Are Directory Publishers the Solution to Successful Muni Wi-Fi Deployments?

According to this Business Week article, it seems like the excitement level around municipal wi-fi deployments is going down.

(…) While 415 U.S. cities and counties are now building or planning to build municipal Wi-Fi networks, “deployments are slowing down slightly,” says Esme Vos, founder of consultancy Vos’s tally still marks a nearly 70% jump from mid-2006, when there were 247 muni Wi-Fi projects on tap, but that’s down from the torrid pace of a year earlier, when deployment plans doubled. Perhaps the clearest hint of trouble ahead is that some of the companies partnering with cities on these projects, including EarthLink and AT&T, are having second thoughts about remaining in the municipal Wi-Fi business. (…)

Though EarthLink doesn’t disclose specific operating results for that business, there’s little hope it will turn profitable soon. “The Wi-Fi business as currently constructed will not provide a return,” Huff said during the conference call. (…) AT&T, which made a splash as the only major telecom player to embrace the muni Wi-Fi market, is also showing some doubt. The company is “evaluating” whether to pursue any new deployments or even whether to continue working on its four existing projects, says Ebrahim “Eb” Keshavarz, vice-president for business development at AT&T.

When EarthLink and MetroFi first bid for Wi-Fi contracts several years ago, they often agreed to foot the bill for network build-out, operations, maintenance, and upgrades. They also frequently agreed to pay cities to lease public facilities, such as light poles, to hold Wi-Fi transmitters. If that wasn’t enough, the companies also promised some cities a chunk of their subscription and advertising revenues, as well as free usage of the Wi-Fi networks by city workers. (…)

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 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.

What it means: according to the article, it looks like advertising in muni wi-fi networks is helping offset the shortfall in subscription revenues but that traffic numbers don’t warrant high ad revenues. Why don’t wi-fi providers move to a completely ad-supported model? Wi-fi networks are great for very targetted, hyperlocal ads. Who would be a better partner than directory publishers to sell these ads given their large local sales force? Newspapers could also be good partners for that purpose. I think it’s time for Telcos (most of whom have sold their directory operations in the last few years) to reconnect with their old friends and discuss business.

Report finds Mobile Internet Still Has Long Road to Mass Adoption

Via the Center for Media Research:

A new report by Media-Screen finds that, although more than 60 percent of U.S. broadband users currently own an Internet-enabled mobile device, only five percent of them, approximately five million, use the mobile Internet. The report concludes that they are reluctant to partake in online mobile activities due to extra fees and difficulties establishing and maintaining Internet connections.

Jean Durall, Media-Screen’s Director of Research Service, says “Broadband users… have historically driven innovation of online applications by being the first to adopt and embrace new services on the Internet… Understanding this group of influential consumers will help carriers, content providers and marketers develop new offerings.” (…) Over 50 percent of respondents say that the mobile Internet access does not “fit with their lifestyle.”

The study reports that the top mobile Internet activities are:

  • Sending email 47%
  • Playing games 27%
  • Read the news 16%
  • Watch TV programs 13%

More info can be found on the Adotas web site.

What it means: Wow. The way the market is buzzing about mobile Internet, you’d think everyone was using it. I’m still surprised that number is so low. But when I think about it, even I (an early adopter) is not using my mobile device for Internet needs. I’d love to be connected all the time and I’ve sent e-mails, played games and read the news on my mobile device before but I wasn’t too pleased with the experience. I think form factor is a definite issue. I still think we haven’t see the killer app in terms of device. I had high hopes for Apple’s iPhone but it’s unfortunately going to be built as a closed platform. I think WiFi/WiMax-enabled phones (to help reduce usage costs) and open platforms (to make your device more relevant for you) will speed up adoption in the future.