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Thursday, Sep. 27, 2007

Wirecutters: State-Run Wi-fi

By MARK HALPER

Catalonia may be renowned for its hospitality, but the mobile-phone industry could be excused if it were
feeling a bit betrayed. Earlier this year, Barcelona, capital of the Spanish province, hosted the 3GSM World
Congress, the world's biggest annual cellular conference. During his keynote address, Vodafone CEO Arun
Sarin implored his colleagues to improve cellular networks' ability to provide rapid and easy Internet
access, otherwise a new wireless technology called WiMAX could take over. WiMAX doesn't require phone
handsets or cellular networks. It can deliver fast Net connections over long distances directly to computers
or handheld devices. "If we don't build our broadband networks we will have this opportunity taken away
from us," Sarin warned.

Indeed, the opportunity was closing quicker than he may have feared. A day later, the Catalonian
government announced it was embracing the very technology Sarin had declared enemy No. 1. In a press
release announcing the region's plan to extend broadband coverage throughout its territory,
Telecommunications and Information Society secretary Jordi Bosch said, "The Catalonian government is a
highly satisfied WiMAX user and believes in promoting the WiMAX advantage."

Catalonia's announcement raised a series of pressing questions. Are governments or businesses the best
entities to build wide-area wireless broadband networks? And what technology should those networks
employ? Funded by citizens' tax dollars, governments generally look after roads, schools and defense. But
telecoms? Haven't most governments been privatizing their fixed-line phone networks over the past 25
years? Why jump back into the same business? Wouldn't state-backed initiatives undermine free-market
efforts to build networks and offer wireless services?

Apparently, many elected and appointed officials don't think so. Local and sometimes national
governments around the world are not leaving matters to unfettered capitalism. Instead, some are investing
public money or working to secure the corporate investment needed to build wireless Internet networks
that use fledgling WiMAX technologies and, more often, mature wi-fi platforms. Singapore is "unwiring"

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using tax revenue. Macedonia is doing the same with the help of U.S. aid. Municipalities as diverse as Prague,
Paris, Norwich, Dublin and Chicago are either building or attempting to build wireless networks with public
funds.

Some governments cite the "digital divide" between rich and poor to justify these initiatives. Many cities also
want to deploy the networks to connect citizens and tourists to local information, to support city workers
including police, building inspectors and social workers, and to remotely monitor infrastructure such as parking
meters and cctv cameras. But governments usually mention economic competitiveness as their primary
justification. "We see this to be an enabler for new opportunities, new businesses, and to attract new companies,"
says Yeng Kit Chan, head of Singapore's Infocomm Development Authority. "Without this new infrastructure
Singapore would not have an edge over other locations." Late last year, Singapore said it would invest $20
million in a wireless project that will provide Internet access in public places such as parks, hotels and malls.

Even if governments are gung-ho, regulators aren't so sure. In late May, the European Commission forced Prague
to tone down its proposed $16 million free wi-fi initiative by stripping out full Internet access and providing only
public-service websites, lest it distort competition. "Investment in broadband networks is primarily a matter for
private companies," E.U. Competition Commissioner Neelie Kroes said after completing a probe that held up the
project for months. She added that state subsidies for such networks are acceptable only in limited situations —
for example, "if they address a well-defined market failure." The Commission has on several occasions approved
state aid when it determines that market forces are failing to provide a region with broadband. In February it
okayed a publicly-funded fiber-and-wireless broadband scheme in North Yorkshire in the U.K. because the area
was underserved by private industry.

But competition is increasingly giving way to cooperation. The mutual interest of private enterprise and often
cash-strapped governments to provide and sell wireless services is encouraging both camps to experiment with
public-private partnerships. "This was the best way to improve access to the Internet for all," says Glenn
Strachan, now an independent consultant who, as an IT specialist for the Washington-based Academy for
Educational Development, helped funnel $2.5 million of U.S. aid to On.net, an Internet provider based in the
Macedonian capital of Skopje. On.net matched the sum and, in September 2005, began offering free wi-fi to 460
schools, along with subsidized services for hospitals, orphanages, libraries and ngos. On.net has also used the
infrastructure to start bringing commercial services to the general public.

Birmingham, England, is likewise going the public-private route, turning to British Telecom to help it cover the
city with wi-fi service that's due to go live soon. In what is becoming a common arrangement, Birmingham
provides access to urban infrastructure such as lampposts on which BT mounts wi-fi transmitters. The city uses
the network to give free access to local services, transport information and events listings, while BT sells full
Internet access to the public.

Public-private partnerships don't always work out as both sides might wish. Birmingham would like to extend
wireless coverage outside the city center, but can't unless BT or some other provider agrees to participate. BT

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announced plans for 12 "wireless cities" over a year ago, but several have hit delays, in part because getting access
to streetlamps can become bogged down in bureaucratic approval. Even Singapore, where the government is
relatively authoritarian, has encountered resistance from venues that have refused to install free wi-fi. And some
users have balked at tapping free access because registration requires them to submit passport and other
personal information. Still, Singapore plans to hit its target of 5,000 wi-fi hot spots by fall.

Elsewhere, the trend looks unstoppable. In Estonia, for instance, technology website operator and wi-fi
evangelist Veljo Haamer has helped convince hundreds of cafés and parks to install wi-fi, getting the city of
Tallinn involved and bringing in advertisers. He's even helped to put wi-fi on an international bus that runs from
Tallinn to Riga in Latvia. Interesting that it's wi-fi and not cellular delivering a lot of the broadband to Estonians
on the go. Though tentatively, even Vodafone has started to express more support for WiMAX since Sarin's
3GSM warning. Maybe Catalonia's brashness showed him the way.

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