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Wi-Fi for Rural Areas

Head to the country, where Wi-Fi roams free and unrestricted by big-city politics. You'll be encouraged by the possibilities.

How many phones, phone numbers and phone companies do you have? How would you like to have just one number from one company--a VoIP/cellular combination for home, office and mobile calls served by one voice-mail/e-mail inbox, with all those special calling features for which traditional telecoms still charge extra? What the heck--we'll toss in fixed and mobile broadband, too.

You can have all of it or choose any combination from one company at a very reasonable price. Just move to Mankato, Minnesota, or one of the neighboring farming communities served by Midwest Wireless.

Not really a snow person? Well, your house doesn't necessarily have to be parked on the prairie. Midwest Wireless president and CEO Dennis Miller regularly consults with other wireless ISPs and has found small-market telecom providers in all four corners of the country working on similar bundles (see "Now That's a Plan" on page 41). The Radicati Group shares that observation, predicting that sales of unified communications services like Miller's will quadruple by 2009.

But if you insist on living in a large city, it could be awhile before this level of service reaches you. It will depend on who's left standing after the coming war between municipal governments and the traditional telephone, wireless and cable giants.

It seems that a growing number of city leaders, unhappy with the broadband options being provided by the big boys, plan taxpayer-funded networks of their own to deliver free or deeply discounted broadband to their residents. The technology of choice seems to be wireless mesh networks--Wi-Fi routers perched atop light poles and other city-owned vantage points. More than 200 American cities are in some stage of deployment, reports Ron Sege, president and CEO of Sunnyvale, California, mesh kingpin Tropos Networks. Sege figures that by year's end, more than 300 American cities could be covered by municipal Wi-Fi clouds.

Just one thing: Urban centers happen to be the markets most highly prized by top-tier cable, landline and cellular providers. Historically, cities have been the first to get everything from cable TV to cellular service to wired broadband--and even Wi-Fi hot spots--for one simple reason: As John Dillinger would say, "It's where the money is." But city leaders complain that a "digital divide" is keeping their low-income residents off the internet. Cities could deliver free or cheap access to everyone, the argument goes, by forgoing the profits being reaped by those big providers.

"Cities are disrupting the traditional business model in which an oligopolistic [telecom] or cable company uses wires or other expensive technology to bring broadband to people," explains Sege.

Maybe. But those guys have invested tons in places like Atlanta and Philadelphia and won't just write off those investments. They're going to fight. Their lawyers and lobbyists, who sharpened their incisors shredding the 1996 Telecommunications Act, are pushing Congress and state houses to outlaw muni Wi-Fi. Naturally, cities are buying up politicians of their own. It's just round one in a long fight that will test the viability of all ventures.

Not My Money
Because each urban situation is unique, to muni Wi-Fi or not should be a local choice. But taxpayer dollars should never, ever be thrown into this mosh pit--as many cities are contemplating.

Like every other hot technology market, muni Wi-Fi could very easily be hugely successful in one town and a complete bust in another. As Ashland, Oregon, and Orlando, Florida, have discovered: Build it, and they don't always come. And when they do, low-cost access has to be underwritten by something else--coffee, hotel rooms, Big Macs.

Right now, broadband happens to be an out-of-control snowball picking up competing technologies, and it won't all get sorted out before meeting some distant tree. Established wireline providers, whose profit margins cities hope to divert, are already locked in turf battles that are driving everyone's revenues toward SBC Yahoo! DSL's $14.95 a month.

Raising money is challenging, but whatever happened to special assessment districts, bond issues, or nudging private risk-takers with tax breaks and right-of-way offers? Interested civic groups can band together in nonprofit corporations like cFreeWireless in Central Iowa. But betting the incomes of passive taxpayers on a commercial venture is inappropriate and unnecessary in this case.

That's what Miller does for a living--take risks. His company and hundreds of small commercial WISPs just like his would jump at the chance to tack a radio transmitter to a light pole--if only a lawyer and a lobbyist weren't needed to hold the ladder. Sege reports that some 50 commercial WISPs have recently started using his technology to sell broadband in urban areas.

Why designate just one lucky bidder to be muni Wi-Fi's favorite son? VoIP flourished without much regulation. Licensing, city franchises, overlapping regulatory and taxing authorities--they're what create the oligopolies that cities say are stunting their broadband. Why create a new local monopoly?

Instead, turn guys like Miller loose. If he can bring it to Winona and Keokuk, Philly and Frisco are no problem.

Mike Hogan is Entrepreneur's technology editor.

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This article was originally published in the October 2005 print edition of Entrepreneur with the headline: Phone on the Range.

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