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June 16, 2006
Growing Pains for Muniwireless
It’s probably an understatement to say that the muniwireless industry is going through some serious growing pains. After basking in the glow of 2004-2005’s small, early successes and ambitious plans, the industry now faces a constant stream of press stories, editorials and Blog posts; no longer questioning the role cities are playing – or their right to play this role – but now questioning whether their initiatives will succeed or fail, whether the technology works, whether cities are going about the process correctly and whether cities are making the right policy decisions.
This kind of “backlash” can be demoralizing to an industry. Having to shift from daily high-fives in the office to feelings of constantly being under attack is a tough transition to make. But, being an admitted optimist, I think these growing pains should be expected, and that they are necessary for the industry to move to the next level. After realizing my own need for more pep-talks during an average week, I felt the need to share this perspective with others, so here goes.
Challenges are nothing new to this emerging industry. In 2005, the state-legislative battles and telco-funded special interest groups kept us busy defending the industry; and we had the benefit of being an underdog, attacked by the mean, evil telcos. This underdog status, combined with the fact that the industry was “on the front-side of the hype curve,” had the effect of insulating it from much of the cynicism being expressed today. With many of these legislative efforts defeated, and federal legislation on municipal rights trending in a positive direction, no longer can muniwireless depend on this underdog status; it has to stand on its own; and it has to grow up.
So, what are the growing pains? Evidence suggests three specific areas; business models, technology and policy.
On the business model front, the recent trend has been towards public-private-partnerships, with ownership and capital risk shifted to the private sector. Initially, these partnerships were little more than lease agreements for city assets, but Philadelphia raised the bar in 2005 by forming an ambitious, comprehensive and complex partnership with EarthLink – going far beyond leasing assets; to tackle pricing, revenue sharing and other financial issues as well as open access, community oversight, digital inclusion, privacy and other policy issues.
The business model bar was then raised even higher through the introduction of free services, or in some cases “free tiers” of service. Most would agree that this introduced new risks and placed new pressures on terms to be negotiated and the financial viability and sustainability of partnerships. Anyone who was on the fence about whether muniwireless public private partnerships could be a viable business now had even more reasons to doubt.
On the technology front, information started being released on the actual performance, scalability and status of several early deployments in the market (e.g. Chaska, St. Cloud and others). While valid problems were admitted, and reported, the press mostly ignored the fact that usage of the network was impressive and that the majority of subscribers were quite pleased. Regardless, everyone had to admit that things had not been quite as rosy at first as the case studies had indicated.
As many of the kinks in these early networks were worked out, and reasonable levels and qualities of service were reached, inevitably concerns start being raised about whether these small deployments would scale to major markets. Once again, attention turned to the ambitious, large-scale deployment like Philadelphia – but with Philadelphia’s deployment just now beginning, much is still left to prove.
On the policy front, cities began facing new issues as they moved forward with their initiative and formed partnerships. These included open access, consumer privacy, digital inclusion, health and environmental factors, and many others. As with any policy issue, cities began receiving volumes of input from elected officials, community groups, citizens, businesses and special interest groups. And while this input was tremendously useful to the process, it was also conflicting at times. As cities made trade-offs to balance conflicting input, inevitably some stakeholders were unhappy with the outcome.
All of this leads to the question of what the industry can or should do to best manage these growing pains. After thinking about this a bit, I came up with the following four guidelines:
1) Expect that they are inevitable. Frustration is a function of expectation, so I believe it helps to simply recognize that negative press stories make for more interesting reading that positive ones; and that the industry may inevitably be facing the back-side of the hype curve.
2) Consider new challenges and criticisms that present themselves - no matter how cynical the source may be - as an opportunity. While we’ve become accustomed to aggressively defending the promise of this industry, at times we may have sacrificed level-headed, thoughtful analysis of the issues, and practiced less humility than was called for. The business models, technology and policy issues noted above still have to stand the test of time, and we have to admit that the jury is still out to some extent.
3) Present case studies in the industry as “what worked and what didn’t work,” as opposed to our typical approach to focus only on the positive outcomes of the initiative. I believe that most people reviewing case studies are as interested in the bad news as they are in the good – and the industry gains with this approach though increased credibility and integrity.
4) Continue reaching out to other communities and building new relationships in the industry; sharing experiences and learning how others are dealing with their challenges. Events like Muniwireless 2006 in Silicon Valley next week are – among other things - the industry equivalent of a pep-rally, and the idea-sharing that happens is always a morale booster for its participants.
Posted by Greg at June 16, 2006 01:22 PM