The municipal Wi-Fi market that exploded in 2006 experienced something of a mini-meltdown in the summer of 2007. Multiple cities pulled out of planned projects rather than accept anchor tenancy options even as a Forrester Research report warned that consumer use alone won't pay for a muni Wi-Fi network, and other experts said that government units exploring wireless options needed to proceed with caution.

During the same period, however, a nascent Minneapolis Wi-Fi network performed admirably in aiding public safety officials following the I-35 bridge collapse, while Corpus Christi, Texas, officials completed the successful sale of a city-built network to EarthLink, which will continue to sell services to the city and will add high-speed Internet access for local residents.

Meanwhile, the first municipal WiMAX network, currently being built in Grand Rapids, Mich., looms as another option for city officials to consider, given potentially more favorable economics and better coverage.

The negative press generated after cities such as Anchorage, Alaska, and Corona, Calif., backed out of planned wireless network projects when faced with the reality of having to pay for them came on the heels of complaints that other Wi-Fi networks don't work as promised, particularly when it comes to providing indoor coverage.

Much of that criticism is the result of overblown expectations and, in some cases, poor planning by municipal officials, who were quick to jump on the bandwagon when it looked like Wi-Fi networks were going to be free. That model has since come crashing down in all but the largest of cities, said Craig Settles, president of Successful.com and author of “The Economic Development Impact of Municipal Wireless,” a report for the International Economic Development Council that challenges some expected benefits of wireless.

“The market shouldn't have gone in that direction in the first place,” he said. “A lot of cities saw other cities getting a Wi-Fi network, seemingly for free, and thought, ‘We have to have one, too.’ Rational planning took a back seat in a number of cities.”

Not only that, Settles said, cities need to look at whether the economic development benefits expected to flow from municipal Wi-Fi are real. The cities most likely to fail, Settles said, are those that put resources into building a network in the expectation that it will both attract new businesses and generate income from consumer use.

The Forrester report supports the latter conclusion, pointing out that consumer use of public Wi-Fi networks at parks or other outdoor spaces — the locations that muni Wi-Fi networks will serve — remains very low at 5%. Most consumers using Wi-Fi are doing so at home, reported Sally Cohen, an analyst for Forrester.

The biggest problem with in-home usage isn't with the Wi-Fi networks themselves but with the relatively low power of the Wi-Fi devices built into laptops and PCs, officials say. Laptops that come with 802.11 functionality tend to operate at 30 to 50 milliwatts of power, which may not be enough to connect to an outdoor Wi-Fi antenna. Consumers become frustrated when they can see an available wireless network with a signal that looks strong, but they cannot connect.

EarthLink addresses that frustration by making a customer premises device available that includes a 200 milliwatt antenna; consumers can either buy it outright for $69.95 or rent it for $3 to $4 a month, said Don Berryman, president of EarthLink Municipal Networks. “Most laptops that are equipped with Wi-Fi are between 30 and 40 milliwatts, but with a little bit larger antenna, you can receive the signal from inside,” he said. “About 60% of our home users are using them.”

Corpus Christi could become the poster child for how to do things right. The city built its Wi-Fi network on an existing fiber optic backbone, initially justifying the cost by automating the meter reading for city-owned gas and water utilities. The city went on to add public safety applications as existing systems reached the end of their life cycles, remaining conservative even as it pioneered the muni Wi-Fi market. Rather than become a service provider, however, the city sold its network to EarthLink for $5 million. It will now buy wireless services from EarthLink and sell the operator fiber optic backhaul.

It is that kind of careful planning and realistic expectation-setting that will lead cities to succeed in deploying Wi-Fi, Settles said.

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Read Carol Wilson's four-part series:

“Muni Wi-Fi: Proceed with caution”

“Muni Wi-Fi: What's working”

“Muni Wi-Fi: Its limitations”

“WiMAX looms as muni network option”

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