Leo Van Audenhove: Wireless city networks. Policy initiatives in Europe and the United States.

Business Models for Wireless City Networks in the EU and the US Leo Van Audenhove IBBT-SMIT Pieter Ballon IBBT-SMIT Martijn Poel TNO The Centre for Studies on Media, Information and Telecommunications (SMIT) is part of the Free University of Brussels (VUB) and the Interdisciplinary Institute for BroadBand Technology (IBBT)

Structure of the presentation

Introduction

Selection and introduction of 15 cases

Goals

Technology, topology and coverage

Six business model configurations

Public inputs and returns

Conclusion

Introduction: about the project

Assignor is the Brussels region

Wireless city networks in the EU and the US, in urban areas

Explorative study:

What are the goals (objectives) of cities?

What business models (PPPs) are possible?

What is (can be) the role of government, with a focus on the public inputs and returns (“the deal”)

First indications of results and problems

Introduction: comparative case study analysis

Basic data, e.g. coverage, technological set up

Goals / policy objectives

Relation to broader policy objectives

Target groups, prices, access services offered

Applications, for public and private use

Business model: public inputs and returns

Results and problems

Selection of 15 cases

Initiatives in urban areas with government participation

Pragmatic: availability of information (US cases were/are further in their development, with more information available)

Initiative must be in operation (7 cases) or in preparatory phase, with business models being announced (8 cases)

Nearly all initiatives were driven by the city (“public driven”) with the exception of Leiden, NL (community driven), Turku, FI (private / community driven) and Cardiff, UK (private)

Introduction to the 15 cases City Short description Phase Key driver Bologna (IT) Iperbole Wireless Network: Experimental WiFi network providing wireless internet access to selected groups Pilot Public: City of Bologna Boston (US) Gradual expansion of Boston Main Streets WiFi project providing wireless internet access to entire city Request for proposal Public: Boston Main Street Bristol (UK) Bristol Hot Zone: WiFi hotspot zone providing wireless internet access and walled garden services Operational Public: City of Bristol Cardiff (UK) BT Openzone: WiFi hotspots and zones providing wireless internet access Operational Private: British Telecom Leiden (NL) Wireless Leiden: community network of wireless nodes sharing internet connections Operational Local Community Paris a (FR) Establishment of 400 WiFi access points Information phase Public: City of Paris Paris b (FR) Site provisioning to private operators with the objective of full WiFi coverage of Paris Information phase Public: City of Paris Philadelphia (US) Wireless Philadelphia: large-scale WiFi network providing wireless internet access Roll-out Public: City of Philadelphia

Introduction to the 15 cases Portland (US) WiFi/WiMAX network providing wireless internet access to citizens, companies and city workers Tendering phase Public: City of Portland Sacramento (US) Large-scale WiFi network for wireless internet access and additional services Tendering phase Public: City of Sacramento San Francisco (US) WiFi network covering the entire city for wireless internet access Request for proposal Public: City of San Francisco Saint Cloud (US) Cyber Spot: Full coverage of city with WiFi/WiMAX network providing wireless internet access Operational Public: City of Saint Cloud Stockholm (SW) Stockholm Mobile Connect: WiMAX network providing wireless internet access Roll-out Public: City of Stockholm Turku (FI) OpenSpark: WiFi community network providing wireless internet access Operational Private / Local Community: Sparknet Westminster (UK) WiFi network for closed circuit television and other services Operational Public: City of Westminster City Short description Phase Key driver

State aid considerations: wireless is ‘fibre revisited’

Criteria used by the European Commission

White or grey areas (rather than areas with no clear market failure)

Basic facilities and open infrastructures (rather than retail services)

Open tender

Technology neutrality

Open access

Use of existing infrastructure

Short duration, small aid amount and intensity

Reverse payment mechanism

Cost allocation transparency and monitoring

Minimization of price distortion

Ook criteria voor alternatieven zoals “ invest on market terms”

Discourse on goals

Multiple goals

Most cities pursue multiple goals

Digital divide prominent (e.g. Philadelphia)

BUT other goals often underlying driver

E-gov applications (security, metering, etc.)

Saving on government communication costs

Innovation and economic city development

Goals Integration in broader policy

Integration in broader policy

Supporting attractiveness of specific zones or whole city

Platform for developing new services/applications

Security policy

Modernisation of government service delivery

No specific connection to poverty reduction policies

Bridging digital divide by giving people free access

NOT by specifically focusing on disadvantaged groups

Some cities introduced additional measures or programs

Technology

Mostly based on WiFi

Often in combination with WiMAX

Backhaul and backbone, only seldom access

In certain cases upgrade to WiMAX access network foreseen

D üsseldorf case with WiMAX stopped

Uncertainty about frequencies

Other communication infrastructures available

Most cases (especially those in early phases) use mesh

Coverage

3 main types: Hotspots, Hotzones and Clouds

Often ambition to arrive at Wireless Clouds

In half of cases, indoor connectivity is one of the objectives

Coverage

Difficult to cover whole area

Difficulty with quality of service

City centres with tall buildings and bad coverage

Remote areas bad coverage

This questions Digital Divide goals

Indoor coverage

Indoor coverage not optimal (lowers speed considerably)

Individual investment in repeaters/antennas

Roaming and VoIP

Possible but not optimal

Business models

The business model and “the deal” between public and private players are influenced by several factors

How the wireless city network fits the overall policy objectives of a city (e.g. business climate, social, eGov)

Fit with strategy of the firms and (research) organisations involved (e.g. type of sectors, location of R&D)

Coverage and quality of existing broadband infrastructures (fixed, mobile, wireless)

Tariffs of existing access services and applications

State aid considerations and case law

Business model: roles / activities

Main factors to differentiate between business models Network ownership / operation Private concession: one private player Private concession: one private player Public / Non-profit: one or several public players Public / Non-profit: one public player, e.g. the city itself Wholesale: several private players build on a wholesale access offer Open site model: several players No specific ISP, e.g. “using” existing ISPs Community model: communities of individuals or organisations Service provisioning

Private concession

Public / Non-profit

Open site model

Community model

Private concession

Public / Non-profit

Wholesale

No specific ISP

Network ownership / operation Service provisioning 1: Private-Private model: Bristol, Cardiff, Paris (a) and Westminster: either small area or municipal employees, due to state-aid considerations 2: Private-Wholesale model: Philadelphia, Portland, Sacramento, SF: large areas 1 2

Private concession

Public / Non-profit

Open site model

Community model

Private concession

Public / Non-profit

Wholesale

No specific ISP

3: Public-Public model: St. Cloud: small city, full coverage, outdoors and indoors 4: Public-Wholesale model: Stockholm and Boston: large areas Network ownership / operation Service provisioning 3 4

Private concession

Public / Non-profit

Open site model

Community model

Private concession

Public / Non-profit

Wholesale

No specific ISP

5: Open site model: Paris (b) and Bologna, with one private service provider (possibly more) with a concession (e.g. with restrictions on tariffs). The service provider may decide to provide wholesale access services to resellers Network ownership / operation Service provisioning 5

Private concession

Public / Non-profit

Open site model

Community model

Private concession

Public / Non-profit

Wholesale

No specific ISP

6: Community model: Leiden and Turku: often facilitated by cities, the model is possible with no specific ISP or with a community driven ISP (OpenSpark in Turku) Network ownership / operation Service provisioning 6

P ublic inputs and returns Public inputs Public returns Site provisioning / rental Influence on prices Number of ISPs Subsidies Coverage, e.g. specific areas Licenses, e.g. exclusive, special Financial return Public backbone (backhaul) Type of applications Procurement, city as anchor tenant Other Other

Public inputs and returns City Input Description Influence Description 1. Private-Private Model Bristol Low - Site provision - Co-financing of pilot Low / Medium - City has the right to offer municipal services within walled garden environment - Limited period of free Internet, financed by advert. Cardiff Low - Site rental Low / Medium - Limited number of free accounts for city employees - City collects rental fee Paris (a) Very High - Full network financing - Site provision - Outsourcing of network operation and service prov. Very high - Outsourcing contract - Free access to hotspots for all citizens Westminster Very High - Full network financing - Site provision - Outsourcing of network operation and site provision Very high - Outsourcing contract - Only dedicated services for municipality are offered

Public inputs and returns City Input Description Influence Description 2. Private-Wholesale Model (two examples) Philadelphia Low - Site rental - Exclusive license for 10 years - City as ‘anchor tenant’ Medium / High - Wholesale offering - License and rental fees - Limited coverage requirements - Price cap on wholesale tariff - Low subscription rate for socially disadvantaged - “Free hotspots” at limited number of strategic locations - Free accounts for city empl. Sacramento Low / Medium - Site provision - Access to City backbone network for backhaul - License for 5 years - City as ‘anchor tenant’ Medium / High - Initially, free subscriptions for all were demanded by city; this is being re-examined - Plans involve limited basic free service and subsidies for socially disadvantaged - Free access for schools - Preferential service for municipal services

Public inputs and returns City Input Description Influence Description 3. Public-Public model St Cloud Full - Fully public financing , ownership and operation of the network Full - Full control over coverage, services - Completely free access 4. Public-Wholesale model Boston Medium - Site provision - Set-up of Non-profit organization for building network and making wholesale offering to service providers - Limited co-financing by city Medium? - Not known as project is still in information phase Stockholm High - Site provision - Building network and making wholesale offering to service providers through non-profit organization Medium? - Not known as project is still in information phase

Public inputs and returns City Input Description Influence Description 5. Open site model Bologna Low - Site provision to multiple actors Low? - In the pilot phase, a limited free access service was demanded by the city. It is recognized that this requirement is probably ‘untenable’ after the pilot, within the open site model Paris (b) Low - Site provision to multiple actors Low - Stimulus for competition 6. Community model Leiden Low - Site provision - Subsidy of one specific application Low - Some influence on topology by integration of city’s own nodes Turku Low - Site provision - Provision of additional access points Low - Some influence on topology by integration of city’s own nodes and additional access points

Business Model Problems