Is There a Business Case for Free WiFi?

Wi-FiLately I have seen numerous press releases about free WiFi networks in various cities. I can certainly understand why a City would want to provide free WiFi if it can afford it since there are numerous benefits to citizens from having ubiquitous WiFi. But most of these press releases talk about having private companies supply the WiFi. And that makes me ask the question: is there a business case to be made for providing free WiFi?

Probably the most talked about recent example is where Google agreed to retrofit the numerous abandoned payphone booths in New York City into free outdoor WiFi hotspots. But Google is different than anybody else who would do this and perhaps they will gather enough data through these various free connections and sell enough advertising to make this pay for itself. I suspect that even for them this won’t be profitable, but I can grant them the benefit of the doubt and perhaps for them this will work financially.

But it’s hard to see the case for other private providers. For instance, in Pittsburgh a start-up, Meta Mesh, is hoping to bring free WiFi throughout the city. Their business plan hopes to get funded by grants from Google and the Braddock Community Development Corp. They will then place commercial mesh routers throughout the city and hope that households and businesses will agree to add their WiFi connections to the larger mesh.

This again sounds like something beneficial for the city in that it will provide WiFi to those who can’t afford it. But it doesn’t seem like much of a permanent business plan. Grant funding is notoriously unreliable and while they may raise the money to get this going, it’s quite a challenge to keep getting grants year after year to keep it going. If they hit one dry spell in raising money the project probably dies. And to a large extent they are not really deploying WiFi but are instead counting on homes and businesses to agree to share their bandwidth with others.

I hope what I wrote doesn’t sound like I am belittling the project, because it will provide great community benefits if it works. My question is rather to ask if this is a permanent business model that can be sustained and copied elsewhere. These kinds of efforts are usually local and very much depend upon a few key people to make them work and to keep them working. With no reliable customer-based revenue stream it’s really hard to maintain something that is being done for altruistic rather than monetary purposes.

Another similar project is the solar-powered trash cans that will provide WiFi in lower Manhattan. These are also being provided by a non-profit company in conjunction with a trash removal company and are funded through grants from the city and others.

These efforts show that a city might be able to get WiFi started through a non-profit. But time is going to tell if this is sustainable. I can remember numerous similar WiFi projects that were started over the years and I think each of them eventually fizzled out.

Cities can certainly provide WiFi directly as a municipally-funded community benefit. Wikipedia lists 57 US cities that currently provide some sort of public WiFi. I am familiar with many of the cities on the list. In some cases they only provide WiFi in and around city buildings like City Hall or perhaps also in their local airport. And there are many other cities that provide WiFi that are not on this list. I also know that many of these cities deployed WiFi many years ago, and the speeds available with the older WiFi technology probably means that they offer speeds in the range of a few Mbps. That was a great speed when it was launched but is woefully inadequate today.

And that is my real concern. WiFi, like most technologies, is rapidly changing and anything deployed in the past is obsolete today, and anything deployed today will soon be obsolete once HotSpot 2.0 is perfected and as soon as MIMO antennas get better. Deploying an alternate bandwidth source for a community is going to require constant upgrades to make WiFi keep up with public expectations. And upgrades are expensive and it’s hard to maintain an adequate network in a world where the amount of data that people and households use doubles approximately every three years.

I wish all of these ventures good luck and I hope they can make it work. And I hope that more cities expand their free WiFi because it can be a huge benefit to those who can’t otherwise get bandwidth. But I have yet to see a sustainable financial model, other than perhaps a direct tax subsidy that can both pay for the initial WiFi deployment and then keep up with the needed upgrades to keep it relevant.

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