A Classification of Community Wireless Networks Business Models

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This is a presentation for a paper presented at the AMCIS2007 conference. It conceptualizes and classifies emerging business models for community and municipal wireless networks.

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A Classification of Community Wireless Networks Business Models

  1. 1. A Typology for Community Wireless Network Business Models Abdelnasser M. Abdelaal and Hesham H. Ali Department of Computer Science College of Information Science and Technology University of Nebraska at Omaha Omaha, NE 68182 {aabdelaal | hali}@mail.unomaha.edu
  2. 2. Agenda <ul><li>Introduction </li></ul><ul><li>Literature review </li></ul><ul><li>Proposed Typology for CWN business models </li></ul><ul><li>Implications for practice and future research </li></ul><ul><li>Conclusion </li></ul>
  3. 3. Introduction <ul><li>CWNs are clusters of wireless networks developed and run by non-profit entities and they provide free or affordable Internet access . </li></ul><ul><li>Community Wireless Networks (CWNs) have been established for the purpose of: </li></ul><ul><ul><li>Bridging the digital divide; </li></ul></ul><ul><ul><li>Improving the business environment; </li></ul></ul><ul><ul><li>Improving the civic engagement and political participation; </li></ul></ul><ul><ul><li>Improving the security in the area; </li></ul></ul><ul><ul><li>Supporting municipal services and/or </li></ul></ul><ul><ul><li>Improving the well-being of the community at large . </li></ul></ul>
  4. 4. Interfaces and Services of Community Wireless Networks Source : http://www.3g-generation.com
  5. 5. Community Wireless Networks for Civic Engagement Many-to-many engagement M-democracy Direct and unregulated democracy Customized civic participation Real-time participation Advancements of wireless communications Failure of mainstream media to bridge the political divide SMS MobiTV Moblogs WAP RSS MMS DAB DVB VoIP Affordable political participation Mobile Voting A framework for civic-engagement using wireless communications
  6. 6. Research Problem <ul><li>What are CWNs? </li></ul><ul><li>Are they viable and sustainable systems? </li></ul><ul><li>What is the impact of CWNs on social and economic development? </li></ul><ul><li>Will they serve residents, local businesses, or municipalities? </li></ul><ul><li>What are their main stakeholders? </li></ul><ul><li>What is the difference between CWNs, municipal wireless networks, and public WiFi hotspots? </li></ul><ul><li>We will use the concept of business models to answer these questions </li></ul>
  7. 7. Motivation <ul><li>CWNs are confused with municipal wireless networks and commercial WiFi hotspots. </li></ul><ul><li>There are many concerns about the viability and sustainability of CWN projects. </li></ul><ul><li>CWNs is a young innovation whose implementation models are still in trial stages </li></ul><ul><li>CWNs literature has been influenced by scholars from different disciplines and advocates who lack the necessary theoretical background. </li></ul><ul><li>CWNs is a multidisciplinary topic that lies at the cross area between public, private, and nonprofit sectors </li></ul>
  8. 8. Drivers of CWNs <ul><li>Emerging wireless technologies </li></ul><ul><ul><li>802.11, WiMax, antennas, routers, Open source software, etc </li></ul></ul><ul><li>Open frequency </li></ul><ul><ul><li>The 2.4GHZ (for WiFi) </li></ul></ul><ul><li>Community support </li></ul><ul><ul><li>Voluntary work, donations, open source software, location-hosting, etc </li></ul></ul>CWNs Wireless Technology Community support Open frequency Figure 2: The drivers of CWNs
  9. 9. CWNs Main Issues Inputs Volunteerism, donations, sponsorship, location hosting, open source software CWNs Funding, pricing, management, ownership QoS, security, reliability, node placement, coverage, spectrum regulation Social and economic development Tech Issues Org. Issues Clustering, routing, antenna management, Social capital, business models Network theory Outputs Physical capital, social capital and human capital Figure 3: A Framework for Research on CWNs Education, municipal, health, commercial, social, personal, services Operation phase Implementation phase Mobility, flexibility, affordability, time-saving, effort-saving, resource sharing
  10. 10. Research Approach <ul><li>. </li></ul><ul><li>A business model outlines the contributions of different business partners in creating and distributing a specific value to a particular segment of customers in order to generate sustainable revenue streams </li></ul><ul><li>Social capital is the social ties and norms in a specific social structure that facilitate collective actions </li></ul>Collective actions Value proposition Social networks Business partners Embedded resources Resource management Figure 4: the components of the social capital concept and their equivalent in the business model concept that we use to assess the social and economic impacts of CWNs Social Capital Business models
  11. 11. The Role of Social Capital in the Creation of CWNs The definition of social capital
  12. 12. Agenda <ul><li>Introduction </li></ul><ul><li>Literature review </li></ul><ul><li>Proposed typology for CWN business models </li></ul><ul><li>Implications for practice and future research </li></ul><ul><li>Conclusion </li></ul>
  13. 13. Literature Review <ul><li>Osterwalder and Pigneur (2004) developed a business model ontology that identifies the main elements of business models. </li></ul><ul><ul><li>It outlines the contributions of different business partners in creating and distributing a specific value to a particular segment of customers in order to generate sustainable revenue streams </li></ul></ul><ul><ul><li>This ontology is conceived as a tool that helps managers to capture, understand, design, communicate, analyze, and change the business logic of the firm. </li></ul></ul><ul><li>Camponovo et al. (2003) explored different business models for private, community, wide area, and WiFi hotspots in the Swiss market. </li></ul><ul><li>Meinrath (2007) classified CWN business models into the following categories: single-payer municipal model; free access and fee-for-services; free for residential and fee for commercial-government; off-peak versus peak; nonprofit ISP; educational purposes; and request for proposal (RFP) </li></ul><ul><li>Ohlhausen et al. (2006) classified CWN business models into six categories: nonprofit, cooperative, contracting out, public-private partnership, municipal, and government loan-grant. </li></ul><ul><li>Mandviwalla et al. (2006) classified the management and funding models of CWNs into the following categories: government-owned and operated, government-owned and privately operated, public utility, cooperative wholesale, and private consortium-owned and operated. </li></ul>
  14. 14. Agenda <ul><li>Introduction </li></ul><ul><li>Literature review </li></ul><ul><li>Proposed typology for CWN business models </li></ul><ul><li>Implications for practice and future research </li></ul><ul><li>Conclusion </li></ul>
  15. 15. CWN Business Models <ul><li>Public utility </li></ul><ul><li>Ad-supported </li></ul><ul><li>Education-centric </li></ul><ul><li>Public private </li></ul><ul><li>Community wireless network </li></ul><ul><li>Location-hosting </li></ul>
  16. 16. (a) Public Utility <ul><li>Description: </li></ul><ul><ul><li>A municipality build and run the project </li></ul></ul><ul><ul><li>A company may be contacted to build or/and run the project </li></ul></ul><ul><ul><li>Funded from bonds or tax money </li></ul></ul><ul><li>Advantages: </li></ul><ul><ul><li>Stability of funding sources and low risk </li></ul></ul><ul><ul><li>Better service quality and reliability </li></ul></ul><ul><ul><li>Serving the entire city and bridging the digital divide </li></ul></ul><ul><ul><li>Using the facilities for public services such as utility meter reading and emergency service (Cisco 2007; Vos 2005) </li></ul></ul><ul><ul><li>Investing the generated money in the community </li></ul></ul><ul><ul><li>Reducing service costs by having a tax-exempt status </li></ul></ul><ul><ul><li>Using public buildings and venues with good visibility such as light poles, public libraries, schools, and parks to install the system facilities. </li></ul></ul><ul><li>Disadvantages: </li></ul><ul><ul><li>Some oppositions say that tax money should not fund such project </li></ul></ul><ul><ul><li>Municipalities may not be qualified to run such business </li></ul></ul><ul><ul><li>Governments in developing societies may not have enough fund for such projects </li></ul></ul><ul><ul><li>It has less opportunity to engage the community and empower the civic society </li></ul></ul><ul><li>Examples: </li></ul><ul><ul><li>Lebanon, OR; Dayton, OH; Chaska, MN </li></ul></ul>
  17. 17. (b) Ad-supported <ul><li>Description: </li></ul><ul><ul><li>A content provider (e.g., Google) funds the project from advertisement revenue </li></ul></ul><ul><li>Advantages: </li></ul><ul><ul><li>Content providers support a free WiFi service </li></ul></ul><ul><ul><li>Suitable for metropolitan areas , large cities and commercial districts </li></ul></ul><ul><li>Disadvantages: </li></ul><ul><ul><li>It needs economies of scale and enough demand to generate sufficient revenue </li></ul></ul><ul><ul><li>It is suitable for big cities and business districts because </li></ul></ul><ul><li>Examples: </li></ul><ul><ul><li>San Francisco, CA; Mountain View, CA </li></ul></ul>
  18. 18. ( c) Education-centric <ul><li>Description: </li></ul><ul><ul><ul><li>A school is an anchor partner where student interns build and run the system as part of the educational process </li></ul></ul></ul><ul><li>Advantages: </li></ul><ul><ul><ul><li>Provide the service free in most cases </li></ul></ul></ul><ul><ul><ul><li>Academic institutions possess the expertise needed to implement and manage the system </li></ul></ul></ul><ul><ul><ul><li>The system may have a dual purpose of supporting the educational mission of the sponsored institution as well as providing digital connectivity to the community </li></ul></ul></ul><ul><ul><ul><li>The use of network resources may be optimized since their usage by universities (mostly during the daytime) may be complemented by the needs of the community in the evenings </li></ul></ul></ul><ul><ul><ul><li>Students participating in these projects obtain valuable experience, </li></ul></ul></ul><ul><ul><ul><li>The project could be used for research purposes </li></ul></ul></ul><ul><ul><ul><li>Academic institutions have access to different financial resources </li></ul></ul></ul><ul><ul><ul><li>This model may reduce any legal risks facing nonprofit entities that own it </li></ul></ul></ul><ul><ul><ul><li>The school get engaged with the community </li></ul></ul></ul><ul><li>Examples: </li></ul><ul><ul><ul><li>SparkNet ( University of Turku,, Finland) and Smart School (Bario, Malaysia), OmahaWireless, U.S. </li></ul></ul></ul>
  19. 19. (d) Public-private <ul><li>Description: </li></ul><ul><ul><li>The city partners a private company for the project </li></ul></ul><ul><ul><li>The city give this company access to public places to install the facilities </li></ul></ul><ul><ul><li>The company provide free or subsidized service to public entities and needy individuals </li></ul></ul><ul><li>Advantages: </li></ul><ul><ul><li>Cities have some control over deployment and service pricing. </li></ul></ul><ul><ul><li>Communities and municipalities obtain some benefits for giving telecommunication companies access to public places to install the system facilities. </li></ul></ul><ul><ul><li>Usually provide free or subsidized service to needy individuals, public entities, and nonprofit organizations. </li></ul></ul><ul><li>Disadvantages: </li></ul><ul><ul><li>Does not engage the community </li></ul></ul><ul><ul><li>The business partner shares the revenue </li></ul></ul><ul><li>Examples: </li></ul><ul><ul><li>Philadelphia, PA, U.S. </li></ul></ul>
  20. 20. (e) Community Wireless Network <ul><li>Description: </li></ul><ul><ul><li>Community members donate and volunteer to build and run a wireless system for the community </li></ul></ul><ul><li>Advantages: </li></ul><ul><ul><li>Providing the service free in most cases </li></ul></ul><ul><ul><li>Using the social capital of volunteers and donors </li></ul></ul><ul><ul><li>Engaging the community in public affairs, educating them about new technologies, and providing them with experience </li></ul></ul><ul><ul><li>Providing the service free of charge or at low cost </li></ul></ul><ul><ul><li>Keeping generated revenue in the community </li></ul></ul><ul><li>Disadvantages: </li></ul><ul><ul><li>Instable management structure and uncertain funds and revenues </li></ul></ul><ul><ul><li>May face legal problems with telecommunication companies </li></ul></ul><ul><ul><li>May not be used for municipal services </li></ul></ul><ul><ul><li>May not cover the entire city </li></ul></ul><ul><li>Examples: </li></ul><ul><ul><li>NYC Wireless, Austin Wireless (U.S.); Wireless Ghana; </li></ul></ul>
  21. 21. (f) Location-hosting <ul><li>Description: </li></ul><ul><ul><li>an entity hosts the facilities in return for some incentives such as customer attraction, free service, brand exposure, or for the purpose of improving community well-being. </li></ul></ul><ul><li>Advantages: </li></ul><ul><ul><li>Providing the service free in most cases </li></ul></ul><ul><ul><li>Obtaining benefits for the distinguished location of the property </li></ul></ul><ul><ul><li>Its an application for the location theory in the digital domain </li></ul></ul><ul><li>Disadvantages: </li></ul><ul><ul><li>May lack the necessary management support </li></ul></ul><ul><ul><li>May not be used for municipal services </li></ul></ul><ul><ul><li>May not cover the entire city </li></ul></ul><ul><li>Examples: </li></ul><ul><ul><li>OzoneParis (Paris, France) , SkyFrames; U.S. </li></ul></ul>
  22. 22. Main Business Models for CWNs and their Components Business model Value offering Financing Business partners Infrastructure management Target customer Public Utility Serves public services, bridges the digital divide, employs public resources Public funds Municipalities A municipality or a contracted company Any community Community Employs social capital, achieves civic engagement Donations, volunteerism Municipalities, local businesses, volunteers Nonprofit entity Any community Public-private Uses public venues to host the facilities, improves management efficiency Private funds Service providers A private company Big communities Ad-supported Content providers bridge the digital divide From ad revenue Content providers, technology vendors Content operators (Google, Yahoo), or ISP Business districts and large cities Education Provides students with expertise, guarantees long-term management structure Public fund , donations, student expertise Academic institutions, local businesses and governments, nonprofit organizations Students of the academic institutions Any community but more suitable for rural and underserved ones Location-hosting Location is an important asset, uses public places and venues An ISP, donations, sponsorship Community members, local businesses, public entities, nonprofit organizations An ISP, or a nonprofit organization Rural and underserved communities, business districts Table 1: The main components of CWN business models
  23. 23. Agenda <ul><li>Introduction </li></ul><ul><li>Literature review </li></ul><ul><li>Proposed typology for CWN business models </li></ul><ul><li>Implications for practice and future research </li></ul><ul><li>Conclusion </li></ul>
  24. 24. Matching CWN Business Models with the Social Sittings <ul><li>. </li></ul><ul><li>The properties of the community and the social sittings determine the appropriate business model </li></ul><ul><li>CWN business models are not mutually exclusive </li></ul><ul><li>Practitioners can use a mix of these business models </li></ul>Education Public utility Location-hosting Ad-supported Community Big cities and business districts Underserved and rural communities Public-private
  25. 25. Implications for Practice <ul><li>The typology helps practitioners to choose the best model for their community </li></ul><ul><ul><li>Ad-supported and public-private models may be more appropriate for business districts and big cities </li></ul></ul><ul><ul><li>The community, education-centric, and location-hosting models could suit any community particularly underserved and rural ones. </li></ul></ul><ul><ul><li>The success key is adopting the proper business model that fits the economic and social settings of the designated community </li></ul></ul><ul><ul><li>Regardless of the adopted business model, practitioners should collaborate with local communities, businesses, municipalities, non profit entities, and academic institutions in a win-win partnership to fund, build and maintain the system. </li></ul></ul><ul><li>Helps researchers to: </li></ul><ul><ul><li>Discipline the area of CWNs for development as a research stream; </li></ul></ul><ul><ul><li>Choose the proper level and unit of analysis for future research in this area; and </li></ul></ul><ul><ul><li>Assess the social and economic impacts of this innovation. </li></ul></ul><ul><li>There is a need for a special instrument to validate and evaluate this business models typology </li></ul>
  26. 26. Agenda <ul><li>Introduction </li></ul><ul><li>Literature review </li></ul><ul><li>Proposed typology for CWN business models </li></ul><ul><li>Implications for practice and future research </li></ul><ul><li>Conclusion </li></ul>
  27. 27. Conclusion <ul><li>We proposed a typology of CWNs business models that considers the social settings and the main issues of these emerging systems </li></ul><ul><li>The typology links the CWN business model concept to its impact on the society </li></ul><ul><li>It classifies them into six main models: public utility, ad-supported, education-centric, community, location-hosting, and public-private partnership </li></ul><ul><li>This groundwork is an important step towards a unified theory that explains and predicts the CWN phenomenon and its social and economic implications </li></ul>
  28. 28. Acknowledgement <ul><li>This research study was partially supported by NSF grant number EPS-0346476 and a grant from the Nebraska Research </li></ul>

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