All sizzle, no cheesesteak

Philadelphia's muni Wi-Fi rollout isn't all it's cracked up to be

A year after Philadelphia gave EarthLink the green light to build a citywide Wi-Fi network, the grand plan to deliver ubiquitous broadband to tourists, residents, businesses, government workers and low-income households is in shambles.

A year after Philadelphia gave EarthLink the green light to build a citywide Wi-Fi network, the grand plan to deliver ubiquitous broadband to tourists, residents, businesses, government workers and low-income households is in shambles.


Read Wireless Philadelphia's take on the project.

See more analysis of municipal wireless efforts.


Between unanticipated technical challenges and a flawed business model, the project is over budget and under performing. According to sources, only 3,000 residential customers have signed up – a paltry 1% penetration rate.

EarthLink, faced with similar problems elsewhere, announced last month it plans to sell off its entire muni Wi-Fi business. It's unclear whether Earthlink, which declined our request for comment and failed to appear at a recent City Council meeting, will ever finish the 80%-completed network.

After EarthLink announced last fall that it was seeking "strategic alternatives" for its municipal Wi-Fi business, the company drastically scaled back its efforts in Philadelphia. EarthLink has been tuning the existing coverage area, but it has left the northeast and northwest areas without service. The city maintains that even if the public-access business model falls flat, Philadelphia's 3,000 mobile city workers can use the network. However, in its current condition the network isn't much good to city workers because coverage is so spotty.

"What EarthLink has accomplished in the past couple of years is underwhelming," says Philadelphia Councilman-at-large Frank S. Rizzo. "I wish it were otherwise, but there is not much to be excited about yet."

No brotherly love

When Network World first reported on Philly's Wi-Fi efforts in August, EarthLink was enthusiastically building out the network, nailing up Tropos access points on light poles and shooting for blanket coverage of the city's 135-square miles by last fall. The plan was to tune the network and have the city approve the buildout by year-end.

Map of EarthLink's coverage area

The first sign of technical and financial trouble came when EarthLink realized it needed to double the density of access points from an initial estimate of 20 per square mile to an average of 42 per square mile.

Even at the more costly 42 access points per square mile, EarthLink couldn't deliver in-building Wi-Fi without an additional CPE device that residential customers had to either buy or lease. EarthLink recently added new firmware modules to the client-side signal boosters, which improved reception to some degree, but the network is far from delivering the kind of service that the city expected.

"We have gone through some redesign of the network and dealt with some spectrum issues," says Varinia Robinson, director of wireless/emerging technology for the city. For example, EarthLink recently switched from the 2.4MHz to the newly available 5MHz spectrum, which reduces interference associated with the 2.4MHz band and offers some performance gains.

EarthLink also ran into issues at the backhaul layer, where its rooftop towers are linked together. The plan was to use as many Motorola Canopy line-of-sight microwave radios as possible, but in order to get around corners and past trees, EarthLink has had to add Alvarion BreezeAccess VL non-line-of-sight radios.

Even with the additional Alvarion gear, EarthLink could only link half its rooftop towers using microwave technology. The other half needed to be connected via the more-expensive fiber-optic cable.

Thus far, EarthLink's costs are running double what the company anticipated at this point in the project. Total costs are now estimated at $15 million.

On the revenue side, the results are pretty grim. The incumbent broadband providers – Verizon and Comcast – lowered their rates to negate any price advantage that EarthLink might have had. Between the ability of Verizon and Comcast to bundle other services, like voice and television, and EarthLink's performance problems, only 3,000 of the 300,000 households with computers in the city have signed up for the Wi-Fi service.

And some residents hadn't even heard about the EarthLink service. "I haven't used it but I can tell you this: I don't know it was set up yet, if it was taken down already, or how you were supposed to sign up for it. You would have thought it would be on philly.com, in the papers, a commercial on TV, or some type of advertisement. It's just crazy that we get this thing set up and then the city doesn't do anything at all to tell us it's in place or how to access it. It's not like I live in a dungeon; I pay attention to the news and radio,'' says resident Michael Diaz.

Is the glass half-lit or half dark?

Clearly, things have not gone the way city officials had hoped, but key municipal players remain committed to seeing the project through.

"I wouldn't say that it has been smooth as silk. This is new technology, especially on a scale as large as this. There have been some various speed bumps but they are not unexpected from the aspect of rolling out something of this size and rolling out a cutting-edge technology," says Terry Phillis, Philadelphia's CIO.

"We have to move forward," adds Greg Goldman, CEO of Wireless Philadelphia, the non-profit formed to bridge the digital divide in Philly. "We have no choice but to succeed in our efforts."

Goldman adds, "This was never going to be a business model that was going to show immediate returns. Any business venture with physical infrastructure is a five-to-seven year time horizon."

The questions now are: Is this a viable business model at all? And what happens to the network if EarthLink sells to another service provider?

Under the deal with the city, EarthLink made all of the investment into the network. The city has no financial skin in the game. EarthLink's revenue comes from selling short-term Internet access to tourists and visiting business people, plus service plans for consumers at $21 a month.

The contract that Earthlink signed has some other wrinkles that make the business plan look exceedingly shaky. EarthLink is actually paying the city $2 a month per access point (the company has installed more than 5,000). The company coughed up $1 million to help get the Wireless Philadelphia non-profit up and running. And it agreed to provide service to 25,000 low-income households at half-price.

Analysts are convinced that this business model simply can't work. "Whether city officials of Philadelphia would agree or not, the reality is that EarthLink's public access business model has pretty much died," says Peter Jarish, an analyst at Current Analysis. "What has to be understood is that this isn't an indictment of municipal wireless in general. It is an indictment of going in and trying to justify public access alone."

Gartner analyst Phillip Redman is similarly pessimistic. "Though it appears that EarthLink is trying to keep to its obligations, there is no doubt the likelihood of success of the venture is low.'' He adds, "Wi-Fi technology was never really devised for these large systems. In most cases, I would say, especially for larger cities, that it's better left to the professional service providers like Verizon or others that can bundle in multiple types of technologies at a lower cost and offer better services."

Datamonitor analyst Ben Madgett offers this prediction: "While the network will likely find a buyer eventually, it is certainly a case of 'buyer beware'. It's becoming increasingly clear that for a muni-Wi-Fi network to be viable, the government needs to commit to some level of use and/or provide a degree of funding, so whoever takes over from EarthLink will likely insist that the city become an anchor tenant.''

Muni for muni's sake

Both Phillis and Robinson, who work in new Mayor Michael Nutter's Office of Information Services, are hopeful that the project will be completed this year so the network can be used for governmental purposes. "We are testing it with our Licensing and Inspection Department, Public Safety, and our Health Department," Robinson says. "But we are getting mixed results, and that's mostly because the city is not totally covered with the technology." She adds that because the agencies need to work all over the city, they would likely not use it until there is complete coverage.

"Unfortunately we have a few gaps in coverage," Phillis says. "In some areas it is spotty coverage because EarthLink hasn't finished tuning, optimizing and deploying all the antennas yet." The typical scenario for a city worker within the Department of Licenses and Inspections would be to conduct inspections and to do enforcement of applicable codes and regulations for the city. This requires access to the city's database resources over a VPN tunnel.

In search of a white knight

City officials, however, are convinced that the existing contract will be fulfilled and that someone will take over the network and deliver on the promise of municipal Wi-Fi for all.

Goldman says, "EarthLink is going to be making a change in its business, but that doesn't change the contract. As the contract is transferred to another entity, the exact same thing is going to be achieved or accomplished by the new operator."

Phillis agrees. "Regardless of whether EarthLink is around or not, the city of Philadelphia is protected by the contract that we have in place. We believe that we will be able to hang on to this asset [an almost complete wireless network], that we consider to be very valuable to the city,"

He adds that city would have the first right of refusal or acceptance on any potential sale regarding the network in Philadelphia. "So whether a new provider takes over the contract or whatever might happen, we have ultimate control over making sure that these assets/network infrastructure are available to the city in the future."

But what if there is no buyer? One solution would be for the city to either assume ownership of the network and then try to find a buyer, or pursue legal remedies to make sure that the obligations of the contract are adhered to. A last resort would be to scrap the network, but that seems unlikely.

Matteo is an independent wireless/mobile technology writer based in South Jersey near Philadelphia. You can reach her at soninamatteo@TechResearchServices.com.

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