2007CSW020 Attachment 1. City-Wide Public Wi Fi Service Business Case on Model Options April 2007

Transcription

1 2007CSW020 Attachmet 1 City-Wide Public Wi Fi Service Busiess Case o Model Optios April 2007

2 2007CSW020 Attachmet 1

3 2007CSW020 Attachmet 1 Iformatio Techology Brach Service Stewardship & Iovatio Table of Cotets 1 Executive Summary Itroductio Iformatio Request The Visio Evirometal Sca Techologies ad Architectures Wireless Broadbad Techologies Cellular Digital Wi Fi Techology WiMAX Techology Wireless Techology: Key Observatios Edmoto: Local Market Wireless Coverage City of Edmoto Broadbad Coverage Muicipal Wireless Backgroud: Drivers & Busiess Case Busiess / Fudig Models Lessos Leared Key Observatios Fiacial Implicatios Wireless Networks Cost Implicatios High-Level Cost Calculatios Reveue & Demad Forecasts Deploymet Optios / Impact Assessmets Optios Coclusio Recommedatios Appedix A Case Studies Appedix B Busiess Models

4 2007CSW020 Attachmet 1 1 Executive Summary This report addresses the Executive Committee s request to research publicly-accessible muicipal wireless etworks ad explore the feasibility ad potetial beefits of such a iitiative for the City of Edmoto. This busiess case lays out optios for a city-wide etwork, icludig potetial busiess models, fiacials, risks, beefits ad impacts. A sustaiable busiess case could ot be determied for the City to implemet a city-wide wireless broadbad etwork to provide public Wi Fi access. This coclusio is based o the followig ratioale: Availability: Edmoto is well-served by existig private sector wireless ad wired Iteret access services ad providers. More tha 100 publicly-accessible hotspots ad thousads of private cosumer ad busiess Wi Fi etworks exist withi Edmoto. The market is highly competitive, with cotiuously evolvig techologies ad chagig cosumer eeds that the private sector is best positioed to address. There is o sigificat gap i services or ufilled customer demad that would require muicipal itervetio. Offerig city-wide Wi Fi service would put the City i direct competitio with private sector etworks. Fiacials: Creatio ad maiteace of a ew, competig wireless etwork would ot be ecoomically viable. The costs to desig, build, operate ad maage a reliable ad scalable wireless etwork with curret Wi Fi techologies are sigificat. Beefits are hard to quatify ad the reveue model is ureliable ad isufficiet to cover costs. To date, large-scale city-wide deploymets have ot bee able to demostrate a sustaiable fiacial model. Risks ad Implicatios: Protocols ad stadards, techologies, eduser devices ad other elemets that impact the ecoomic viability of a wireless solutio are chagig at a rapid pace. Wireless services without a attractive price/performace poit quickly become irrelevat. Additioally, oe of the respodets to the City of Edmoto s Request for Iformatio (RFI) idicated a willigess to assume etwork owership risk o behalf of the City. Five potetial deploymet scearios ad three busiess models were cosidered. Noe of the busiess models were deemed viable for the City of Edmoto. City Wide Wi Fi Busiess Case v 1.0

5 2007CSW020 Attachmet 1 Iformatio Techology Brach Service Stewardship & Iovatio Recommedatios: Recommedatios based o the aalysis are: 1. that the City of Edmoto ot implemet a city-wide Wi Fi etwork to eable public Wi Fi access. 2. that the City pilot a limited umber of free hotspots i high traffic civic spaces. These would be i accordace with the seasoal eeds of citizes ad visitors, ad would complemet coverage already available at commercial sites. 3. that the City of Edmoto assume a role as facilitator i supportig iitiatives as they emerge from commuity groups. O-goig moitorig of developmets i the area of muicipal Wi Fi should cotiue i support of this work.

6 2007CSW020 Attachmet 1 2 Itroductio 2.1 Iformatio Request Publicly-accessible, low-cost wireless iteret access is viewed as a eabler i improvig the City s quality of life, image ad attractiveess. These views were expressed i 2005 by members of the Next Ge taskforce, formed to create recommedatios to attract ad retai the ext geeratio. I September 2006, the Next Ge taskforce preseted a umber of recommedatios to the Executive Committee, icludig some specific to the City of Edmoto playig a role i expadig publicly-accessible, low-cost Wi Fi services. The Executive Committee subsequetly requested that the City s Corporate Services Departmet research publicly-accessible muicipal wireless etworks ad explore the feasibility ad potetial beefits of such a iitiative for the City of Edmoto. The Executive Committee recommeded a busiess case be prepared ad preseted back o the various potetial city-wide Wi Fi busiess models. This busiess case lays out those optios, icludig potetial busiess models, fiacials, risks, beefits ad impacts. The objectives of this iitiative are to: research the wireless techologies curretly beig used for muicipal wireless broadbad iitiatives ad existig wireless broadbad services ad coverage i the City of Edmoto; aalyze curret muicipal Wi Fi iitiatives (icludig key drivers, busiess models, lessos leared ad best practices) ad potetial busiess models ad cost implicatios for the City i deliverig wireless broadbad service; preset the results of the aalysis ad provide a recommeded course of actio. The research methodology was based o Iteret searches, telephoe iterviews, meetigs ad discussios with select ISPs (TELUS, Bell, Rogers) ad with muicipal ad idustry experts. A Request for Iformatio (RFI) process was udertake to solicit iput from iterested ISPs ad techology vedors. 2.2 The Visio People are icreasigly mobile ad wat to stay coected by accessig iformatio wirelessly. New wireless techologies have brought the visio of aytime, aywhere access to iformatio much closer to reality. Wireless techologies are beig deployed i homes ad busiesses to create low-cost, high speed wireless local area etworks. Commercial wireless hotspots i airports ad other high-traffic locatios (e.g. retail/hospitality idustry) are expadig. New wireless techology advaces are beig used to provide blaket coverage over cities. City Wide Wi Fi Busiess Case v 1.0

7 2007CSW020 Attachmet 1 Iformatio Techology Brach Service Stewardship & Iovatio Techologies providig city-wide wireless, publicly-accessible Iteret access have bee uder developmet for a umber of years. Muicipalities are icreasigly aware of the treds ad opportuities afforded by wireless techologies. As these techologies cotiue to evolve, busiesses ad govermets are startig to explore how costeffective wireless broadbad etworks ca be deployed ad itegrated ito existig etworks. Some muicipalities, icludig the City of Edmoto, have deployed ifrastructure ad developed applicatios specifically desiged to support their mobile workforce by extedig the eterprise to the field. Recet advaces i wireless techologies have caused some citizes to advocate that muicipalities have a role to play i providig publicly-accessible, low or o-cost broadbad wireless Iteret access. This is partly drive by the view that icumbet service providers prices are high, that they provide limited coverage or that they oly serve market segmets that meet bottom-lie busiess objectives. 5

8 2007CSW020 Attachmet 1 3 Evirometal Sca Techologies ad Architectures 3.1 Wireless Broadbad Techologies Broadbad services are geerally defied as data services that are fast, always available ad capable of supportig advaced applicatios. The geeral stadard used to distiguish broadbad is data trasmissio speeds of 200 kilobits per secod (200Kbps) or more. At this speed, for example, Web pages ca be flipped as quickly as pages of a book ad full-motio video is available. There are a umber of wired ad wireless optios curretly available for deliverig broadbad services. Each has its advatages ad disadvatages i certai applicatios desiged to meet particular eeds. The primary techologies relevat for muicipal wireless are Cellular Digital, Wi Fi ad WiMAX Cellular Digital Cellular Digital is the geeric term for the wireless data service offerigs from cellular mobile telephoe providers such as TELUS, Bell ad Rogers. Cellular etworks provide ubiquitous coverage ad have a extremely high adoptio rate. Wireless carriers ow offer coverage to more tha 98 per cet of Caadias, ad more tha two-thirds of Caadias have access to wireless phoes. (Caadia Wireless Telecommuicatios Associatio CWTA). Mobile phoe techology has goe through may versios or geeratios. The latest mobile wireless broadbad services provide speeds i major metropolita areas ragig from Kbps. This eables cell phoes to become smart phoes which, i additio to the stadard voice fuctio, ca support may additioal services. Youger geeratios are the largest users of these services which iclude: text messagig, , Iteret browsig, access to corporate etworks, music (MP3) playback, built-i cameras, games, radio, ability to watch streamig video ad servig as a wireless modem for a PC. Cellular etworks use the licesed portio of the radio frequecy spectrum. The costs associated with the liceses are high ad ultimately passed o to the cosumer. A device capable of fully utilizig these services costs $300 or more ad service plas are based o megabytes used. The cellular marketplace is fiercely competitive. The ext evolutio (4G) offerigs, which will be available withi the ext few years, promise sigificatly higher speeds ad are expected to itegrate aspects of Wi Fi ad WiMAX techologies Wi Fi Techology Wi Fi is a brad ame describig the set of product specificatios (802.11x) used for wireless local area etworks (WLANS). It was iitially developed as a i-buildig LAN etwork for mobile computig devices ad as a coveiet ad cost-effective alterative to cablig. Wi Fi operates at ulicesed radio frequecies ad has gaied acceptace i the marketplace as a iexpesive i buildig ad outdoor optio for providig wireless Iteret access. Users require Wi Fi eabled devices to coect through Wi Fi to the Iteret. Most ew mobile devices offer Wi Fi radios as part of their stadard equipmet. Wi Fi is a poit-to-multipoit techology which allows several cliets to coect simultaeously. As more cliets coect, the performace degrades. City Wide Wi Fi Busiess Case v 1.0

9 2007CSW020 Attachmet 1 Iformatio Techology Brach Service Stewardship & Iovatio Curret muicipal wireless implemetatios typically offer speeds of 500Kbps to 1Mbps. Curret stadards provide a idoor rage of about 50 metres ad a outdoor rage of about 100 metres. Cosumer grade Wi Fi etwork cards have become commoditized ad are priced uder $100, while commercial grades, with greater security ad user maagemet features, are i excess of $2,000. Hotspot is the term used to describe the area covered by oe or several Access Poits (APs). Hotspots are ow widely available at high-traffic, public locatios such as airports, hotels, covetio cetres, retail outlets ad coffee shops. Large scale Wi Fi etworks coverig a umber of city blocks, a commuity or eve city-wide are also beig deployed, but sice APs have limited rage, large deploymets require cofigurig may APs to overlap each other to form a cotiuous mesh etwork of wireless sigals, similar to cellular techology WiMAX Techology WiMAX is a loger-rage techology, based o the family of specificatios, that also uses a poit-to-multipoit architecture. As a licesed frequecy bad, it is more expesive to deploy tha Wi Fi. WiMAX ca exted local Wi Fi or cellular etworks across greater distaces or provide last mile coectivity to a service provider or other carrier may miles away. WiMAX stadards are still beig developed ad the techology is oly startig to be icorporated i cosumer mobile devices. As etwork covergece i mobility accelerates, the complexities of Wi Fi mesh cofiguratios will become more proouced ad the WiMAX access solutio becomes more attractive. I the future, wireless providers will likely pursue WiMAX as a key compoet i their wireless etworks. 3.2 Wireless Techology: Key Observatios Wireless techologies are i a state of rapid chage: Data trasmissio speeds are roughly doublig each year; New protocols ad stadards are beig developed; Older protocols are beig ehaced through ew stadards that icrease speed, rage, security ad mobility features; this is eabled through equipmet upgrades; Wireless systems of the future will evolve to a sigle ifrastructure that supports differet wireless access techologies (Wi Fi, WiMAX, Cellular ad the 4.9GHz public safety bad). These techologies are evolvig idepedetly at differet rates, but movig towards covergece; Covergece o the cosumer side is already evidet ad will icrease. Dual mode Wi Fi cellular hadsets are comig to market ow, ad whe mobile WiMAX arrives, it will commoly be combied with a Wi Fi cliet. I the log-term, this evolutio will be positive for the cosumer. Short-term, there is risk i ivestig i large wireless deploymets based o Wi Fi techology. Particular cocers iclude: Cotiuous availability caot be guarateed. Wi Fi operates i ulicesed radio bads, so there are o cotrols o who or what ca share the limited umber of bads. As usage grows,

10 2007CSW020 Attachmet 1 so does the potetial for iterferece issues ad falterig coectios; Cosistet service levels will be difficult to maitai. Wi Fi badwidth is shared, ad performace degrades with multiple simultaeous users. Whe performace is degraded, high performace applicatios such as streamig video ad audio ca be a usatisfyig experiece, makig alterate broadbad techologies more attractive; Additioal equipmet (CPE) would likely be required to facilitate i-buildig Iteret access to outside access poits. Coverage may require umerous ateas to icrease coverage or boost sigal stregth, because of Wi Fi s, short rage ad, limited ability to peetrate buildig walls or reach above the secod floor. Iteroperability challeges with other techologies. WiMAX is a emergig techology viewed as a complemetary techology to Wi Fi. As a licesed frequecy bad, it is more expesive to deploy tha Wi Fi, ad curret implemetatios iclude proprietary techology. Of the three techologies, Wi Fi has emerged as the foreruer for muicipal wireless deploymets. It is a good, low-cost solutio, ad is easy to deploy i smaller public places (e.g. coffee shops, hotels, shoppig malls). 3.3 Edmoto: Local Market Wireless Coverage Statistics idicate local telephoy ad Iteret usage is strog ad the market is well served. Alberta Fiace Statistics 2003 reports 58% of the populatio used the Iteret at home, 42% at work ad 40% at a school/library/other, for a total usage rate of 69% at ay locatio. City of Edmoto statistics ( Comm Services) idicate Iteret access from the household has icreased rapidly, from 34% i 1999 to approximately 60% i This growth rate is cotiuig, as supported by the 2005 Caadia Iteret Use Survey which idicates that 69% of Edmotoias aged 18 ad over use the Iteret City of Edmoto Broadbad Coverage More tha 50 Iteret Service Providers (ISPs), icludig telecommuicatio ad cable compaies, offer Edmoto ad area a variety of Iteret services for both residetial ad busiess customers. I additio to cellular etworks, Edmotoias have a variety of broadbad techology choices. Almost every busiess ad residece has a choice of cable or DSL fixed wirelie Iteret access from several providers, priced from $30/moth, These services provide speeds from 1Mbps 8Mbps. Lower cost dial-up service (56Kbps) is also available. Several providers also offer to provide wireless access by moutig a atea i private resideces or busiess locatios. City Wide Wi Fi Busiess Case v 1.0 8

11 2007CSW020 Attachmet 1 Iformatio Techology Brach Service Stewardship & Iovatio Edmoto is well served with wireless Iteret access, as evideced by the followig: Cellular Coverage: Edmoto is covered by cellular data services wide-area etworkig techologies that provide comprehesive, ubiquitous, reliable ad seamless coverage at speeds from Kbps. Wi Fi / Commercial Hotspots: There are more tha 100 publicly accessible hotspots i strategic, high-traffic locatios throughout Edmoto, such as hotels, restaurats, retail outlets, golf courses ad coffee shops (see www. jiwire.com for a partial list of locatios). These hotspots are a mixture of free ad fee-based wireless Iteret access poits provided by commercial establishmets as a customer service differetiator ad/or reveue geerator. Educatioal Istitutios: Edmoto s postsecodary educatioal istitutios, icludig the Uiversity of Alberta ad NAIT, provide Wi Fi access for their studet populatio. Coverage ofte exteds beyod their buildigs to outside commo areas throughout their campus sites. City Libraries: All Edmoto Public Libraries offer free Iteret access, through approximately 350 computers. I 2007, idoor Wi Fi access poits are also beig deployed throughout library buildigs to allow the public to coect to the Iteret usig their ow Wi Fi eabled mobile devices. Alberta s provicially-owed ad fuded SuperNet is a high-speed ad high-capacity broadbad backboe. It exteds throughout Alberta ad is utilized withi Edmoto by schools, libraries ad hospitals. The etwork provides direct access to public facilities ad, more recetly, through service providers to busiesses ad resideces i Alberta commuities. SuperNet uses a ope access model which allows local service providers to buy badwidth at reasoable, uiform rates across the provice for resale to busiess ad residetial customers. Axia is the private compay cotracted by the Govermet of Alberta to maage commercial access to SuperNet. 3.4 Muicipal Wireless Backgroud: Accordig to IformatioWeek (November 2006), more tha 300 cities ad couties i the US are either cosiderig or deployig muicipal Wi Fi etworks. This is triple the umber reported i early While umerous small-scale successes exist, few large-scale muicipal Wi Fi iitiatives have bee implemeted that could serve as a bechmark. May of the plaed large-scale iitiatives have udergoe chages i scope, timig, techology ad fudig models. A umber of promiet muicipal wireless iitiatives recetly completed or curretly uderway were researched i order to uderstad the cotext, drivers, busiess models, issues ad key lessos (see Appedix A) Drivers & Busiess Case There are three commo drivers behid muicipal wireless iitiatives: 1. Ehacig the delivery of govermet services; 2. Stregtheig ecoomic developmet; 3. Improvig the quality of life for citizes through icreased access to iformatio. Typically, all three are evidet, but the emphasis differs depedig o a particular city s cotext. The busiess case for ehacig the delivery of govermet services is usually clear ad compellig. May muicipalities have deployed ifrastructure ad applicatios specifically desiged to support their mobile workforce, track assets, moitor remotely, provide surveillace, etc. The beefits i ehacig service delivery ad cost savigs compared to commercial etwork providers rates ted to be easily demostrable ad provide a quick payback. May cities, icludig the City of Edmoto have cosidered this route.

12 2007CSW020 Attachmet 1 A variatio of this occurs whe a commuity is seriously uderserved by the icumbet providers, or broadbad services are deficiet or too expesive. I these cases, city officials may parter with busiesses ad leverage their combied resources to provide improved services. The busiess commuity helps pay for the ifrastructure. The City of Fredericto, where excess capacity is offered to support publicly accessible Wi Fi services, is a example. The busiess cases for the other two drivers are more difficult to measure ad ofte lack strog tagible beefits. I some muicipalities where these are the drivers such as Philadelphia ad Sa Fracisco commercial providers, citizes ad taxpayer associatios have expressed cocers with the otio of cities creatig govermet-owed ad fuded wireless etworks to compete with private sector etworks. This has prompted debate about the issues surroudig muicipal wireless, ad recet legislatio i the US has curtailed these types of vetures. While the above examples are more commo, research also ucovered a example of a more busiess-focused implemetatio, Toroto Hydro Telecom (THT). Iitially THT s iitiative focused o providig the public with wireless service which was a result of the the plaed expasio of its ifrastructure to implemet automatic meter readig. As the utility aalyzed the busiess opportuities i wireless, it etered ito this lie-of-busiess o a commercial basis, positioig itself as a alterate ISP whose pilot is focused o a select area of the dowtow core. This decisio places THT i competitio with the icumbets ad multiple other ISPs Busiess / Fudig Models A umber of muicipalities have tried to leverage their ow iteral broadbad etworks to provide publicly-accessible wireless Iteret access service. Where legal ad regulatory hurdles have preveted muicipalities from gettig ito this lie of busiess, some have set up separate etities ad/or sought busiess parters to complete their projects. Early attempts to expad or create ew etworks have show that deployig, maagig ad maitaiig a etwork of acceptable quality is a major, costly ad risky udertakig beyod the scope of most muicipalities competecies. The risks ca be cosiderable ad eed to be mitigated. A key challege for wireless iitiatives is fudig. Two factors eed to be cosidered: Who will pay the cost of costructig the etwork? How will the costs of operatios ad cotiuig equipmet upgrades be covered? Decisios regardig these fudig factors are largely drive by decisios surroudig the degree of owership ad cotrol a city wats over the etwork ad the purpose of the etwork. Clear ad cocise aswers to questios icludig: What eeds are we tryig to satisfy?, Who are the users?, What are the requiremets?, What beefits are we strivig to achieve? ad What amout of risk is the city willig to assume? must first be determied. These aswers would help idetify the techology ad operatig model required to meet the customer care, service developmet, etwork operatios ad maagemet requiremets. Model choices cover the spectrum from idepedet ot-for-profit commuity grassroots iitiatives to fully city-owed ad fuded (see Appedix B for descriptios). Case studies ad idustry research idicate large scale muicipal wireless deploymets ted to favour a maaged-service or public/private City Wide Wi Fi Busiess Case v

13 2007CSW020 Attachmet 1 Iformatio Techology Brach Service Stewardship & Iovatio partership model. Agreemets ted to share the followig characteristics: A city eters ito a partership agreemet with a major ISP which agrees to desig, build ad ru the etwork for the city; Fudig is provided by the ISP, with reveue streams expected from retail ad wholesale subscriptio fees, as well as advertisemets; Service plas are tiered ad priced accordigly, ofte icludig a free compoet based o slower access rates. Most muicipal plas have provisios for higher speed tiers at varyig price poits; The city directs some of its muicipal applicatios to the etwork ad acts as a achor teat to esure the etwork s fiacial viability; The city is expected to support the iitiative by makig its assets (e.g. lamp posts, muicipal buildigs) available to the service provider to locate the ifrastructure; The city egotiates some ad-geerated reveue sharig, or receives discouted service rates for specific customer groups or geographic areas to address the digital divide. Examples of this type of agreemet are: Muicipality Philadelphia ad Sa Fracisco Portlad, Orego Riverside, Califoria Silico Valley, Califoria Parter Compay(s) EarthLik ad Google Microsoft ad MetroFi AT&T Metro Coect (Cisco Systems & IBM) ad Aluzar Lessos Leared Key Observatios The followig are key observatios resultig from a review of muicipal wireless broadbad iitiatives case studies ad techical research. They represet risk elemets that eed to be factored ito decisios about the potetial role of muicipalities i wireless broadbad iitiatives: Cost Risks: Maiteace ad replacemet costs upfrot costs ted to be deceptively low ad escalate rapidly whe factorig i yearly maiteace ad equipmet replacemets costs (approximately 50 per cet replacemet/upgrade every three to five years); Costs of large-scale offerigs sigificatly higher expeditures are icurred whe deployig the carriergrade etworks required for pay-for-use or subscriptio services. Costs ca quickly skyrocket due to etwork redudacy, provisio of power, customer service, ati-hackig security measures, billig ad other maagemet ad admiistrative cost requiremets. For example, Philadelphia s costs doubled from the origial estimates; Cost of additioal equipmet for ibuildig access Iteret access withi buildigs poses a challege ad would likely require subscribers to purchase additioal equipmet. This lesses the attractiveess of the service offerig. Note: the favourable terms offered by the ISP ad major equipmet provider o the early cotracts with the cities of Philadelphia ad Sa Fracisco were offered i part to establish test beds i the marketplace for their techical solutios. Subsequet cotracts with other cities teded to have fewer cocessios. 11

14 2007CSW020 Attachmet 1 Reveue Risks: May large-scale or city-wide deploymets have ot bee able to cover their costs without beig subsidized by taxpayers or rate hikes. A wireless etwork for which obody pays is t viable. If the govermet pays, it is usually iappropriate ad, if ads pay, it is usually ureliable. Large muicipal etworks are icreasigly seekig subscriptio-based ad pay-for-usage reveue streams to be viable; Subscriber willigess to pay is provig to be below expectatios: Users are more iclied to experimet with free access service. This is causig lower tha aticipated take rates whe switchig from free access to pay-for-use. Prelimiary iformatio from Taipei, Taiwa suggests a very low subscriptio rate. With a populatio of 2.6 millio people, oly 60,000 users registered for the free trial period. Of those users, oly 10 per cet (6,000) cotiued to use the service whe required to pay for it. Commercial Hotspots are ot geeratig sufficiet reveues, causig establishmets to icreasigly view them as a value-added service rather tha a reveue geerator. Health cocers, security of data ad iformatio privacy cocers may adversely affect subscriber take rates. Techology Risks: Few large-scale Wi Fi muicipal deploymets have bee implemeted that ca be used as a techology bechmark. Most have bee small scale; ucertaity still remais over whether large scale etworks will be able to overcome their techical challeges. Wi Fi was origially desiged for use i small areas or zoes. Wi Fi is ot a techology desiged for large full-coverage muicipal developmets. Wireless techology is rapidly evolvig ad there is a risk that curret Wi Fi deploymets could be leap-frogged by ewer versios of cellular ad, evetually, WiMAX. both techologies promise speed ad coverage advatages. Curret Wi Fi deploymets may rapidly become outdated; There is o commo stadard for Wi Fi meshig, ad thus o compatibility betwee the five leadig vedors equipmet; Techical problems ca persist log after deploymet, regardless of scale or resources (Taipei, Taiwa). Health Cocers: The potetial detrimetal health effects of huma exposure to Radio Frequecy (RF) are startig to get more attetio, ad the debate impacts wireless broadbad iitiatives because Wi Fi services are based o RF. While may studies have suggested these cocers are ufouded, orgaizatios such as the Lakehead Uiversity i Thuder Bay, Otario have baed further Wi Fi deploymet util further studies either refute or support the health cocers. While there is value i wireless coectivity i situatios where people are ot workig from fixed locatios, such as airport louges, the beefits are more teuous i locatios where fixed-lie Iteret access is readily available. City Wide Wi Fi Busiess Case v

15 2007CSW020 Attachmet 1 Iformatio Techology Brach Service Stewardship & Iovatio Wi Fi etwork equipmet must comply, at a miimum, with Idustry Caada s federal stadards that address exposure to electromagetic radiatio. While a Wi Fi deploymet would ot cotribute sigificatly to the overall level of sigals that make up the radio eviromet, it is impossible to prove there is o risk. Cities should expect public cocer about city-wide wireless deploymet i which access poits are clearly visible o city streets. Security ad Privacy Iteret-based crime is icreasig. Reports of fiacial scams ad the distributio of porography o the etwork frequetly make headlies, ad it is challegig to track dow the perpetrators. Law eforcemet agecies are cocered that urestricted wireless access would offer crimials a alterative where trackig would be eve harder. These risks caot be completely mitigated, but the visibility of a city-owed etwork would require the muicipality to employ user registratio ad autheticatio. This would icrease the cost of the etwork ad could coflict with public views of privacy ad uimpeded access. Similar cocers are expressed with ad-based ad locatio-based cotet reveue. May users view cotet filters, ad-based ad locatio-based cotet applicatios as a ifrigemet, ad may avoid wireless deploymets o those terms. Citizes resistace to the deal Sa Fracisco egotiated with EarthLik ad Google is a case i poit. Regulatory Issues: Caadia muicipalities cosiderig city-wide wireless deploymets must ivestigate potetial regulatory issues. Wi Fi is telecommuicatios, ad large-scale Wi Fi iitiatives may have to comply with Idustry Caada requiremets ad/or provisios of the Telecommuicatios Act, admiistered by the CRTC. These key observatios corroborate the issues ad cocers with large-scale muicipal Wi Fi iitiatives. I summary, large-scale wireless broadbad etworks remai experimetal eough to warrat cautio. 13

16 2007CSW020 Attachmet 1 4 Fiacial Implicatios Wireless Networks 4.1 Cost Implicatios Desigig, egieerig ad costig a wireless broadbad deploymet ivolves desig decisios about may variables, icludig coverage, desity, topology, existig spectrum ad type of service. These decisios affect both equipmet ad techology choices. Cost data for deployig muicipal Wi Fi implemetatios is ot readily available. While high-level figures have bee quoted, cities ad ISPs do ot voluteer cofidetial cost data ad reveue forecast details. High-level cost iformatio quoted i media stories ofte reflect pricig scearios ad assumptios which are more positioal statemets tha cotract pricig. A ofte-utilized cost figure for muicipal wireless etworks is provided by Jupiter Research (Wi Fi Plaet News, July ). Based o surveys ad coversatios with vedors ad 83 cities that have deployed or are i the process of deployig some form of a wireless etwork, Jupiter Research cocluded that the average cost of buildig ad maitaiig a muicipal wireless etwork is $150,000 USD per square mile over 5 years, approximately $70,000 CAD per square kilometre. Local sources suggest this cost figure is too low ad would likely be sigificatly higher. The report goes o to say that about half of the iitiatives today to create city or couty backed wireless etworks will ot break eve, eve if they charge ed users as much as $25 (US) per moth i subscriptio fees. outdoor istallatio raises may more challeges because of evirometal factors, moutig locatios, heatig/shelterig eeds, power source ad backhaul requiremets. Implemetig ad maagig a city-wide wireless broadbad etwork providig both idoor ad outdoor coectivity is a complex udertakig with may ukows that eed to be surveyed, egieered ad costatly moitored. There are sigificat costs to establishig ad maitaiig ogoig operatioal maagemet processes for a large-scale, multi-service, pay-for-use etwork implemetatio. The magitude of each idetified activity or busiess process is a fuctio of the geographic area to be covered, the umber of users ad service levels beig plaed. Each has associated capitals expeditures ad operatioal costs which must be factored ito the busiess case High-Level Cost Calculatios Ball-park costs for a umber of scearios are outlied i the table below. I the absece of specific requiremets, the cost estimates provided for the purpose of this aalysis are high level ad based o a large umber of assumptios. Istallig a sigle access poit i a cotrolled idoor eviromet is a fairly simple udertakig. A City Wide Wi Fi Busiess Case v

17 2007CSW020 Attachmet 1 Iformatio Techology Brach Service Stewardship & Iovatio Cost Coverage Area Assumptios Ratioale I excess of $50 Millio $70,000 /sq km Miimum plus ogoig operatioal expeses City-Wide Mesh deploymet Hot Zoe (multiple Access Poits) Mesh deploymet Carrier grade with all supportig busiess processes, billig, customer care, security, cotet filterig, etc. Costs ca vary greatly accordig to the terrai, the type of coverage, the service grade desiged for ad the techology set deployed. This figure is o the low side, with limited coverage. Idustry stadard of $70,000 CAD/sq km. Edmoto cotais 684 sq km. As above, costs will likely be sigificatly higher because of lower ecoomies of scale ad urba vs. rural coverage challeges. $9,000 each Sigle Access Poit Outdoor $6,000 each Sigle Access Poit Idoor $6,000 plus $7,200 yearly Sigle Access Poit Idoor City istall i/o a City-owed facility usig the facility s coectio to the City etwork to provide public access to the Iteret; o o call support. City idoor istall same as above Commercial ISP istalls Idoor A example would be Wi Fi service i Churchill Square. It would likely require 4 APs, for a total of approximately $27,000. A example would be a AP at City Hall. AP = approx $6,000 plus mothly backhaul charge of $600. Equals $13,000 i year 1 ad $7,200 aually afterwards; plus customer pays usage charges. Note: Wi Fi is a shared etwork, ad performace degradatio is experieced with additioal users ad applicatios beig ru. This requires costat usage moitorig to determie if additioal APs (cells) are required to hadle the volume. 15

18 2007CSW020 Attachmet Reveue & Demad Forecasts While high-level costs ca be estimated based o a large umber of assumptios ad costraits, user demad ad reveue forecastig is much less accurate ad thus riskier i the absece of a idepth market aalysis ad a stakeholder egagemet process. There are a umber of key observatios from the research that idicate large scale muicipal Wi Fi iitiatives ca be a fiacially high-risk udertakig. Muicipal etworks must ofte seek subscriptiobased ad pay-for-usage reveue streams, i additio to other more creative fudig, i order to be viable. This requires a carrier-grade etwork offerig competitive services ad a value propositio better tha existig etworks i order to gai market share. Give that the Edmoto market is well served ad the user commuities curretly have multiple service optios, the eed to capture a sigificat user base i the face of a competitive marketplace is a high risk. A blaket Wi Fi deploymet i Edmoto would probably require i excess of $50 millio dollars. There has to be a sustaiable fiacial model to support this level of capital ivestmet ad the postimplemetatio operatig costs. Curret muicipal models rely o a combiatio of user subscriptios, ad-geerated reveue ad fixed reveue streams from the muicipality as a achor teat. To date, there is little evidece that these models have bee successfully established. The followig poits illustrate the reveue risks: Willigess to Pay: While the umber of hotspots is growig, the willigess to pay is ot keepig pace. Jupiter Research (November 2003) idicated that while 70% of olie cosumers were aware of public hotspots, oly 6% have used the service i a public place, ad oly 1% have paid to use it i a public place; Competitio: Govermet-sposored broadbad will have to compete with icumbets, such as telecommuicatio compaies, cable compaies ad other ISPs who already have a substatial head start. To retai market share they may employ powerful marketig tools ad itroduce or expad loyalty programs, service budlig, etc.; Limited Market: Existig Wi Fi vedors have already explored all the commercially viable, strategic locatios ad high-use target markets. A muicipal iitiative may ot attract eough users to make the busiess viable; Marketig Focus: I the face of dyamic competitio ad swift techology chage, the etwork owers must adopt professioal private-busiess maagemet ad marketig practices ad processes i order to esure a positive customer experiece ad a compellig value propositio; Cotiuous Iovatio: The market requires cotiuous iovatio improvig the price poit ad service offerigs to esure the value propositio remais compellig ad customer chur (whether due to Price, Selectio, Service, or Iovatio) is maaged; Chur: Usig the highly competitive cellular idustry as a example, customer chur rates are sigificat ad ca rage betwee 25% 35% of the base yearly. ISP chur rates average 4% to 8% per moth (48% 96% per year). (Network World 11/12/01). A article i C/Net News.com ( Ja ) suggests that Iteret Service Providers are sufferig from mothly subscriptio cacellatio rates that are five times greater tha those of telecommuicatios services such as cellular phoes, pager ad log distace carriers. This is potetially a huge threat to the forecast reveue streams, ad represets a fiacial risk to the etwork; City Wide Wi Fi Busiess Case v

19 2007CSW020 Attachmet 1 Iformatio Techology Brach Service Stewardship & Iovatio Price/Performace: Market share ca oly be achieved if the price/performace combiatio is viewed by the cosumer as beig superior to what the competitio offers. If the techology ad performace level is the same a big assumptio for a ew etrat the the oly lever a muicipal iitiative has is to lower the price poit to buy market share. Capital Requiremet: The icumbet telecommuicatio ad cable compaies have depth of capital ad are i a better positio to build ad update their etworks. I summary, the barriers to etry are much more formidable agaist etreched competitio tha most muicipalities realize. The Edmoto broadbad Iteret access market is well-served by icumbets. The market is fiercely competitive ad there would be a aggressive respose from icumbets. 17

20 2007CSW020 Attachmet 1 5 Deploymet Optios / Impact Assessmets 5.1 Optios Cities have a umber of optios for deployig publicly-accessible Wi Fi Iteret access. The followig covers the spectrum of most likely optios: 1. Do Nothig Rely o the Private Sector 2. Selective City-owed Wi Fi Locatios (Hot zoes) 3. Corporate Wholesale 4. Public Utility 5. Public-Private Partership (P3) Each optio is described alog with a assessmet of the fiacials, risk profile, beefits ad impacts. Do Nothig Rely o the Private Sector: Eve if the City chooses this optio, the wireless city visio will likely be realized evetually through the private sector. This would ot preclude the City from ay ivolvemet i public access wireless deploymets as it could assume a role as facilitator i supportig grass roots iitiatives as they emerge from commuity groups. The impact to the City of this optio is miimal: o costs to the City, o associated risks ad o icremetal beefits to those already delivered by private idustry. I the case of small grassroots iitiatives, the beefits from a City perspective are limited, as they would oly accrue to a small group. Costs Risks Beefits Owership / Cotrol Commets Nil Nil /a Nil Private Sector drive with separate grassroots or local busiess associatio iitiatives. There are o icremetal beefits uless the City supports the iitiatives. I aticipatio of requests for access to City assets, it is recommeded the City review its policies ad applicable regulatios regardig the use of City assets, such as lamp posts ad other vertical ifrastructure. City Wide Wi Fi Busiess Case v