March 2007 · Volume 89 · Number 2

Metro Wi-Fi Networks: What are They and How Can They Benefit Your Community?

by Bert Williams

Walk into virtually any Starbucks and, in addition to lattes and espressos, you'll see people working on laptop computers. A computer networking technology known as Wi-Fi enables users to access the Internet as well as send and receive e-mail globally at more than 100,000 locations called "hot spots." With Wi-Fi, people are no longer shackled to their home or office Internet connections. Internet access is available in many locations throughout their communities.

But hot spots are the Internet equivalent of pay phones-you have to travel to a location where service is available. In the past few years, an emerging technology known by a variety of names, including "metro-scale Wi-Fi," "municipal Wi-Fi," and "mesh networking," has taken the hot-spot concept to the next level, providing community-wide Wi-Fi access and doing for high-speed Internet access what cellular telephones did for voice services. A metro-scale Wi-Fi network can connect all sorts of Wi-Fi devices, including laptops, personal digital assistants (PDAs), and Voice over Internet Protocol (VoIP) phones.

HOW DOES METRO WI-FI WORK?

Mesh technology makes practical the distribution of Wi-Fi throughout a community by eliminating a significant logistical and economic hurdle—the need to connect each Wi-Fi access point to a wired network. Instead of using conventional access points, Wi-Fi mesh networks provide user connections with mesh routers.

Approximately 10 percent to 20 percent of these routers connect to the Internet via a wire. The rest are completely wireless. Information is transmitted from Wi-Fi router to Wi-Fi router, hopping across the wireless network until it reaches a wired connection to the Internet. Each Wi-Fi router in the mesh network is the size of a breadbox and is attached to a lamppost, telephone pole, or other fixture with a power source. Because there are no large towers, no zoning ordinances or variance approvals are required. No specialized skills are needed; installation averages 15 minutes per pole. The equipment is designed and built for environmental extremes.

If the network expands or is altered, there is no need to return to adjust the routers already in place. Expeditious and straightforward construction (combined with the lack of wireline connection to each router) delivers enormous cost savings and short deployment time frames. Tropos Networks has provided the wireless routers used in more than 500 metro-scale Wi-Fi networks around the world, including networks in Philadelphia, Anaheim, Corpus Christi, Oklahoma City, Pittsburgh, Houston, and a number of smaller cities.

METRO WI-FI APPLICATIONS

Local governments and service providers are deploying these networks for a wide variety of applications, including public safety, public access, and economic redevelopment:

	An innovative MetroMesh™ router attaches easily to phone poles, traffic lights, and other local government assets.

• Locally owned and operated networks in Chaska and Moorhead, Minnesota, among others, offer residents broadband (more than one megabit per second [Mbps]) Internet access at dial-up prices ($17 to $20 per month). In a typical city of 10 to 15 square miles with this service, we see that about 20 to 25 percent of households use the service (similar to rates of use of digital subscriber line [DSL] service over telephone lines plus cable broadband penetration), 1,550 are steady daily users, and an average of 2,640 use the service each week. These users generally download, in aggregate, more than 100 gigabytes (one gigabyte equals one billion bytes) per day (that's the equivalent of 1 million typical Web pages, or 25,000 typical MP3 [digital audio] files per day).
• New Orleans, Louisiana, installed a public safety video surveillance network using a metro-scale Wi-Fi mesh network. The innovative combination of Internet-based high-end camera technology, Wi-Fi mesh, motion detection, and other elements reduced the murder rate by 57 percent in six months and auto theft by 25 percent in the covered areas. After Hurricane Katrina, this network was converted to a public access network and remained, for nearly a year, the only source of broadband Internet access in parts of the city.
• First responders in Milpitas, California, shave precious seconds off of response times using a metro-scale Wi-Fi network coupled with an automated vehicle location system.
• In Corpus Christi, Texas, a metro-scale Wi-Fi network is automating utility meter reading to cut costs and improve service. Using the system, the city is now reading 73 water meters per second compared with minutes per meter with the old manual process. This network is also used by municipal field workers, including public safety officers and building inspectors.
• In St. Cloud, Florida, a metro-scale Wi-Fi network, built with public economic development funds, provides low-cost broadband access and thus cuts costs for downtown businesses. This leaves the businesses with more money to invest in the local community, creating more jobs and more growth.
• In Philadelphia, Pennsylvania, more than 30 citizens per day log-on and use the network installed around Love Park in the city's downtown. Many of these users are from low- income families in Philadelphia, and they use the network to do homework and other research. This is only one small example of how metro-scale Wi-Fi networks foster digital inclusion.

METRO WI-FI BUSINESS MODELS

A number of different ownership and operational models, shown in Figure 1, have emerged from early metro-scale Wi-Fi deployments. These ownership models are being used today by localities and across multiple carrier segments to promote broad adoption of metro-scale Wi-Fi for many different users and applications.

Even if the metro-scale Wi-Fi network is privately owned, local government cooperation is usually required to enable the service. This is no different from other forms of broadband: DSL is delivered over wiring installed using rights-of-way often acquired by eminent domain. Cable modem services run over systems installed under local government franchise. Even when built by private service providers, wireless services often require similar city cooperation so that devices can be mounted on city assets such as streetlights.

No matter what the ownership model, most metro-scale Wi-Fi networks are mixed-use networks that provide services simultaneously to multiple sectors (business, government, and consumer). Further analysis shows that these networks leverage up to five "revenue engines" as part of a successful business operation.

Two access revenue engines have shown that they can deliver a breakeven on investment within three to four years. Three other revenue engines enable service providers to increase average revenue per user (ARPU) and shorten the break-even period by enabling new services and applications.

ACCESS AND REVENUE ENGINES

Consumer and small-medium business (SMB) access. Market analysts estimate that by 2008 there will be more than 500 million Wi-Fi- enabled devices worldwide. Both fixed and mobile users are currently taking advantage of metro Wi-Fi availability. At the start of the metro-scale Wi-Fi deployments in the cities of Chaska and Moorhead, Minnesota, 20 to 25 percent of potential customers signed on within 90 days of service introduction.

In addition, more than 70 percent of subscribers in Chaska and Moorhead reported being extremely satisfied with the speed and the reliability of their service, and 69 percent of subscribers recommended the service to others.

Fee-based consumer and SMB metro-scale Wi-Fi access networks are in place today at Moorhead and Chaska, Minnesota. EarthLink, which will own and operate the networks in Philadelphia, Anaheim, New Orleans, and other cities, offers wireless broadband services with monthly charges ranging from $17 to $25.

Local government and enterprise access. Applications that provide increased productivity and pervasive services work well in this market. Whether improving the productivity of public safety officers, providing increased security through video surveillance cameras, or reducing losses through Wi-Fi-enabled parking and water meters, always-on connectivity helps reduce costs and increase revenues. Some localities are signing on as anchor tenants, thus helping to assure a steady revenue stream as other users and applications come online.

Other communities choose to own the metro-scale Wi-Fi networks, so local access becomes a cost avoidance (in other words, the community provides the service to itself rather than paying access fees to a commercial provider). An excellent example of local access is Corpus Christi, Texas, which uses network access for automated meter reading, public safety, and a number of other operations.

Mobile device-driven applications. Wi-Fi isn't just for laptops anymore. A new wave of mobile devices, such as gaming, mobile TV, Voice over Wi-Fi (VoWiFi), music, photo sharing, and personal communicators offer revenue opportunities. These devices help drive multiple accounts per subscriber, much as cellular accounts have reached 1.9 devices per subscriber.

Advertising and content distribution. Advertising revenues are shifting from traditional printed media to online channels. Online advertising revenues are growing dramatically. Service providers are generating incremental subscriber revenues through revenue-sharing arrangements that monetize the white-space areas on the log-on page, landing page, service provider portal, and so on, in addition to deriving revenue from partnerships with global search firms.

Key to maximizing revenue is the ability to target the advertising based on knowledge about the subscriber-for example, location and behavior. Location-specific cost per click for advertising is 4 to 10 times greater than global or national advertising. Approximately 25 to 30 percent of all search requests are for local information; the combination of mobility and location-specific advertising can drive two to three times more advertising revenue and increase ARPU. Google, for example, will be providing a low-speed, advertising-supported service on the San Francisco metro-scale Wi-Fi network.

Other benefits. St. Cloud, Florida, has chosen to forgo revenue altogether. It offers free Wi-Fi to all residents and visitors. St. Cloud calculated that, on average, residents could keep the money they spent on their Internet connections supplied by private telephone and cable companies headquartered out of the local area and instead spend that money in St. Cloud. The average citizen in St. Cloud was paying more for Internet access to out-of-area companies than that citizen was paying in local taxes to support all local services. The city chose to offer free coverage to all citizens, businesses, and government entities in order to keep the money within the city and broaden service to all citizens.

ECONOMICS OF METRO SCALE WI-FI

Metro-scale Wi-Fi offers compelling economic advantages over other wide-area wireless and broadband solutions. The technology provides higher throughput; enables richer, more compelling data services; and provides a substantial competitive advantage in the wireless data market. Consider the following:

• Capital expenditures are typically 15 to 50 percent of the cost per megabit per second (Mbps) of subscriber capacity when compared with competing mobile technologies. Use of low-cost Wi-Fi technology and limiting backhaul to a few points per square mile contribute to the superior economics. Metro Wi-Fi network infrastructures are being deployed for $100,000 to $150,000 per square mile or geographically expanded at $90,000 to $130,000 per square mile.
• Operating expenses are similarly 15 to 50 percent of the cost of competing technologies. Truck rolls for customer installations are all but eliminated. Metro-scale Wi-Fi mesh technology dramatically reduces backhaul costs. User-device investment(Wi-Fi phones, gaming devices, or music players, for example) is minimized because devices incorporate Wi-Fi technology as standard equipment or a low-cost option. Virtually all maintenance and optimization of the network is handled remotely via smart mesh analysis and control software.

These tested revenue engines have emerged from the early efforts to deploy metro-scale Wi-Fi networks. Whether the network is locally owned or service provider-owned, using multiple revenue engines delivers profitable services to consumer, business, and government users. Choosing the right technology, products, and integration partners can reduce capital expenditure, operating expense, and time to service.

Bert Williams is vice president of marketing, Tropos Networks, Sunnyvale, California (bert.williams@tropos.com; www.tropos.com; for inquiries, info@troposnetworks.com). Tropos Networks is an ICMA Corporate Partner.

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