In the effort to make high-speed access available to more people in more places, municipal Wi-Fi networks using meshed Wi-Fi technology are gaining trction in the U.S. Philadelphia has announced details of its planned partnership with EarthLink, and numerous other cities, such as San Francisco and Boston, are seriously considering similar initiatives.

Meshed Wi-Fi's promise is widely available broadband at a low cost: estimates suggest that a large metro area can be covered for tens of millions of dollars, a bargain in the context of wide-area networking. Since most PCs and laptops today already have Wi-Fi chips, no new customer premises equipment would be required, eliminating additional end-user device costs. Service speeds of up to 50 Mb/s would be attainable in theory, with unlimited scalability and little network management. On the surface, it sounds like an ideal proposition.

We have evaluated the business case for meshed Wi-Fi services in some detail and believe that although each situation is unique, there are several key factors that must be fully understood to minimize the risk of failure.

First, as with any business case, the attainable market share is a fundamental driver of value. For example, in a city like Philadelphia with strong cable and RBOC presence, what is a realistic market share for a new high-speed data venture — 5%, 20%, 50%? The ultimate share has a direct impact on the per-subscriber revenue that must be attained (either through end-user charge, municipal subsidy or a combination of both).

Second, from a technical perspective, Wi-Fi is widely known as a “first-wall” technology, meaning that coverage within buildings can require the use of high-powered window receivers. More seriously, bandwidth speeds achieved by end users of a metro Wi-Fi deployment may be disappointing. In a mesh environment, Wi-Fi bandwidth degrades as it passes through each node (or hop), often significantly. In addition, actual bandwidth varies with signal strength, which can be negatively impacted by topology, distance from a node and physical obstacles. Finally, as a shared resource, realized mesh Wi-Fi speeds vary significantly with the number of simultaneous end users. This combination of variable throughput combined with potential interference can complicate deployment of certain applications. Voice over IP, one of the areas of greatest current interest, will be especially challenging in an unmanaged network using unlicensed spectrum.

Third, although a meshed Wi-Fi network is cheaper to build than a wired infrastructure, it is not free. In addition to the capital buildout costs, there are operating expenses that must be recovered. The most significant expense is backhaul: The network may be locally robust but will be valueless if users cannot reach beyond it to the Internet or to remote locations. For example, in Philadelphia there will be at least 4000 wireless nodes (based on the fact that EarthLink is leasing space on 4000 light poles). Even with the latest mesh Wi-Fi technologies, hundreds, if not thousands, of backhaul points are still required to connect the meshed network to the Internet — each requiring some form of broadband connectivity. Deploying WiMAX backhaul may help, but many leased connections will still be required.

How, then, can cities provide this desirable public utility if they do not wish to make it simply a paid subscription service? There are several options worth considering beyond direct subsidies. Meshed Wi-Fi might be cost-justified through its enablement of enhanced public-safety applications. Another approach is a partnership with a profit-making organization that believes it will be able to generate revenues from the network though services such as location-based advertising. For example, amid much speculation, Google has announced a partnership with EarthLink in its bid for the San Francisco meshed Wi-Fi network, which could act as a foundation for a location-based search service.

All of these factors must be considered to give each deployment the best chance of success.

Matthew Dinsmore is a vice president and Ed Naef is a principal at CSMG, the strategy consulting division of TMNG. They can be reached at (617) 999-1000 or at matt.dinsmore@tmng.com and ed.naef@tmng.com.