In light of the recent announcements by EarthLink to discontinue operations of municipal Wi-Fi networks throughout the U.S., I thought it would be appropriate to share some of my insights from a technical perspective of Municipal Wi-Fi 1.0.

I've personally been involved in the design and optimization of more than a dozen active municipal Wi-Fi networks, and experience suggests that a dense, urban- scale municipal Wi-Fi network will likely fail to provide a universally available, technically viable, low-cost alternative to existing broadband services. This isn't to say that Wi-Fi doesn't have its place in the broadband ecosystem. In fact, it has become obvious that Wi-Fi will be a fundamental means of access for some time. With this in mind, it is important to know the limits of the technology, and what a city or service provider can expect from a large scale deployment.

1. It is challenging to establish a reliable connection to an outdoor Wi-Fi access point using the low power client devices inherent in handheld, laptops and indoor customer premise equipment (CPEs). This challenge is due to the constrained power budgets associated with Wi-Fi radio equipment and the power output and emission mask limits established by the FCC. The typical uplink gain for municipal Wi-Fi systems is very low and does not withstand heavy loss factors due to exterior wall penetration or significant obstruction between transmitters.

2. An especially demanding use-case for municipal Wi-Fi where this problem is common is multi-dwelling units (MDUs), where the penetration through many densely constructed walls is required for communication between transmitters. Another example of where constrained link budgets limit the ability to establish reliable Wi-Fi connections is in high rise or mid rise buildings where: (1) construction is dense and highly absorbent of the 2.4GHz electromagnetic signal, (2) exterior metallic reflective windows reflect the electromagnetic signal, and (3) the higher elevation floors (often above the 4th or 5th floor) are outside of the vertical radiation pattern of the omni directional antenna.

3. We find that Wi-Fi is most reliable when client devices are within the main radiating lobe of the antenna and only minimal obstructions exist between the transmitters. A universally available service based on this operating assumption would require a massive node density in an urban environment, and would require a significant infrastructure of both outdoor and indoor mounted Wi-Fi access points. As we'll discuss in the following paragraphs, this massive node density presents other challenges outside of the obvious cost of infrastructure and operations.

4. The 2.4GHz spectrum used by Wi-Fi is an unlicensed frequency band, and is susceptible to interference from other radiators in the 2.4GHz band as defined by the FCC’s Part 15 regulations. An important factor in considering the availability of a Wi-Fi system is that transceivers are always susceptible from outside, non-cooperative interference. This interference will exhibit itself as complete loss of connection, or RF "jamming", or as significant degradation of data throughput. The intensity of the interference is dependent upon factors such as the power output of the interfering device, the proximity to the interfering device, and the baseline signal to noise ratio (SNR) of the Wi-Fi signal.

5. A dense, urban scale deployment of Wi-Fi transmitters is often susceptible to performance degradation due to the issue of media sharing. Wi-Fi systems operate across a total of 3 non-overlapping channels in the US and North America. In situations where a dense deployment of transmitters is needed, nodes operating on a given channel will have to share that channel with neighbor transmitters.
This issue is known as "mutual node visibility" and will cause system capacity to decrease by up to 1/n the number of mutually visible neighbors on the same channel, where n is the number of mutually visible nodes.

6. Municipal Wi-Fi systems require an infrastructure underlay to provide and distribute capacity throughout a network. Traditionally we find that this additional network tier leverages terrestrial fiber or some other unlicensed microwave frequency such as 5GHz. Both of these options present challenges. A terrestrial fiber infrastructure is often financially prohibitive to provide the number of physical connections required to support a dense, urban scale municipal Wi-Fi network. The use of 5GHz for capacity distribution requires the arduous process of identifying and acquiring key high sites throughout the City. The density of buildings and height differential in a downtown corridor often lead to situations where it is extremely difficult to identify viable high sites from a radio frequency (RF) propagation perspective. This is exacerbated by the fact that 5GHz is inherently a line of sight (or near line of sight) wavelength.

Many of the challenges noted above are specific to the common architecture used for municipal Wi-Fi 1.0, but many are inherent in the constraints of the technology itself. As next-generation, 2.0 models emerge, engineering approaches and deployment models (e.g. increased use of multi-radio solutions, organic ad-hoc networks and so on) may address some of these challenges, while at the same time introducing new ones that architects and engineers will have to resolve.

There are lots of industries and market segments that have grappled with “the economics of free” over time. This has certainly been the case in the music industry. In fact, most content-related industries are in some way continuing to sort through what should be free and what should be paid.

As the municipal Wi-Fi market has evolved, and especially since the correction that began in mid 2007, free vs. paid has continued to be one of its most debated issues. Plenty of consultants, analysts, bloggers and pundits have piled into this debate with a seemingly reasonable argument; that the correction was caused in large part by too much focus on free. I will take the risky position that 1) its failure was inevitable, and 2) the only way that large-scale, particularly urban, Wi-Fi will ultimately succeed is IF it is free.

There is something about the concept of free that elicits doubt and cynicism from anyone it’s presented to. Think about all the negative associations with the term free; nothing comes for free; you get what you pay for; wanting a free ride; freeloader.

This has been apparent in coverage of the municipal Wi-Fi market. An equipment provider in this article says "the [municipal Wi-Fi] market is very much in transition from that irrational exuberance around free WiFi, which just frankly is silly. The business model doesn’t work."

And in this article, an industry pundit says "the utopian world of free wireless everywhere was just silly." Editors note: I commit to readers of this blog that I will resist the urge to use the word “silly.”

Another of my favorites has been the argument that “nothing is free.” A research director at ABI was quoted in this article as saying “the shifting gears that you’re seeing is the realization that nothing is free. You can’t promise free Wi-Fi for everybody. That model doesn’t fly at all.”

Well, I can easily challenge that statement. Many things are indeed free, assuming that one accepts a definition of free as a product or service delivered without a discrete fee, and accepts that it’s still free even if something is gained by the provider, or offered of value by the consumer. The important issue is whether I, as a consumer, perceive something as free, and whether I am willing to accept the trade-off (e.g. my attention to view a non-organic advertisement when doing an Internet search, or my loyalty to stick with a provider because of a bundled service) that comes with using something that has no discrete fee attached to it.

Emerging Frameworks for Free

Fortunately, there have been some very smart people engaging in more critical and objective thinking about the economics of free, its history in other markets, how it might be applied to actually strengthen competitive positions and so on. Some of the best (and original) work in this area has been done by Mike Masnick over at Techdirt.

Masnick summarizes a great deal of his thinking, writing and interaction with his readers in this post entitled The Grand Unified Theory On The Economics Of Free. For anyone interested in the dynamics of free vs. paid, this is an absolute must read. Much of Masnick’s work centers on the digital media space, specifically on the love-hate relationship that the music industry seems to have with the transition from CDs to digital music. So, it gets into the implications of free on copyrights, IP protection, DRM and so on, but it still provides great insight for thinking about broadband access.

And of course, Chris Anderson, Editor in Chief at Wired Magazine, and author of the book The Long Tail, has a new book on the drawing board appropriately entitled Free. Anderson tackled the issue of scarcity vs. abundance in The Long Tail, and his work on Free seems to be a natural extension to dig into the infinite abundance that Free represents in a market.

Anderson proposes free as a legitimate business strategy in saying that “when the marginal cost of producing something trends to zero, the smart thing to do is to treat it as zero and get ahead of the competition: give it away for free in order to sell something else."

Can Access/Distribution Fit into this Framework?

While Masnick and Anderson’s work is fascinating, and they lay out some great frameworks to think about what free is, what it means, how it can be applied as a business strategy, etc., I find that neither really tackles the issue of whether these frameworks can/will apply only to digital content and media (inherently abundant resources, once they are composed/conceived), or whether it can actually be applied to the distribution of content and media; the underlying access networks, and in this context, Wi-Fi. Anderson does reference in this Nokia speech something that comes close to this. He refers to the common tactic by mobile operators of “giving away the phone to sell the minutes.”

The build-up of the municipal Wi-Fi market, and its subsequent meltdown, provides us with an excellent case study to test out, and think through Masnick and Anderson’s theories. But first, we need to take a brief trip back in time.

Attacked by Free – The Netscape Story

Remember the Netscape story? Emerging in the early 1990s, Netscape became the largest IPO in history, an IPO that was viewed as a watershed event of the Internet era. As you recall, Netscape’s business model was heavily, if not entirely, dependent on consumers paying for a licensed copy of Netscape Navigator, the company’s flagship browser software.

What does Netscape have to do with Wi-Fi though? Well, I find important similarities between Wi-Fi and the Internet browser, at least from the standpoint of how their markets evolved, or are evolving. Sure, one is a software interface to content and the other is a network access technology, but important similarities exist nonetheless.

- Ubiquity - The browser is ubiquitous. How many devices can you think of that do not have a browser embedded when purchased? This is of course true with Wi-Fi.

- Consumer expectation - Consumers expect browser software to be free. Who could imagine pulling out a credit card to pay for a download of Firefox? This is also true with Wi-Fi access in many settings.

- Standardization - Browsers, or more accurately their content handling and APIs are highly standardized. Sure there are nuances with Java support, scripting and other things, but for the most part, browsers owe much of their success to being standards-based. Once again, this is true with the family of Wi-Fi access standards.

- Consumer reliance - Consumers couldn’t function without a browser. Who can imagine going through an average day and not opening their browser? Again, at least in a home setting, and increasingly in an office setting, one could argue that this is true with Wi-Fi.

If you buy the basic similarities, the next step is to look into what this might tell us about the future of Wi-Fi, and especially its latest (and most uncertain) domain, municipal Wi-Fi. Going back to the evolution of Netscape, it appeared that by 1995, Microsoft perceived Netscape as a threat to its non-Internet-enabled Windows franchise. Microsoft got serious about integrating Internet standards across their product lines, and more importantly, decided to make Internet Explorer free for download. You may remember during the USA vs. Microsoft antitrust case where it was alleged that Microsoft “made a deliberate move to ‘cut off the oxygen supply’ to Netscape” by giving away Internet Explorer.

Sound familiar? Well, if you replace EarthLink with Netscape it might. Like Netscape’s dependence on browser licensing revenues, EarthLink’s entry into municipal Wi-Fi was almost entirely dependent on access fees, especially given that it was mostly unsuccessful at getting revenue assurances from its municipal partners. And as industry veteran Marty Hahnfeld points out on his blog, since EarthLink had a relatively narrow portfolio of other products to sell, the idea of bundling Wi-Fi as a differentiator to improve the value of other core products, or to reduce their churn, or to pull customers away from competitors, was really not of much use.

Combine this with the fact that promotional prices for DSL were being introduced. Add to this that few barriers to competitive entry were possible for EarthLink - since the networks they were building used unlicensed spectrum and standards-based (some would argue, commodity-based) equipment. And one more factor may have sealed the fate; the ubiquity of Wi-Fi on client devices ended up being of not much value in a business model like this, since residential CPEs were still costly. It didn’t matter how many residential customers you could get, since the cost of acquiring those customers exceeded their lifetime value (due to the low selling price of the service).

In short, at the time EarthLink was trying to introduce Wi-Fi as a “good enough” alternative to disrupt DSL and cable, other alternatives were being introduced - many of which were free - that were “good enough” to prevent its paid access networks from even getting close to a critical mass of paying subscribers. So, in our case study of the Netscape of Broadband, there was not a single attack from a Microsoft, but rather a whole range of industry dynamics combining to “cut off the oxygen supply.” A visit from Clayton Christensen or re-reading The Innovator’s Dilemma might have been in order, but that’s all water under the bridge by now it seems.

Wi-Fi Wants to be Free

Now where are we? Well, since the market correction, we have seen the emergence of organic Wi-Fi solutions and models like FON, Meraki and even Open-Mesh; we have seen AT&T open its nationwide hotspot network for free to AT&T customers; we have seen AT&T again offer free Wi-Fi access to its iPhone customers at Starbucks and beyond; and most recently, the big move; Cablevision announces that it will commit $330 million to deploy mesh Wi-Fi over the next two years. And as a side-note, Cablevision’s move fits perfectly within the frameworks from Masnick and Anderson, since 1) access will be free for existing customers and 2) its value will be in the differentiation it brings to their core products. $330 million sounds like a big number to me, but apparently it’s “a marginal cost nearing zero” on a cost per home basis to them.

While we don’t know if Wi-Fi will ultimately succeed on a municipal scale (specifically in dense urban markets; it’s already doing just fine in mid-American cities), what we do know is that larger-scale private investments in dense urban Wi-Fi environments, with the primary purpose to serve commercial needs, will likely re-emerge.

The Implications for Suppliers

The above position is counter to almost everything you will read (much of it from the vendor community, and the blogs they advertise on) about how “municipal governments must commit anchor tenancy and/or fund public-owned Wi-Fi networks” in order for large-scale Wi-Fi networks to succeed. When I read those things, I often assume the author is trying to defend something that actually doesn’t need to be defended (the mid/long-term prospects for municipal Wi-Fi), or knee-jerk-reacting in the hopes of convincing someone to buy radios that are stuck on the shelves. I find myself wanting to say to them “this is a marathon, not a 100 yard dash!”

Having a level-headed view of where the industry is going is critical for vendors and suppliers. With all the mixed signals that exist in this market, that’s an extremely difficult thing to accomplish. The implications of knee-jerking are likely to be the most damaging to the vendor community. For example, imagine an equipment provider who perceives the operator market for municipal Wi-Fi is dead, and advances a position that “municipal ownership and Wi-Fi as an extension for government IT” are the only opportunities to create value in the market with their solutions. Those positions can put them at a substantial disadvantage if/when operator investments reemerge.

On the other hand, vendors who “swing for the fence” on large operator deals, at a time when the only credible buyers are small municipalities, can find themselves out of cash and time. Once again, being able to see just over the horizon is the only way to mitigate these risks, strike the right balance of message, and achieve the right focus at the right time.

The Implications for Major Cities

Before I continue, a couple of disclaimers are necessary. 1) I prefer to stay out of the ideological debate over ownership and control of these or other networks, and 2) I have no pre-conceived policy positions to advance; only an interest in my client’s goals and an objective view on the evolution of this market.

I believe that when its history is written, municipal Wi-Fi will be chalked up as one of the most amazing examples for how local government intervention and action changed the fabric of the broadband market. Follow the chain of events from early 2004, to the Philadelphia project, to hundred of projects being launched in mid-America, to the swell of major city initiatives, to EarthLink’s rise and fall in the market, to the inflows and drying up of venture capital to equipment, software and service providers, to Apple’s integration of Wi-Fi into the iPhone, to AT&T’s renewed energy for its hotspot networks, to Cablevision’s announcement yesterday. What some may call failures in different parts of this chain, I would call building blocks.

In this context, the number of Wi-Fi radios installed in Metropolis, USA becomes largely irrelevant to the overall market’s evolution. While you can pick out mistakes and failures along that entire chain of events, that’s really missing the forest for the trees. I believe that major cities understand the impact of their involvement in this area of the past few years, despite whether the outcome was all they had hoped for. And now, with Wi-Fi having a mind of its own, I believe they are just getting warmed up in terms of their influence on the broadband market in America.

Implications to National Policy

I propose that there are two lessons resulting from the past few years of intense activity, and that these lessons should inform national broadband policy.

First, that municipalities can and do play a vital role in strengthening the broadband market. Their grass-roots, intense experimentation with Wi-Fi was a critical link in the chain above, and one could argue it was in fact the genesis for the deployment of new facilities and services (by .com, .gov AND .org) that may be reemerging. Even massive failures and reversals of direction in a market can create “shoulders of giants” for others to stand on.

Second, that unlicensed spectrum was the underlying force that allowed this to happen.

While Congress and the FCC apply scarcity economics to stuff the U.S. Treasury with spectrum auction proceeds, they would be wise to also understand and begin applying abundance economics. How could this be done? Well, in addition to getting serious about opening the white spaces spectrum, how about allocating a sliver of the proceeds from the recent 700 MHz auction as R&D credits for smart radio technology? Wouldn’t that be a way for the FCC to have its cake (generate the required funds for the auction) and eat it too (plant the seeds for future competition, promote more efficient use of spectrum, and mitigate the consolidation of power by incumbents).

And finally, the implications of all this for competitive access providers can be summarized in one sentence. Trying to sell Netscape Navigator licenses in the Firefox era might be, well… just silly.

That said, there are several things about anchor tenancy that are really troubling to me. First, I can’t recall a single case where large-scale private investments in building commercial infrastructure have been so dependent on these kinds of revenue assurances. For example, billions have been invested in cellular networks over the years, and at no point were cellular companies standing with their hands out requiring revenue assurances before putting up a tower. AT&T and Verizon are moving forward with substantial investments in their u-Verse and FIOS networks, again with no guarantee of revenue or return. And even Clearwire’s and Sprint’s nationwide WiMAX investments, while maybe being a little rocky from time to time, don’t require consumers to pre-order services. So, this leads me to conclude one of two things; either there is an inefficient market and a broken business/revenue model for municipal Wi-Fi, or there is an unreasonable expectation for ROI by the private operators considering these investments. Unfortunately, I believe it is both.

Taking a side-track for a moment on the above issue, consider this; Clearwire stated in its 2006 prospectus leading up to its IPO that “[w]e estimate that our subscriber penetration rate for our U.S. markets that were in operation for more than six months as of March 31, 2006, expressed as a percentage of covered households, had generally reached at least 5%.” Contrast this with EarthLink’s pullback, which began at a time (July) when it had only just began marketing commercial services in its first major market (Philadelphia) and it suggests an unreasonable expectation for achieving a return on invested capital. To be fair, there are many factors that may have given EarthLink the insight to conclude so early that the model wasn’t viable, but the time invested trying to get cities to “step up and make meaningful anchor tenancy commitments” might have been better spent evaluating and tuning the business/revenue model.

In addition to the basic reliance on anchor tenancy, I’m troubled by the level of commitments that have been requested. Having negotiated numerous public-private-partnerships in this area, it has not been uncommon to find myself across the table from an operator asking for anchor tenancy commitments of 5-25-40% of the capex estimates for the entire network. In one case, an operator had the nerve to lay on the table a request that equaled 300% of the capex required! While it’s easy for a local government to toss out the 300% request and conclude “I’ll just build my own darn network,” it’s not so easy to peg the right number between 5%, 25%, 40%. How did these operators typically come up with these numbers? Well, lets just say it seemed less motivated by understanding the cities real need, and more by understanding their own inside or outside risk sharing requirements.

Digging into this a little deeper, I propose that a good place to start for the municipality is to consider what percentage of the total addressable market is made up of municipal employees vs. consumers and businesses at large. The Houston-EarthLink agreement provides a useful case study to consider these issues.

In the agreement that was negotiated, Houston committed to $500k per year for five years, or $2.5m. The network was estimated to require $43m in capex to build. Houston has somewhere in the neighborhood of 30,000 municipal employees. And the City of Houston has approximately 2 million residents. When you look at this admittedly over-simplified analysis, you find that Houston employees represent only 1.5% of the addressable market, but it was willing to commit 5.8% of the capex required in the form of advance revenue assurances. And in the end, its partner wasn’t willing to proceed with the deployment? In short, Houston was more than doing its part, but there’s only so much it can do if a partner has an unreasonable expectation for ROI, a struggling core business, a low tolerance for investment risk, and/or a broken business/revenue model.

Some will argue that this back of the envelope approach doesn’t consider other reasons that may justify higher levels of commitment by local government. For example, municipal governments may have needs that go beyond services for employees, such as in the case of parking meters, vehicles, video cameras, etc. That’s a fair point, but I would argue that this “upside” for municipal use is offset by the fact that my above analysis did not consider the business community as part of the addressable commercial market (I only referenced consumers/residents.)

Others will argue that these networks will contribute substantial social and economic benefits to the community, which should justify additional “investment” by the city. On this point, I agree that what economists call "positive externalities" may result from these networks being deployed. But I propose that “buying these benefits” through inflating a city’s telecommunications budget is probably not the best policy approach to use.

Another issue that needs to be considered in an anchor tenancy analysis is the net present value (NPV) of the revenue assurances being offered. For example, $2m in years one, two and three has a lower NPV than $4 million in year one and $1m in years two and three, even thought the total anchor tenancy in both scenarios is $6 million.

Anchor tenancy will likely continue to be part of the municipal wireless dialog and debate, and as I noted above, it is a responsible approach for local governments to consider when pursuing a private-ownership business model. But, at the point where anchor tenancy commitments go beyond the Wi-Fi services that local government can reasonably consume for its internal needs, cities are “skating on the subsidy ice,” and this becomes a policy issue - not an IT budgeting issue.

Finally, private operators will have to wake up to the fact that just because local governments are “involved” in this market, does not mean that an appropriate role for them is that of a venture capitalist or a bank. Operators need to focus on building a business case to justify their investments that doesn’t depend on anchor tenancy, but welcomes it if it has value for both parties. This is the kind of incentive that will drive the behavior needed to fix an inefficient market.

Let the negotiating commence.

I propose that the statements by EarthLink’s CEO actually send two messages; In addition to the classified ad above, which might have the effect of soliciting parties who want to get in on a fire-sale, it also opens the door for cities where EarthLink has agreements and performance obligations to renegotiate terms – the most meaningful of which would relate to anchor tenancy – as a way to avoid less desirable outcomes under an Assignment.

Philadelphia is probably the most interesting case to dig into to understand exactly how difficult the break-ups will be. Since it was one of the early agreements to be negotiated, it lacked some of the safety-net provisions that EarthLink was successful in negotiating in later deals. For example, let’s look at the Assignment provisions in the Street Light Use Agreement for Philadelphia.

Section 17.16 deals with the issue of Assignment, and it says: EL shall not assign this [Street Light Use] Agreement, or any portion of it, without the prior written permission of PAID and the City, which permission may be withheld in their complete discretion, and any such assignment made without such consent shall be void and shall not operate to relieve EL from any of its obligations or liabilities under this Agreement;

That seems pretty clear; an Assignment would have to be on the City and PAID’s terms, but there are at least a couple of loop-holes.

..provided, that EL is entitled to assign this Agreement without the consent of PAID and the City pursuant to the sale or transfer of all or substantially all of the assets or stock of EL, or pursuant to a transfer or assignment pursuant to a reorganization or merger or assignment to a subsidiary that is wholly or majority owned and controlled by EL;

OK, so EarthLink can assign the Agreement if they sell or transfer all of the assets of EarthLink, Inc., or if they “spin out” the EarthLink Municipal Networks (EMN) division in such a way that it remains wholly or majority owned by EarthLink, Inc. But there’s more:

..provided, that EL shall remain responsible for defaults or damages under the Agreement caused by such entity and for such entity’s performance of the Agreement.

So, EarthLink doesn’t get out of its performance obligations by spinning out EMN, even if it could find outside co-investment. Finally, this provision turns to the issue of what Assignment authority the City has.

PAID, with the City’s approval but otherwise in PAID’s sole discretion and upon written notice to EL, may assign the Agreement to another City-related authority or agency created pursuant to the Pennsylvania Municipal Authorities Act of 1945, as amended, or the Pennsylvania Economic Development Financing Law, Act No. 102, approved April 23, 1967, as amended, that has substantially the same powers, purposes, and authority as has PAID, including the power and authority to enter into and to carry out and perform this Agreement.

This one’s more difficult to interpret as a layperson, but it basically says that The City can choose to assign its own authority in the Agreement, so long as the assignee has the authority to carry out its performance obligations.

That’s a layperson’s interpretation of just one provision of one EarthLink Agreement in this area. New Orleans, Anaheim and Corpus Christi will have their own specific issues. In many later agreements, EarthLink negotiated language that gave a little more “wiggle room” in areas where cities could terminate the agreement or control things like assignment. Often this language was worded to say that “..such approval could not be unreasonably withheld [by cities.]”

So begins the next chapter in the EarthLink municipal Wi-Fi novel. The inevitable break-ups that lay ahead will probably get much more attention than is healthy for a market that has more important business to tend to. The overall market marches forward in so many ways; new projects launched by cities, ad-hoc deployments by FON and Meraki gaining momentum, CBS deploying in mid-town Manhattan; Apple introducing a Wi-Fi specific store; WiMAX providers stumbling a bit and leaving the window open longer for municipal Wi-Fi – just to name a few. The fascination with EarthLink in this market has become like a reality show of sorts; a waste of time; not very productive; but somehow impossible to turn away from.

In a future post, we’ll pick up the issue of what can be learned – now that EarthLink has cleared up any confusion about its intent in this space - from municipal wireless Round 2 (we consider Metricom Ricochet to have been Round 1) and whether three times will be the charm – or a final nail in the coffin. We’ll also tackle the issue of whether anchor tenancy and institutional-use are actually the Advil for all municipal Wi-Fi aches and pains, which some have suggested that it is.

The most intense Google-speculation so far in 2007 has focused on its efforts to break up the wireless telephone duopoly dominated by AT&T and Verizon Wireless. Its strategy to promote open, high-capacity wireless networks is so multi-faceted, it can strain the grey matter of almost any business strategist trying assemble the pieces into some cohesive grand-plan. From plans to participate in the upcoming 700 MHz spectrum auction, to strategic partnerships with carriers planning WiMAX networks, to deploying free metro-scale Wi-Fi across its home town, to its recent launch of the Open Handset Alliance; Google seems to be everywhere and no-where at the same time in the wireless market.

It’s easy to get caught up in the endless speculation about what Google might do; could do; will do. And it’s also easy to think about Google’s strategy overall as somehow being different; unique; fresh; without precedent. I mean, there has never been a company quite like it, and the markets it touches are too vast, emerging, and dynamic for historical business case studies to be of much use, right?

Well, not so fast. As I will argue below, the kind of market tension that exists between Google and the telco industry has existed in many industries before, over decades if not centuries in business. There is much that can be learned from how similar show-downs have played out in these industries, and much that can be used to predict the unpredictable; Google’s next move.

In the late 1990s, five airlines controlled about 80% of the air travel market in the U.S.; roughly an $80 billion industry. These airlines had become frustrated by the rise of online travel agencies such as Expedia and Travelocity, who had in a sense begun to insert themselves between the airlines and consumers, and the top airlines decided to do something about it by forming their own online travel agency; Orbitz. Rather than paraphrase a well-documented case study, I’ll provide an excerpt from Wikipedia.

Orbitz constituted the airline industry's response to the rise of online travel agencies such as Expedia and Travelocity, as well as the continued increase in [reservation system] fees, and trailed its major competitors by several years. Continental Airlines, Delta Air Lines, Northwest Airlines, and United Airlines, subsequently joined by American Airlines, invested a combined $145 million to start the [Orbitz] project in November 1999. It was code-named T2 — some claimed, meaning "Travelocity Terminator" – but adopted the brand name Orbitz.

As this article states, "Orbitz began selling tickets in June and by February it had topped $1 billion in revenue. By contrast, it took Seattle-based Expedia, which debuted in October 1996, about four years to reach $1 billion in annual revenue. It took Travelocity, which debuted in March 1996, about three years."

To make a fairly long story short, Orbitz was challenged on anti-competitive grounds by almost every industry and government regulator imaginable, but in the end, it went public in 2003 (the airlines held 70% of the outstanding stock and over 90% of the voting power.) It was acquired in 2004 by Cendant for $1.25 billion, and later in 2006 by The Blackstone Group, a private equity firm, for $4.3 billion. It is generally assumed that Orbitz “did what it was supposed to do” for the airlines; it leveled the playing field, some would argue even too far in its own favor.

What does this have to do with Google? Well it spells out one strategy that Google could adopt to deal with the wireless carriers. In this scenario, Google would partner with companies who share its goal for open, high-capacity wireless networks that don’t favor the network owners’ software and services (Apple comes to mind of course) and create or acquire the assets needs to create a viable alternative. Om Malik’s post just this morning of a rumored Google acquisition and spin-off of Sprint is a great example of this option. The airlines demonstrated that you don't have to "get into the business" of providing online travel services; you just have to make sure that someone if in the business of doing it the way you want it done.

Another case study highlights a second strategic option; Wal-Mart and the credit card industry.

Since the 1980s, Visa and MasterCard have accounted for 70 percent of the credit card market, and some argue that these companies have controlled their payment networks to advantage their bank members. In the 1990s, some merchants became large enough to exert their own leverage on these payment networks. For example, Wal-Mart, Sears and Safeway joined forces to eliminate fees and rules imposed on them by MasterCard and Visa. In 2005, Discover and Wal-Mart (the nation’s largest retailer) launched a new credit card.

Again, the relationship between Wal-Mart and other retailers’ strategic response to Visa and MasterCard, and Google’s strategic options to deal with the wireless duopoly are clear. A credit card payment network is akin to a wireless network. Visa and MasterCard are AT&T and Verizon; and Google is the Wal-Mart of the Internet search and content business. Google says to AT&T and Verizon, “if you keep controlling consumers over your network, in a way that disadvantages my content and services, I’ll have no choice but to build an alliance to finance an alternative to your networks.”

Despite the similarities, this option is fundamentally different from the airline industry’s response to Expedia and Travelocity. If Google were to use the Wal-Mart strategy, it would likely involve forming a strategic partnership with a wireless carrier. Ideally this would be a third-place, underdog player who is struggling to compete with the big-two players, but who has certain useful assets (licensed spectrum and tens of millions of consumers.) Once again, Sprint comes to mind; but of course T-Mobile could be a powerful ally as well.

So, will Google “be like Wal-Mart” and do a strategic deal with Sprint to prop up its apparently weak investor sentiment for WiMAX, or “be like United Airlines” and join forces with Apple and others to acquire and spin-off Sprint into the model of what it wants a wireless operator to be? Or is Google truly different; will it do something brilliant and without precedent? Who knows, but the Google-speculating that has become a national pastime is sure to continue.

The generation of consumers (citizens in this context) that cities are responsible for protecting and serving may transform almost overnight, and the expectations and demands they will have for technology will be intense and unprecedented. Consider that a majority of citizens who are just reaching the age to vote have never paid for a home phone. Their phone numbers and email addresses aren’t tied to street addresses and a email servers; but are tied to them. They rely on social networks and build personal relationships in ways that we often have trouble understanding. They communicate within these networks in quick and casual ways, and much more frequently than the prior generation. They view consumer electronics devices - from phones to music players to portable gaming consoles - as fashion statements; as status symbols; as intimate possessions that go beyond even our own attachment to laptops and BlackBerries.

In the case of low-income youths who are often the targets for digital inclusion efforts, it is entirely possible that their first experience with technology will not be a computer, but will be an iPod or a camera-phone, with the computer being viewed as “a peripheral.” The idea that these youths may view technology first on its entertainment value – and on its social networking value – and not on its personal productivity value is once again quite different from prior generations. Nonetheless, many digital inclusion efforts continue to focus on getting a personal computer into the hands of everyone; a chicken in every pot; when a chicken may not be the most effective or even desired fare. It may be that introducing technologies that are naturally appealing to children first, with a bridge to the more “serious” use of technology happening through the education system, is more effective. Who knows.

Will the inevitable wave of new tech-savvy citizens be impressed that wireless connectivity exists within the community? Will they be in awe of the fact that they can pay their water-bill online? Will they be surprised and encouraged to learn that parking meters accept credit card payments? Once again, we can imagine that they will just.. assume. How many more election cycles will occur before technology, broadband and innovation will be platform issues that affect the ballot? This is occurring already in Australia, where an intense battle between competing political parties and the former state-owned incumbent monopoly has elevated national broadband policy to be a top election issue. And looking at websites like techpresident.com, you get a glimpse into how technology may play a part in the 2012 presidential election here in the U.S.

It is our view that the natural evolution of city-involvement in technology – the opportunity to lead - will come from a move upstream from network infrastructure to services infrastructure. At the risk of promoting over-used marketing jargon, the opportunity is with Web 2.0, and how the Web will evolve over time. While Web 2.0 lacks a consistent and agreed-upon definition, it generally refers to the second generation of web-based communities and hosted services — such as social-networking sites, wikis and collaborative tagging — which aim to facilitate collaboration and sharing between users. While many local governments have launched e-Government initiatives, introducing transaction-oriented features to their websites, allowing for electronic filings and payments, automating the interaction between government agencies and citizens, etc., they have generally not kept pace with the innovation happening with the broader Web.

To find an example for how this may manifest itself, we need only to look at the devastating wildfires happening in Southern California on the date of this post. Residents have being using technology in unprecedented ways to create and share information about each fire. In addition to traditional media outlets, residents are sharing information through blogs, photo sharing sites, microblogs such as Twitter, YouTube, Google Maps, RSS feeds and more. This article provides an excellent overview of the various applications and services being used. Flickr users are posting photos of fires; news clips are being uploaded to YouTube; a TV and radio station in San Diego is using Twitter to post short updates and has created a mashup using Google Maps; and of course numerous blogs have been created to share information and communicate updates. All of this demonstrates that, as the saying goes, necessity is indeed the mother of invention.

Watching what’s happening with the California wildfires, I found myself reflecting on John F. Kennedy’s famous quote “Ask not what your country can do for you..” What a wonderful example of how technology can be used to increase the number of resources attacking a community threat, and the quantity and quality of information needed to best respond. Long before the emergence of personal computers, the Internet and cell phones, Kennedy’s remark demonstrated an awareness that government’s resources were inevitably minute when compared to the resources and capabilities of the citizens it served. It is not uncommon for city employees, who are directly responsible for protecting and serving the community, to represent less than 1% of the residents of that community. What if only a fraction of the other 99% could be engaged in a meaningful way? But, our cities are too large and diverse to allow Mayors to call everyone into the town square to collaborate and respond to an issue. Abundant wireless broadband, a robust and interactive service infrastructure and innovative use of technology are the levers that could unlock this potential.

While using these technologies in the face of disaster or during emergency response provides extreme use cases, leading cities will also find relatively straightforward examples in their day-to-day operations. Allowing citizens to upload photos of pot-holes and street light outages to a city-specific version of Flickr; evolving department websites to blogs to allow for better interaction with the community; delivering real-time alerts and updates on issues like lane closures, accidents, etc. using services like Twitter; integrating local traffic management information into mainstream consumer navigation and GIS systems. When the City of Houston set-up computers and networks after Hurricane Katrina to help displaced people from New Orleans find friends and relatives, what was this if not an example of Houston using a form of social-networking to tackle an immense natural disaster and civic challenge? Combine these scenarios in some way with the ad-hoc, community-powered networks (e.g. Meraki and FON) that are being built by citizens themselves, and the opportunities are almost endless.

To the extent that cities like Philadelphia and Corpus Christi were flag bearers for municipal wireless 1.0, it will be fascinating to see which cities take steps to harness Web 2.0 technologies, build new service infrastructures, and enroll “citizens of the future” to better protect and serve. And which come to define the evolution from e-Government to City 2.0.

In its newest domain - metropolitan area networks - skeptics point out the many ways that Wi-Fi as a technology is flawed and inferior to other technologies, including WiMAX and various 3G standards. Of course they are right. Wi-Fi is hamstrung by its reliance on unlicensed spectrum; its lack of quality of service mechanisms; its low power restrictions. But what these skeptics fail to realize is that there’s more to determining whether a technology succeeds or fails than its level of technical superiority. The ditches of the tech-industry are littered with technologies that were better than their competitors, but failed to get into the “disruptive hall of fame” of mass-market, ubiquitous, de facto standards. In almost all cases, these “superior” technologies were not outright destroyed, just relegated to niche markets and applications. Let’s look at a couple of examples.

Sound familiar? Of course it does; it’s the same debate going on now in some circles about the relationship between muni Wi-Fi, WiMAX and 3G standards. WiMAX uses licensed spectrum and has quality of service. It was designed from the ground up as a metro-area technology. Wi-Fi was built for LANs.

Another famous example; In 1981, the PC was inferior in all ways to the minicomputers it would ultimately replace. Who would have predicted at that time that PCs would become the dominant computing platform in the world? At least one company did; Microsoft.

David Isenberg, in his now-famous paper Rise of the Stupid Network , got it right in 1997. David observed that a paradigm shift would occur as devices - the end-points on the network - became more intelligent. And network-centric quality of service limitations could be mitigated by these intelligent devices, and also by huge increases in the raw bandwidth (capacity) of the networks. So as not to butcher David’s great paper with my paraphrasing, I’m better off quoting a passage.

It is rare that a market is completely killed by the next generation of technology. Neither TV nor the VCR killed the movies. Neither the minicomputer (alas, remember them?) nor the PC killed the Mainframe. We still have ships and railroads, though their markets are both diminished and changed by the car and airplane.

Kevin Werbach, Associate Professor at Wharton Business School, nailed the paradigm shift that occurs when unregulated spectrum meets intelligent devices in his 2004 paper , where he wrote:

Think about a group at a cocktail party. Many people can hold conversations with one another simultaneously. They can do so not because they each shout over the others, or because they agree on a set of rules to define who can talk when and how. It’s obvious to us that the reason so many people can talk at once is that the speakers modulate their volume and the listeners use their brains to distinguish their partner from the ambient noise.

So, the argument that Wi-Fi (or any wireless technology) is “hamstrung” by its reliance on unlicensed spectrum assumes something critical that is no longer true; that the end-point devices communicating over this shared spectrum are dumb listening devices; like an FM radio. This is a dangerous assumption to hold onto if you are in the wireless voice and data business. The 802.11n standard is precisely focused on using better radio and antenna technology to distinguish between intended signals and ambient noise.

Finally, it’s worth noting that Clayton Christensen, professor at Harvard Business School, and the father of disruptive innovation theory, also picked up on the potential for Wi-Fi to disrupt mobile operators. In this article, he notes:

Ironically, the wireless industry’s history traces back to disruptive innovation. The first mobile phones had low voice quality, limited battery life, were bulky and expensive. But they offered something that land line telephones could not match: The capability of placing and receiving calls while mobile.

On its own, the growth of Wi-Fi threatens wireless carriers who are increasingly reliant on high-end services. Then consider what happens when emergent companies layer in VoIP over Wi-Fi. Since VoIP translates voice communication into data, companies could charge a single flat rate that covers unlimited Web surfing, file downloading, e-mail and phone calls. But wait, the disruption is just beginning. What happens if companies go beyond charging a low flat rate that undercuts wireless carriers? What if they actually give away wireless voice and data service?

Now, before I move on from all of this theoretical stuff, some readers must be thinking “doesn’t this idiot know that muni Wi-Fi is in trouble; didn’t he read that EarthLink is backing away from this business?” Sure, I follow all the blow-by blow developments in the industry, but it is a mistake to assume this industry is in the fourth quarter, and its down by 17 points with 45 second to go. It is in fact early in the first quarter. How many of us remember that the apparent runaway success of the Apple iPhone was built on layers – on years - of miserable failure, beginning with the Apple Newton? EarthLink has certainly been an interesting player in this early market, but it is a mistake to assume that they define it, or that their decisions will determine its outcome.

Part of the reason any fledgling industry like muni Wi-Fi seems to always be on a roller coaster ride is that we read too much into press articles. The technology press is largely in the business of pumping up markets and technology to drive readership from early hype, and then tearing them down once the hype wears off, which drives yet more readership. The lesson for the industry is to stop knee-jerking and hanging on every slight shift in direction.

Now, I’ll turn to the real market dynamics in the mobile operator space. Why would Wi-Fi matter to a mobile operator? Is it a threat; an opportunity; neither?

Most mobile operators have made investments in Wi-Fi deployments, but these deployments have largely been limited to venue-based hot-spots. This seems logical; it’s a way to apply Wi-Fi for its intended use; un-tethered local area networking for nomadic users.

But when Wi-Fi started to cross over into the new domain of metro-area networks in the early part of this decade, I imagine debates started occurring throughout these organizations between engineers, product managers and ultimately executives. These are smart companies, with smart people. And Christensen’s books on disruptive innovation have always been standard reading in large technology companies. The product managers looking at emerging markets must have had a lot of fun in meetings with engineers who scoffed at this “crappy little LAN technology,” with its pico-cell architecture and its unlicensed (queue ominous music as Glenn Fleishman would say) spectrum.

So, despite the fact that competitive service providers, fledgling wireless ISPs, large, diversified incumbent providers and even some cable MSOs have been building, or in some cases experimenting with, muni Wi-Fi, mobile operators have stayed on the sidelines. Even T-Mobile, with its great Wi-Fi brand in the U.S., and its anemic 3G spectrum situation, has stayed out of citywide Wi-Fi RFPs. I believe there are five reasons that mobile operators will have to make their move in the next 3-6 months.

Reason 1 - Simple economics. The raw bandwidth and capacity delivered by hundreds of Wi-Fi radios deployed in a metropolitan area can be delivered at a fraction – a tiny fraction – of the capex and opex of a traditional WiMAX or 3G network. The fact that no spectrum costs have to be recovered is one reason. The high cost of cellular backhaul carried by mobile operators is another.

The kinds of rich content and media being downloaded and uploaded by consumers now and in the future will demand much more capacity than today’s mobile operators can deliver using their scarce spectrum and relatively large cell sizes. So, this is not about Wi-Fi as a technology; it’s about a fundamentally different architecture for wireless broadband networks; a pico-cell architecture. By placing radios closer to subscribers, the roughly 60 Mhz of Wi-Fi spectrum can be used and re-used over and over and over, in increasingly smaller geographic areas. Recent operator and investor interest in “femtocells” seem to validate that the market is going in this direction with our without Wi-Fi.

While the tech-minded critics of Wi-Fi complain about its low output power restrictions, the tables get turned when low output power is precisely what’s needed to re-use spectrum more efficiently and drive raw bandwidth and capacity. The old model of macro-cells, re-using 12-20 Mhz of licensed spectrum over several square miles won’t be able to stand up to this attack on raw bandwidth and capacity.

It should be noted that mounting assets (street light poles) can and will likely be a limitation with this pico-cell model. These assets simply don’t exist in a uniform way in all areas where an operator may want to deploy them. Not a big deal, since the mobile operator could simply use their WiMAX or 3G network as a “fallback” in these cases.

Reason 2 – Mobile and nomadic VoIP. While early muni Wi-Fi operators evaluated markets based on metrics like “household density” signaling that the business models were focused on providing a fixed-line alternative to DSL, the real opportunity is in mobile and nomadic services, particularly voice. Here is where mobile operators have the most to lose, and Wi-Fi has the most to offer. At the VON conference in March of this year, one of the panelists – a representative now working for Truphone – said he’d analyzed 20 cellular networks and found that “the average number of cell base stations used in the course of a call is just 1.06.” While I can’t speak to how accurate this is, what I can say is that it suggests that the vast majority of calls made on “mobile networks” are made when the subscriber is not in motion. In this context, mobile doesn’t mean mobile; it means not at home.

This means that one of the key value propositions (and barriers to competitive entry) that mobile operators have - seamless handoff and mobility - may not be the barrier to entry it has always seemed. If a large-scale muni Wi-Fi network were built over the voice calling area of an incumbent mobile operator, and services like Vonage, Skype and others were introduced in a big way, there would inevitably be a cannibalization of mobile voice revenues over time. This won’t happen overnight, as Skype didn’t destroy fixed line telephony all at once; and cellular voice didn’t replace fixed line telephony overnight; but it is exactly the kind of “chipping away” that can result in major disruption.

Reason 3 – Dual mode handsets and fixed-mobile convergence (FMC.) We know that there are several hundred million Wi-Fi enabled devices on the market already; everything from laptops to PDAs to portable game consoles to cameras. But Wi-Fi interfaces shifting into mobile/cellular handsets are coming, and coming fast . The recent launch of the iPhone has put virtually all handset makers on notice that they have to match the iPhone feature by feature, and that will include Wi-Fi. In addition, the rules set this week for the upcoming 700 MHz spectrum auction incorporate conditions that many believe will break up the strangle-hold mobile operators have placed on consumers’ choice of devices, once again leading to less ability for dual-mode handsets to be “throttled.”

On FMC, T-Mobile has been the most aggressive carrier to deploy Unlicensed Mobile Access (UMA) as a solution to integrate voice services between residential Wi-Fi networks and their cellular network. The larger operators have talked about UMA and/or IMS for years, but have dragged their feet compared to T-Mobile and many European mobile operators. T-Mobile is the smartest U.S. operator here, realizing that Wi-Fi is inevitable (at least in the home and office) and providing a service that integrates with Wi-Fi, particularly when they can charge for this integration, is better than the alternative of having voice revenues cannibalized by users who figure out that Skype on a handset is not so hard to use. One could also speculate that T-Mobile’s previous 3G spectrum constraints in the U.S., at least relative to the larger operators, have given them more motivation to offload expensive data traffic to Wi-Fi networks.

Reason 4 – Flat-rate pricing. Many have speculated that, if mobile operators dramatically reduced their 3G data prices – or move to flat-rate voice pricing – their networks could struggle under the demand. I don’t know if this is true, but the current $60-80 per month prices for unlimited 3G data would seem to be at risk if muni Wi-Fi networks spread far beyond where they are today. Due to the sheer bandwidth and capacity that Wi-Fi delivers, 3G (and I would argue WiMAX) will never be able to compete on a price per Mbps basis if a single mobile operator “breaks ranks” with flat-rate pricing. Sprint Nextel has already launched flat-rate pricing trials in some markets, so I don’t think this is far-fetched.

Reason 5 – Anchor tenancy. Capital-constrained muni Wi-Fi operators have shifted their business models to require revenue commitments from local governments recently, as a condition for agreeing to build Wi-Fi networks, and to meet cities’ social and economic goals. This has used by some to suggest that cities will pull back on their ambitious goals for citywide Wi-Fi, and that the muni Wi-Fi market will come to a crawl.

What these knee-jerk critics fail to realize is that the idea of anchor tenancy may be viewed quite differently by large, diversified incumbent providers than it is viewed by the less-diversified, smaller players. What I mean is that the ability for local governments to aggregate demand across a broader portfolio of services (wired and wireless, fixed and mobile) could be a windfall for mobile operators who step into this vacuum. Today, it may not be possible for local governments to aggregate enough anchor tenancy - using Wi-Fi alone - to get the kind of community benefit cities like Philadelphia, Minneapolis, Riverside, Houston and others got from these partnerships in the past. But when T-1 lines, cellular phones, hosting services and dozens of other portfolio items – which governments require anyway to run their operations – are introduced as a contribution towards this anchor tenancy… New opportunities emerge for public-private partnerships.

In summary, mobile operators face a Wi-Fi imperative. With its low barriers to entry and constant and continued innovation – and even with all its warts and blemishes - Wi-Fi is inevitably moving into their territory. Wi-Fi is the manifest destiny of Ethernet, without the cord or the wall-socket.

A classic “beat them or join them” decision is emerging, where mobile operators have to consider and analyze the risk of 1) doing nothing and hoping Wi-Fi just crawls back into the coffee shop, 2) deploying muni Wi-Fi aggressively as part of an integrated FMC strategy or 3) adopting some sort of hybrid approach. In this context, mobile operators stand where Digital Equipment Corporation (DEC) stood in the early 1980s. DEC stared at the fledgling PC market and its founder and CEO Ken Olsen famously said “There is no reason for any individual to have a computer in their home.”

We know where one company stands; as Verizon CEO Ivan Seidenberg was quoted as saying “Municipal Wi-Fi is one of the dumbest ideas I've ever heard.” I wonder what the other mobile operators will say.

I believe there is a constituency that the FCC has not heard from directly on this auction process, but that has made its positions on some of the issues abundantly clear through its actions; local government and the citizens they represent - through the closest and most intimate form of representative government. But, I am getting ahead of myself.

As the FCC prepares to meet on Tuesday July 31st, it has the difficult job of reconciling the viewpoints and interest of incumbents, competitive ISPs, Internet companies, special interest groups, politicians, lobbyists and many other constituencies. With all the complex, inter-related issues; the arcane details; the economic theory; and the political jockeying, it must be difficult for the FCC to keep the will and interest of the public in mind. How can the average citizen be expected to form an opinion and raise their voice on things like C-block spectrum bands and blocking premiums? And I don’t think many Americans would react well to cocktail conversation about the “wireless Carterphone.”

Well, I believe I can demonstrate that local governments across the nation have spoken loudly and clearly – albeit indirectly - about one of the central issues being debated about the auction; whether to set a condition requiring the winner to provide wholesale open access to the network. In the estimated 400 municipal wireless initiatives underway, the overwhelming majority have incorporated very clear requirements that their private sector partner adhere to exactly the kind of wholesale open access condition being advocated by some, including me. Consider the following language from the Wireless Philadelphia RFP:

The network must provide basic wireless Internet access throughout the City on a wholesale basis to multiple Service Providers (“SPs”), who will be responsible for marketing services using the network, providing tier-one customer service and technical support, subscriber billing, and other similar services.

Consider the following language from the City of San Francisco’s RFP:

The Network Operator shall provide Open Access to its wireless broadband Internet access transport services to multiple unaffiliated Service Providers.

I could cite dozens of others, but will stop there and simply point out that the population represented in just ten of the metropolitan areas anchored by cities with wholesale open access conditions in their RFP is in the tens of millions. That’s a very loud and clear statement on the importance of wholesale open access.

Having advised many of these cities, I can tell you that macro-level telecommunications policy was not necessarily the driving force behind any of their decisions to demand wholesale open access. Local governments were not trying to maximize the revenue from auctioning their assets; they were trying to maximize “community value” from the use of their assets, a subtle but important distinction.

While there was often a belief that community value was increased when retail competition and consumer choice was introduced, it was also important for cities to ensure that local Internet businesses had an opportunity to participate in the initiative. In many cities we’ve worked with, we’ve found that dozens or hundreds of small, local Internet Service Providers existed in a market, but many were still surviving by hanging on to legacy dial-up subscribers; frustrated by the loss of access to cable and DSL networks through Brand X and the 2005 DSL decision by the FCC. In an era of tightening local government budgets and increasing global competitive pressures, keeping jobs local and stimulating small business growth is more than important; it’s critical.

Many cities also wanted to make sure that their efforts didn’t “create another monopoly” and wholesale was a mechanism to mitigate, if not prevent that. Cities viewed their public rights of way – the main bargaining leverage they have in creating a partnership – as a public asset. They didn’t want to grant this public asset to a single provider, on exclusive terms, and with excessive benefit that did not accrue to citizens. So, rights of way are to cities what spectrum is to the FCC, but in telecommunications, they’re being made available in very different ways. If municipalities were forming public-private-partnerships like the FCC is auctioning spectrum, they’d be granting it exclusively to one company – the company who’d pay them the most money. With wholesale as a condition of the auction, it doesn’t have to be that way.

Now, let’s consider one of the incumbents’ many arguments against wholesale open access conditions; that allowing competitors access to its facilities threatens the viability of the investment. Once again, the FCC can look to local government for the real story – but this requires digging deeper.

Consider the recent approval of AT&T’s municipal wireless partnership with the City of St. Louis. In that agreement, Exhibit E – entitled Wholesale Access Package – it states:

After completion of Phase II, Company [AT&T] will offer access to 3rd Party Service Providers.

The same wholesale condition exists in AT&T’s agreement with Riverside, CA. This speaks volumes about whether wholesale conditions are really viewed by incumbents as crippling to the business case.

The FCC has an amazing opportunity here; to learn from the micro-level experimentation of hundreds of municipal wireless projects and their innovative business models. Now, some will argue that the municipal wireless market hasn’t proven itself; that it faces substantial challenges; and they’d be right. The market has suffered from over-hyped, unrealistic expectations; an anemic supply of private investment; a lack of readiness by local government to take on the anchor tenancy commitment needed; political and bureaucratic headaches; and many other challenges. And it will likely get worse before it gets better. But sometimes, studying challenges in a market, or even failure, can be more valuable than studying successes, particularly when you have a sample-size of more than 400 projects to consider.

Let’s take the debate going on about whether a “blocking premium” exists that favors incumbent providers in the auction. I argue that the concept of a blocking premium can be studied in a very different, but still related context. Consider the fact that, in certain municipal wireless projects, incumbent providers have competed – and are competing - against competitive providers to win a partnership with local government to build citywide wireless networks. Even going back to the Philadelphia project is helpful to think about here. Could one not argue that, an incumbent provider could offer more favorable community-benefit terms to a municipality than could a competitive provider? Of course; the incumbent provider may view the negotiation with the city based on 1) the value of the partnership + 2) the value of protecting the market from a new competitive entrant. The competitive entrant may 1) only be able to value the partnership based on its face value and may 2) have the added disadvantage of having to build a new network from scratch, without the benefit of existing facilities to leverage.

Consider another part of the auction debate; whether placing conditions on the bidding process will have the affect of driving down the auction proceeds. I won’t pretend to be qualified on this one; the economists and game theorists may rule here. What I will say is that placing the maximum amount of auction proceeds in the U.S. Treasury can NOT be the only way that “taxpayer value” for this amazing public resource can be measured. The money received in this auction will be paid one time. The money paid by taxpayers for access to the resulting network will be paid over, and over, and over, for decades. A one dollar per month increase in subscriber fees resulting from awarding the license in a way that results in less competition – I feel, but can’t prove – will dwarf any loss in proceeds from the initial auction.

And a quick point on the “wireless Carterphone” open access condition that the FCC appears to be supporting. The loopholes in what has been proposed to allow any device to access the network are, in my opinion, large enough to drive a truck through. Since the condition only applies to one part of the band, a party wanting to exploit this loophole to protect a walled-garden has many options. They could choose to deploy services only in the bands not subject to this requirement. They could choose to charge subscribers more for a “Bring Your Own Phone” service. The wireless Carterphone condition would have to be strengthened substantially to achieve the intent behind the condition.

In summary, there is no better place for the FCC to look when trying to gain insight for predicting the impact of open access conditions than the municipal wireless market. And there is no louder voice that has spoken out in support of wholesale open access conditions than the hundreds of local governments involved in these projects, and the tens of millions of citizens they serve. Civitium does not speak for any of these cities; we believe they have spoken through their actions over the past few years.

Chairman Martin; we urge the Commission to place a wholesale open access condition on the upcoming 700 MHz spectrum auction. We urge the Commission to go further and fully enforce its 2005 policy statement on all four of the principles to “Preserve and Promote the Open and Interconnected Nature of the Public Internet.”

It's the generational-transition from baby-boomers to the Net Generation, and its potential impact to public policy in the areas of communications and media. My thinking on this has led me to conclude that private-sector communications and media companies; whether incumbent or competitive; broadcast or interactive; offline or online; have a lot to get ready for, as the old methods of influencing policy-making cease to operate. But I'm getting ahead of my own argument, so I'll back up and explain.

What prompted me to think about this at first was the infamous “series of tubes” metaphor used by Senator Ted Stevens to describe the way the Internet works. Despite the generous ammunition the Senator served up for nighttime talk show hosts and many others, it occurred to me that the episode brought into clear focus some very serious issues; the state of U.S. broadband policy and the country’s downhill slide in world standing.

Eighty-eight million offspring produced by 85 million baby boomers have eclipsed their parents in size and impact. The youngest of these kids are still in their diapers, and the eldest are just turning twenty. As N-Gen culture is extended into society, every institution will have to change. The N-Gen will transform business. As they stream into the marketplace, power and authority will shift towards the consumer.

Tapscott’s book is one of those that could have been shelved (and it was in my case) due to the fact that it was written roughly within the dot-com era, but I found instead that it was ahead of its time. In my view, it laid the groundwork for many of the trends that are now considered leading-edge; Web 2.0, social networking, long tail theory, peer production, Wikinomics and many others.

As I made my way through the book again, I started to notice its ideas playing out in my own family and household. My children, ages eight and seven, had become engrossed in the hugely-popular online virtual world of Club Penguin. The game basically allows children to create an avatar (a penguin, go figure) and “waddle around” a virtual world, interacting with other penguins, gaining points (a currency of sorts), purchase igloos (homes) and various other virtual-world concepts. Increasingly, I found my daughter playing the game at the same time she was talking to her best friend in the neighborhood by cell-phone. This was a type of interaction and community-building that even I had trouble grasping; a melding of online social networking and old-world communication. As I sat with her and observed, I realized that to my daughter, these two worlds were seamless; natural.

Then I started to realize the rapid rate at which communications and media were becoming platform issues for elected officials and the profound impact that personal technology and peer production (e.g. camera phones, blogs, video) were having on public figures. Examples appeared almost daily. And events that had been happening over the past few years started to have a context:

A website called Techpresident is covering “how the 2008 presidential candidates are using the web, and vice versa, how content generated by voters is affecting the campaign.” A complete merger of President 2008 and Web 2.0. Very cool I thought.

The firing of Don Imus for his racial remark recently was put in motion by a blogger. Eric Chabrow wrote a fantastic article recently where he referred to Wikinomics forces at play, saying:

What makes Imus' dismissal different from [Dan] Rather's departure from the airwaves is speed. Today, the tumult created by various media working in unintentional harmony can results in quick actions as the community comes to a rapid consensus. About 20 months passed from the ill-fated 60 Minutes report to the time Rather last walked out the doors on West 57th Street. Imus was silenced in eight days.

In 2006, Virginia gubernatorial candidate George Allen used the word macaca to refer to S.R. Sidarth, a young man of Indian ancestry, but who was born and raised in Virginia, while Sidarth was filming Allen’s political event as a "tracker" for the opposing campaign. The rest is history.

Howard Dean’s extensive use of the Internet in his run for the 2004 Presidency is now legendary, and has been mimicked by virtually every serious candidate in 2008. This has evolved to the point where Clinton, Edwards and Obama all have virtual campaign sites set up in Second Life (although they appear unofficial), the popular online virtual world.

In doing a quick review at a local level, I found that the average age of a Mayor in the top 300 U.S. cities is 56. If you reverse this timeline, you find that the average U.S. Mayor graduated college roughly 5-7 years before the introduction of the personal computer.

Now, to be clear, I am not trying to generalize or stereotype here by suggesting that anyone over a certain age is a luddite. That would be unfair, and it is clearly not the case. But the concept of having the loud echo of Tapscott’s Net Generation enter communications policy-making roles over a span of just ten years or so suggests that change will happen; and that change will happen at a very rapid rate. Time is compressed through technology and communications. The pressure that may be placed on existing policy-makers who are not as progressive as this N-Gen crowd could be intense.

All of this convinces me that the phenomenon of community broadband, public broadband, municipal wireless; whatever one chooses to call it, is not a fad, but rather an inevitable continuation of forces that have been underway for quite a while. When looked at from the vantage point of communications policy, the N-Gen will accept nothing other than policies that promote what they have grown up believing to be the norm; low barriers to entry, infinite choices, the ability to peer-produce content. They will value having more options over strong brands. They will have little appreciation for policies that place more power in the hands of fewer companies. They will have little tolerance for well-established protections of any status quo.

Tapscott sums it all up with the following passage:

The technology innovation introduced to the baby boom – TV – had strong values. It assumed that communications should be controlled centrally, by broadcasters. These broadcasters understood your needs and desires for entertainment, news and information. They programmed, creating a schedule which they estimated corresponded to the largest masses.

Such values were enshrined by governments, which regulate TV, and the advertisers who dominate the medium. There is careful licensing of broadcasters to ensure that ideologies which challenge tenets of the social order do not have a loud or sustained voice.

The interactive media cherish a different set of values. These media embrace the two-way interactive model of the telephone and extend it a thousand fold. To Bell’s invention, the new media add information banks that can be created by anyone.

How will communications policy be re-shaped when the N-Gen is no longer simply playing the role of activist and policy advocate; but instead moving into the role of policy maker? Will this new generation be content to force-fit a converged voice-data, wired-wireless world into the ancient framework of "telecommunications vs. information services?" Will this generation prioritize over-arching, mega-telecom-reform-bills that seem obsolete at the time they are passed? Or will they look to the ordered chaos, grass-roots experimentation and other characteristics of unlicensed spectrum, community involvement and private-sector innovation for guidance? Remember, this is a generation that values more options over strong brands.

I believe the writing is already on the wall; from the defeat of state bills to limit community-choice in 2005, to the decreasing effectiveness of “think tanks” that are paid to write biased reports to influence policy-makers. These are ineffective strategies to influence communications policy already, and they will be even more ineffective in the future as the N-Gen becomes the majority.

I argue that the far-left viewpoints being expressed by the ACLU (on electronic consumer privacy) and ILSR (on public ownership) are as damaging to the public broadband movement as the far-right viewpoints advanced in 2005 by conservative think tanks and special interest groups. Just like the far-right arguments we heard in 2005 that “cities are too stupid to own or manage communications networks” and “cities are wasting taxpayer money, competing with the private sector,” far-left organizations are now hijacking the debate on public broadband, and leaving little ground in the middle for moderate, level-headed viewpoints.

And it’s time for this to change.

Now I am being naïve of course. Moderate, level-headed viewpoints don’t make for interesting news stories; at least not with the level of intrigue, the passionate pronouncements and the dueling editorials that characterize the far-left vs. far-right debate in San Francisco papers.

Take the recent “Board of Obstructionist” editorial in the San Francisco Chronicle. While I find myself agreeing with some of the author’s underlying arguments in that editorial, taking it to the level of suggesting that those on the San Francisco Board who are opposed to private ownership are intentionally trying to obstruct the process - or playing politics - is a bit unfair in my opinion. The editorial steps over the line, with rudeness and disrespect. While I may not agree with the opponents on the Board who argue for public ownership of Wi-Fi (I have made my opinion on this issue clear in open forums with the Board,) I assume that their viewpoints are grounded in an honest conviction that public ownership is best for their constituents.

Let’s consider the ACLU’s recent criticism, which is based on a viewpoint that the agreement with EarthLink does not provide for adequate consumer privacy protections. On the surface, most would agree that having more protections in this area is better than have fewer protections. But, this fails to put the issue into context, by assuming automatically that the “gold standard for consumer privacy” that the ACLU (together with EPIC and EFF) has advanced is the standard that should be applied. I argue that it is not the right standard. Rather than defend “why we didn’t restrict A and B in the EarthLink agreement,” I openly object to the argument that we should have applied all of those standards in the first place. Why?

• There are dozens of existing federal and state laws that regulate in some way electronic consumer privacy, but none of these laws require the protections called for in the ACLU’s gold standard; if they did, there would be no reason to regulate EarthLink on these points at a local level.

• I have reviewed the privacy policies for incumbent broadband providers in San Francisco, finding that none of them would come close to meeting the gold standard called for by the ACLU.

• Protections in the EarthLink agreement go far beyond those in similar Wi-Fi public-private-partnership agreements. If the ACLU thinks the protections in the San Francisco-EarthLink agreement are weak, they should go read the Philadelphia agreement, or those in numerous other major U.S. cities. The only thing required in most of those agreements is that operators discloses their privacy policy and require users’ explicit acceptance before service is provisioned.

• I happen to have my own ideological belief that consumers are smart enough to make informed decisions about whether to use any given product or service, and that my use of a service is a contract between me and my provider. I don’t want a world where the products and services available to me are based on the ones that the ACLU has decided meet their standard.

If the ACLU feels so passionately that these standards should apply, why not address this at a federal and/or state level? Why fight a battle that wouldn’t win the war? This would have the added benefit of making sure that all providers would be on a level playing field, and that the DSL and cable companies in San Francisco would be required to provide the same protections. Even for the ACLU, the outcome would be better, as they wouldn’t have to argue their points in each and every city involved in a Wi-Fi initiative with a private operator.

Several provisions exists in the agreement with EarthLink that no-one seems to have recognized the significance of. First is the requirement that EarthLink abide by Applicable Laws (which you will find this in various parts of the Privacy section of the agreement.) Now, it’s understandable why no-one finds this interesting or relevant, since it seems obvious that they would have to abide by any applicable laws, and that this kind of language can seem like lawyerly fluff. Second, in the Broadband Non-Discrimination (aka network neutrality) section of the agreement, it says “More specific standards may be established by a separate ordinance of general applicability, which would apply to all similarly situated providers of broadband service.”

So, to the Board I would say “don’t delay Wi-Fi for San Franciscans by imposing valid, justifiable restrictions on the EarthLink agreement - in a way that is discriminatory; instead create local regulations and apply them to all broadband providers in San Francisco.”

Isn’t this a more moderate, level-headed way of thinking about the issue? Of course it is. It recognizes that the number of regulations placed on a competitive entrant to the San Francisco broadband market (EarthLink in this case) should not go far beyond those placed on incumbent providers, who most would agree hold more market power, and have a greater ability to abuse that market power.

So, in the end, the ACLU doesn’t appear to be opposed to the terms of the EarthLink agreement, but rather they appear to be opposed to Applicable Law, and naïve to the precedent set by dozens of major U.S. cities. There are different remedies for that, and the right one is not to delay the right of San Franciscans to have free citywide Wi-Fi.

Are public private partnerships for Wi-Fi truly partnerships? Are they really just opportunities for cities to gain every single concession imaginable by special interest groups, academics and far-right or far-left ideologists? Should cities be trying to create a “telecom policy panacea” that feels like a win to policy makers, but guarantees that the competitive Wi-Fi entrant will be disadvantaged against existing providers? Is the role of cities to “get back” every bad concession that many of us feel have been made in national broadband policy through regulations at a local level? Are we trying to impose the national broadband policy that we wish was in place at a national level on competitive entrants at a local level, but leaving established providers playing by the same old - some would say more favorable - rules? These are critically important issues, but again the far-left has us focused on their out-of-context, discrete special interests instead.

Public broadband may be the best hope for positive change for the state of broadband in the U.S. It has already shifted huge power from the halls of the FCC and congress to City Hall, at a time when other forms of local control (e.g. cable franchising) have been moving in the other direction. But we are at risk of screwing it up through letting these discrete special interests dominate the issues. We are losing perspective on what the goal was in the first place for these projects; stimulate economic development, improve government efficiency and bridge the digital divide. San Francisco is allowing the valid goals outlined by the Mayor to be twisted into ideological debates over public ownership, consumer privacy and all manner of other issues. What was the Board doing about electronic consumer privacy in San Francisco before the EarthLink agreement was delivered to them? How much debate was happening in the Board chamber about network neutrality in 2006? Are these issues important? Yes; but only when considered in the context of the overall initiative, market, program, etc.

To put a finer point on this, let’s consider open access. Following Brand X and the FCC’s decision on DSL line-sharing, cable and telephone companies were relieved of any obligation to share their facilities with competitive providers. But cities have brought back similar regulations and placed them on Wi-Fi operators at a local level. I believe this is a wonderful thing, but it further makes the point about the self-imposed pressure the muni-wireless industry is placing on those motivated to deploy these new facilities.

Shifting gears to the debate over public ownership, again the far-left arguments dominate any moderate, level-headed discussion. In August, 2006, the nonprofit organization Institute for Local Self-Reliance (ILSR), in cooperation with Media Alliance, issued a four-page report entitled Is Publicly Owned Information Infrastructure A Wise Public Investment for San Francisco? The report claimed to be “a preliminary financial analysis” of the viability of a publicly-owned Wi-Fi network.”

While ILSR presented its report as an independent, objective analysis, this independence and objectivity is debatable. On its New Rules Project website, which apparently represents ILSR’s agenda in the telecommunications sector, they stated:

“ILSR believes that only public ownership of a city's information infrastructure can guarantee citizens a controlling voice in the design and operation of those systems. Information networks can operate like road networks: a common carrier, open to all users and suppliers, small and large, at similar rates. We're working with key officials in a half dozen cities to foster publicly-owned information networks.”

Only public ownership …can guarantee..? This statement clearly demonstrates a bias on the part of ILSR for public ownership and calls into question whether its “analysis” of San Francisco’s plans could have led to any conclusion other than that public ownership was both financially viable and desirable.

And ILSR goes on to say “This [publicly-owned Wi-Fi] investment, on the other hand, will yield a 10 to 20 percent annual return.” Hold on a minute; if the argument is about all the revenue and profits that “the City is leaving to the private sector,” this could become a slippery slope. Aren’t “essential services” provided by a municipality often regulated on the rate of return they can achieve? I am quite sure that Public Utility Commissions exist, at least in part, to address this issue. Building a financial model based on replicated pricing, revenue, cost and other assumptions from a private provider (who is justifiably responsible to shareholders for maximizing a rate of return) seems a bit shallow to me. Not to mention that I believe there is little, if any, data available on the revenue, uptake, profitability and other metrics from free-tiered Wi-Fi business models. With so little data available to even the private-sector operators who’ve made these investments, how can we place so much trust in a financial model built by a Minnesota-based not-for-profit? Accept their advocacy for a given position – public ownership – and applaud them for making their viewpoints know – but don’t translate this into an expert-based, objective analysis of the investment, and don’t make it the cornerstone of the City’s financial feasibility analysis.

Now, counter to ILSR, The San Francisco Planning and Urban Research Association (SPUR) delivered a memo to the Board in support of private ownership and the agreement with EarthLink. After testifying in front of the Board about the memo, the representative from SPUR was asked only one question; “has SPUR ever advocated for public ownership of anything.” After the SPUR representative tried unsuccessfully to give a politician’s answer to a politician, the chair commented “I think the answer is no” and thanked him for his testimony. What’s my point? In part, my point is that the same question should be asked to ILSR; “has ILSR ever advocated for private ownership of anything.”

More importantly, my point is that all of these organizations; ILSR, SPUR, ACLU and others are advancing their viewpoints, as they have the right to do, but none should be taken as expert, independent, objective advice to the board. Following the dueling viewpoints of ILSR and SPUR noted above, you will find a copy of the ILSR report on the Board’s website at http://www.sfgov.org/site/uploadedfiles/lafco/SF_Financial_Final.pdf but I can find no copy of SPUR’s memo, unless I go to their website. Once again, it is not about moderate, level-headed consideration of the issues, it is about ideology.

But the Budget Analyst did an objective analysis you say? Well, I believe the Budget Analyst did a fantastic job looking into the numerous, complex set of issues here. But the Budget Analyst did not conclude that public ownership was feasible, which many advocates of public ownership seem to be suggesting. Here are just a few excerpts from their report to demonstrate my point:

• “The estimates used in this report result in a wide range of possible outcomes. Therefore, if the City wishes to examine further the option of a municipally-owned and operated wireless network, cost and revenue benefits would need to be substantially strengthened through competitive bidding and acquisition of firm vendor price information.”

• “The Budget Analyst is unable to estimate potential advertising revenues which would be available to the City for a municipally-owned wireless network.”

• “..the Budget Analyst was not able to obtain exact cost estimates to install and operate a municipal wireless network in the City of San Francisco from vendors or other jurisdictions as vendor information is proprietary, cost factors differ among different jurisdictions due to density and geographical variations, and data were not readily available for relatively new municipal wireless networks.”

Note: it is public knowledge that one proposal received in connection with the RFP process estimated the costs for a city owned network and associated programs to be $100M over 10 years, again demonstrating the wide range of estimates, and the uncertainty and risk still present in the market.

The trouble that both the far-left and far-right have in these situations is that they can never reconcile their viewpoints. For example, if the board adopts public ownership (which ILSR advocates), and puts a privacy policy in place that adheres to the ACLU’s gold standard, both would be happy, right? Not so fast. I predict the ACLU will have a new concern; and it’s called Big Brother. While the ACLU is noted as saying “knowing [personal] information is being collected will cause users to limit what they say and do on the Internet,” how will users feel about “knowing that not just personal information, but everything they say, will travel over a government-owned network?” And how will concerns over ownership intersect with other far-left viewpoints (e.g. in the area of censorship and free speech?) Consider the publicly-owned Wi-Fi network in Culver City, and that city’s controversial decision to filter content - http://www.dslreports.com/shownews/77538

Whatever the outcome, the entire debate is fascinating and desperately needed. I just hope that viewpoints can drift back to the center a bit, or else San Franciscans will be getting 802.11z in the year 2020.

For the record, Civitium supports private-ownership of Wi-Fi for San Francisco, and we support the recommendations for public-ownership of fiber (with an open, wholesale model) presented by our partner, CTC. We have the opinion that Wi-Fi should be advanced now, through the approval of the EarthLink agreement, and that tying Wi-Fi to a 15-year fiber plan would be disastrous for San Francisco. None of these positions are based on the ideological arguments discussed above, as is evident by the fact that we support two opposing approaches to the ownership issue.

While removing any barriers for people to gain access to, adopt and apply technology should be considered a good thing, there are two things missing in the debate; the fact that helping people understand the value technology can bring to their life and motivating them to prioritize it are pre-requisites for any of the other tactics to be effective, and the fact that a "technology welfare program" is not necessarily the best way to go about it.

My own view of this issue has evolved a great deal over the past couple of years. It finally took shape about a year ago, at a time and place that I least expected. I was attending a conference on community broadband in Johannesburg, South Africa, a place I had never visited before, and an absolutely beautiful country.

As I sat in the audience at the conference, one of the many speakers - a public official from one of the participating cities - walked up to a podium (I won't name him so as not to embarrass him) and proceeded to give a presentation about what technology meant to his city/community. His presentation skills were unorthodox; speaking in a somewhat low voice, very dry sort of humor, injecting pauses in odd places. Nonetheless, he had the audiences' (and my) full attention.

He clicked his way through a number of slides and stopped on one with a simple photo; that of two young children standing next to each other, obviously very (and I mean very) poor, outside a shack of a home - really nothing more than a few pieces of tin and wood held together, which are unfortunately all too common in that country. Driving anywhere around the outskirts of any city and beyond, you find open fields that could only be described as looking like refugee camps. It's often said that a farmer can go to bed one night and wake the next morning with an entire village outside his home, and the contrast between this and an otherwise wealthy nation, with vibrant, civilized cities, is stark. The best way I can describe it, while over-dramatizing a bit, is "a country with no middle class." You're either upper middle class/rich or you're destitute poor. So, this makes the country quite a petri-dish for the Digital Divide issue.

He then proceeded to ask the audience a few questions; what do you see? A couple of people - trying to anticipate his direction - said they saw sadness, hopelessness, desperation. Nope. He then asked the audience to look around the photo and describe what they saw. One man, thinking he had caught on, noticed a rough-looking power line strung through the field and said he saw “opportunity,” obviously trying to tie things back into broadband over power line, one of the technologies being discussed at the event. Nope.

Then, having built us up with this bit of drama, he said the most unexpected thing; "what you see is ambition; you see potential." Another perfectly-timed pause and he proceeded to explain. He pointed out something about the shack behind the children; that it had a couple of plants neatly dug into the ground, and it had what might be described as a mural painted on one side. This, he said, was a clear indication that the family living in that shack - viewed from the outside by all of us as sadness, desperation, hopelessness and all these other things, was viewed in a very different way by the family living in it. It took pride to paint that mural, and plant those small shrubs. And it took ambition to even attempt to improve on the situation these people found themselves in. How might this ambition translate if the same family had access to the technologies we all take for granted?

Wow. You could have heard a pin drop. In my case, the seed for a new way to think about the Digital Divide was planted. I started to think about the statistics that are often thrown around; like only 1 billion people in the world access the Internet, which leaves 4 billion who don’t. I started thinking about how vast I saw the Internet today, and how much more vast it would be if these other people were on-board. I started thinking about all the millions of Weblogs, photos, music and other types of user-generated content being produced – and what abundance and variety of content would exist if the other 4 billion people had the same tools.

So, in addition to cementing the idea that low-income and disadvantaged persons had much more ambition and potential than most give them credit for, it also brought home the fact that having them adopt technology would not only benefit them, but would be a boom to the Internet, to the economy and to society as a whole.

The barrier created by cultural conditions where families/individuals may prioritize their discretionary income on things other than computers and Internet access (things like music players, entertainment, trendy clothing, etc.) is substantial. It may be true that the first interaction many "digitally-divided" family members/children have with technology will not be what we expect (computers, laptops, the Internet and a spreadsheet). It may be game consoles, music players, etc. This should be considered an opportunity as well. How can phenomenon like iPods/iTunes be used as the initial platform to help young disadvantaged people understand the life benefits that can result from using technology? Thinking along these lines, what are the chances that an iPod or smartphone becomes the critical entry-level technology device, and the personal computer almost becomes a “peripheral” to that device (a place to store my music and photos?) New opportunities arise when we start thinking this way.

OK, so this isn’t exactly a recipe for how to solve the issue of lowering the many barriers that exist (sorry if you were expecting that), but I think framing any challenge in the right way is the first step to solving it. I guess the key message is that the Digital Divide is not so much a problem to be solved as it is an opportunity that can’t be missed.