More bad press for the muni wi-fi movement. It seems like each week brings another story of how things haven't quite turned out as planned. This week, it's Business Week with a story about "Why Wi-Fi Networks Are Floundering." In the piece, author Olga Kharif argues that:
The static crackling around municipal wireless networks is getting worse. San Francisco Wi-Fi, perhaps the highest-profile project among the hundreds announced over the past few years, is in limbo. Milwaukee is delaying its plan to offer citywide wireless Internet access. The network build-out in Philadelphia, the trailblazer among major cities embracing wireless as a vital new form of municipal infrastructure, is progressing slower than expected.
These potholes in the nation's wireless rollout of civic ambitionâ€”criticized by many as an improper use of tax dollarsâ€”are hardly the exception. For the road is getting bumpier for cities and the companies they have partnered with in a bid to blanket their streets with high-speed Internet access at little or no cost to users.
The comments of EarthLink's new chief executive officer, Rolla Huff, are particularly devistating. During a recent conference call with reporters, he announced that EarthLink would "delay any further build-outs and scale back operating expenses" on existing muni Wi-Fi projects. "The Wi-Fi business as currently constructed will not provide a return," he said.
As the story notes, one reason for that is something muni wi-fi skeptics have been pointing to all along: Lack of demand..
One major flaw in these arrangements has been that initial forecasts for Wi-Fi subscriptions used to justify the investment in these networks have proven to be overly optimistic by a wide margin. In many cases, 15% to 30% of an area's population was expected to sign up for muni Wi-Fi. But only 1% to 2% have signed up so far figures Glenn Fleishman, editor of an industry blog called Wifinetnews.com.
While rising demand for advertising on municipal Wi-Fi networks is helping offset the shortfall in subscription revenue, there's a catch-22 at play here: Higher user numbers might generate more ad revenue, but network operators might need to cut fees to attract more users. For now, a tiny user base can't even begin to cover an operator's costs.
Read the whole story for all the grim details about the failures of central planning.