A new JupiterResearch report estimates that the average cost of building and maintaining a municipal wireless network is $150,000 per square mile over five years. According to the report, roughly 50 percent of current initiatives will fail to breakeven even if the benefit of the initiative is assumed to be $25 per user per month.
“The Jupiter number strikes me as being a little high,” said Bert Williams, vice president of marketing for Tropos Networks, in a WiFi Planet article. “We usually talk in terms of $75,000 per square mile for our gear,” says Williams, who estimates that the Tropos hardware accounts for about 60 to 70 percent of the total cost of installation.
Wireless Philadelphia expects their cost to be just under $75,000 per square mile — plus $5 million to run it for the first two years. The Philadelphia “cloud” will cover some 135 square miles and cost $10 million to install.
It’s time to put our collective thinking heads together and figure out if Jupiter Research’s report entitled “Municipal Wireless: Partner to Spread Risks and Costs While Maximizing Benefit Opportunities” has any merit.
Om Malik posts a reader observation on the municipal WiFi network in Hermosa Beach, California (news & pdf report):
At the cost of about $37,000 the community has built a WiFi network that services about 35% of the area, and costs about $600 to run on a monthly basis. The advertisements from local merchants are about $1250 a month. So in a sense, the system is paying its monthly upkeep, and generating about $650 a month, or roughly $7800 a year.It will pay for itself over a period of five years, if advertising support is maintained. Any additional advertising dollars will help pay-off the project even faster. I would like to point out that Hermosa Beach is one of the wealthier communities, that has the right demographic to support such a project.
Up to 750 towns and cities across the US plan to provide their citizens with wireless broadband access by the end of next year, reports the Financial Times. Proponents of muni Wi-Fi mesh networks see them as complementing rather than replacing traditional communications technologies.
Why are they so popular? City Clouds Save Money. Free Mesh Clouds can pay for themselves by saving time or telecommunications fees. Cloud advocates also expect advertising revenue to become significant in the future.
- The Tempe Arizona hotzone covers 40 square miles, with service to 65,000 households and 1,100 businesses. The Strix-based network will also be used by first responders and by Arizona State University at Tempe. Through the multiple radios, multiple network frequencies will be used, from 2.4 and 5 GHz for 11b/g and 11a, up to the 4.9GHz emergency band and, in the future, WiMax for long distance connections.
- St. Cloud, Florida offers a “free” cloud using some 300 Tropos 5210 mesh nodes and a Motorola Canopy Pre WiMax backhaul. The $2.5 million system is being funded through an economic development fund within the city. The ongoing operational costs beginning in year 2 run about $340,000 annually. It is anticipated that after the first year of operations the city will save 6 FTE’s (Full Time Employees), rising in later years. It pays for itself.
- The City of Dayton, Ohio is creating a free wireless cloud. City leaders said all a person needs is a WiFi card. The city is teaming up with the Harborlink Network. The new service will be paid through advertising.
- San Jose, is joining the list of “free” city clouds. The network will cover spaces where people often gather, making it popular with lunchtime and evening crowds. Long Beach, 22 miles south of Los Angeles, launched one of the first city-supported free networks in January 2003.
- The City of Corpus Christi Texas is using a Tropos MetroMesh network with the primary function of automatically reading the utility meters throughout the 147 square miles of the city. With this system, gas, water and electricity meters will be read several times a day, instead of once a month with manual reading.
- OneCleveland is a nonprofit organization operates a fiber network and works with its subscribers to help deploy and develop new applications. OneCleveland’s WiFi network encompases Case Western Reserve University. Accela has partnered with a number of companies to provide municipalities with wireless/WiMax solutions that allow building inspectors to essentially take their workplace on the road, allowing them to file permit requests and inspection reports directly from construction sites.
- Ontario s push to use smart meters to manage electricity demand may lead to city-wide wireless Internet access in the City of Hamilton. They expect to have some 100,000 smart meters installed by the end of 2007. Telecom Ottawa operates a sizeable hot zone in downtown Ottawa.
Sascha Meinrath calculates how much it would cost to build a citywide Wi-Fi network using non-proprietary, open source softare and open architecture hardware, reports MuniWireless. He estimates a total construction cost of $710,000 with yearly maintenance and upkeep costs of $155,000/year. Meinrath estimates the monthly cost per node/house and break even points are as follows:
- $28.33 — Over 3 Years
- $22.17 — Over 5 Years
- $17.54 — Over 10 years
“Because the benefits of municipal wireless networks are inherently difficult to measure, and because it is too early to look at outcomes, examining breakeven thresholds provides the best reference point for decision-makers,” stated Jay Horwitz, Senior Analyst at JupiterResearch.
Jupitermedia Corporation, headquartered in Darien, CT, is a leading global provider of original information, images, research and events for information technology, business and creative professionals. Jupiter Research creates Broadband, Wireless, Municipal Wireless and WiFi Mobility research reports that are often used by industry and quoted in the press.
