Charleston Business Journal > February 5, 2007 > News
Charleston’s muni Wi-Fi remains partly cloudy

By Lindsay Danzell
Contributing Writer

The Web site dedicated to Charleston’s citywide wireless Internet network announces: “The wait is over.”

However, many downtown residents still wait for the promise of the municipally provided wireless Internet access, originally boasted of as a way to bridge the digital divide.

In January, Ernest Andrade, executive director of the Charleston Digital Corridor, announced the city of Charleston was re-evaluating the city’s spotty Wi-Fi and was consulting with two related telecommunications companies.

In 2005, Mount Pleasant-based Widespread Access and the Evening Post Publishing Co., the parent company of The Post and Courier, bid for and won a five-year contract with Charleston to provide a municipal Wi-Fi cloud, a citywide area of coverage supported by numerous antennas.

Current coverage runs along the length of Calhoun Street, said Widespread Access’ Sam Staley. The entire campus of the Medical University of South Carolina is covered, indoors and outdoors. Marion Square has access to the municipally provided Internet and the S.C. Aquarium receives outdoor coverage, with some indoor coverage.

Early last year, announcements were made heralding the coming of wireless Internet coverage to 90% of the Charleston peninsula, with 70% coverage indoors. Currently, only 30% of the peninsula maintains coverage, mostly outdoor.

The Wi-Fi rumor had created a buzz Widespread Access couldn’t ignore. When Widespread Access launched the partial coverage in March 2006, it was sooner than Staley intended.

After the initial startup, Widespread Access promised full coverage soon but, with only a few additions since, Charleston’s Wi-Fi cloud remains elusive.

Less antennas, more problems

Interference is common with Wi-Fi and is responsible for most of the service’s problems, said Derek Kerton, principal telecommunications analyst for the San Jose, Calif.-based Kerton Group. Wi-Fi is technology running on an unlicensed frequency that Kerton described as a “garbage band.”

The band is the same one used by cordless phones, said Coleman Brazelon, vice president Analysis Group Inc. Like a cordless phone, Wi-Fi works well inside a home or close to a wireless antenna, but reception is plagued by distance in relation to the source and is susceptible to interference.

One of the frequency’s weaknesses is its ability to be absorbed by water. Trees, humans or anything else containing water can create interference, Kerton said.

The frequency is often not strong enough to penetrate buildings, Kerton added. This means that cities nationwide are fighting an impossible battle to provide complete, in-home coverage to digitally depressed residents.

After signing the contract with the city, Widespread Access ran into problems with setting up technology locations downtown. The city’s Board of Architectural Review denied antenna access for some of the needed areas to establish a cloud. The cloud’s main obstacle has been a “matter of getting out the equipment to do this,” Staley said.

With fewer antennas, Charleston’s
Wi-Fi could neither overcome interference nor reach the promised 90% of the peninsula.

Charleston’s choices

Muni Wi-Fis are commonly outsourced to private companies, like Charleston did with Evening Post Publishing and Widespread Access. Although there is little to no taxpayer money spent, the cities often forfeit the areas needed to set up the technology, such as the available space on electrical poles or other municipally owned property.

“Proposals for free or privately subsidized Wi-Fi are obviously attractive at face value,” said Jerry Ellig, former deputy director and acting director of the Federal Trade Commission’s Office of Policy Planning. “Exclusive access to rights-of-way and poles would bestow a significant competitive advantage on any firm selected to use them. … Local governments should not let the sizzle of free Wi-Fi obscure the consumer’s stake in competition.”

Although Widespread Access signed a five-year contract with the city of Charleston, rights to the public utility poles were not exclusive, Staley said. Any company can come in and get reviewed for providing muni Wi-Fi to the city, he added.

Consulting companies Charys Holdings Co. Inc., based in Georgia, and U.S. Internet, based in Minnesota, partnered to provide muni Wi-Fi to Minneapolis in late 2006 and has made plans to pursue Wi-Fi contracts in more metropolitan areas. Staley initiated contact with U.S. Internet to gain from its experience.

Charys agreed with Staley’s original need for more antenna locations, Staley said. In the consulting meetings, newer and better wireless technologies also have been evaluated.

There is a strong possibility that Charys will enter into a contract with the city. The city may completely transfer the contract or Charys may join forces with Widespread Access.

In January, Andrade said Charleston had already found a new company to handle the Wi-Fi project, but would not disclose the company’s name. Staley points to Charys.

All the business aspects have been “put to bed,” but the logistical details are still in the works, Andrade added. Staley echoed the same comment but said the details should be finalized in the “near term.”

Andrade and Staley have meet with the companies and the city on several occasions but have not disclosed the progress of the details.

In the process of consulting and reworking the Wi-Fi details, Charleston may be perched on the edge of the reality that many cities have been forced to acknowledge: Muni Wi-Fi clouds may not be capable of reaching every home and providing free Internet access to all.

The Wi-Fi coverage already established is not a lost cause, however, Kerton added. Cities stuck in the quagmire of spotty clouds often scale back cloud initiatives and stick with wireless hotspots in city squares or the digital-savvy sections where Wi-Fi works best, he said. Another alternative is providing a paid service.

If the city decides to charge for access, Charleston would follow in the footsteps of Philadelphia, another city that found Wi-Fi could not live up to its utopian promise. Philadelphia and other cities nationwide have re-evaluated their Wi-Fi situation and decided to charge for the service.

Charleston may succeed in setting up a true Wi-Fi cloud, but residents might have to pay for access, Staley said. It is one of the items currently on the agenda in the meetings.

Andrade did not comment on what would be the city’s next step.

When asked about last year’s Wi-Fi hype, Staley responded:

“Expectations could have been a little better managed.”


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Something for Charleston to chew on

The Reason Foundation, a libertarian think tank based in Los Angeles, details seven critical issues for governments to tackle before jumping into the municipally provided Wi-Fi or broadband Internet market:

Competition. At the end of 2005, 67% of U.S. zip codes already had at least four high-speed Internet providers, 93% had two or more high-speed competitors and just 1% had no competitors. Thus, municipal cable and Internet offerings face stiff competition and are unlikely to grab a large market share unless they are willing to lose a lot of taxpayer money doing so.

Performance competition. New government systems will have to offer higher speeds or lower prices to compete with private companies. Existing government systems will need to consistently upgrade their speeds or drop their prices to compete with private sector improvements.

Continuous improvements. The real consumer price index for Internet services has fallen 23% since the Bureau of Labor Statistics started tracking it in 1997. Unlike traditional government-owned utilities, the lightning pace at which broadband technology improves and prices fall is difficult for municipalities to match.

Technological change and “lock-in.” The market can get locked in to an inferior technology if government decides to subsidize the inferior technology, thus blocking out better or less expensive technologies. Today it is unknown how Evolution Data Optimized technology and cell phone companies will change the market or what fiber optic service by cable or phone companies will mean to consumers and the Internet.

Obsolescence. Because wireless technology improves so rapidly, capital investment quickly becomes obsolete. Plans for government broadband need to assume faster depreciation rates than have been used for traditional government utilities. A workable plan for municipal Wi-Fi needs to cover operating costs and recover initial capital outlay in three to five years.

Risk. Broadband is a risky endeavor and governments must not finance it as though it is a low-risk infrastructure investment.

Uncertainty. Since taxpayers bear the financial uncertainty in their role as the owners of government broadband, officials should ensure the accountability and transparency in these projects is at least as good as that of publicly held companies.


















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