leo van audenhove: wireless city networks. policy initiatives in europe and the united states
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TRANSCRIPT
Business Models for Wireless City
Networks in the EU and the US
Leo Van Audenhove IBBT-SMITPieter Ballon IBBT-SMIT
Martijn Poel TNO
The Centre for Studies on Media, Information and Telecommunications (SMIT) is part of the Free University of Brussels (VUB) and the Interdisciplinary Institute for BroadBand Technology (IBBT)
Structure of the presentation
• Introduction
• Selection and introduction of 15 cases
• Goals
• Technology, topology and coverage
• Six business model configurations
• Public inputs and returns
• Conclusion
Introduction: about the project
• Assignor is the Brussels region
• Wireless city networks in the EU and the US, in urban areas
• Explorative study:
– What are the goals (objectives) of cities?
– What business models (PPPs) are possible?
– What is (can be) the role of government, with a focus on the public inputs and returns (“the deal”)
– First indications of results and problems
Introduction: comparative case study analysis
1. Basic data, e.g. coverage, technological set up
2. Goals / policy objectives
3. Relation to broader policy objectives
4. Target groups, prices, access services offered
5. Applications, for public and private use
6. Business model: public inputs and returns
7. Results and problems
Selection of 15 cases
• Initiatives in urban areas with government participation
• Pragmatic: availability of information (US cases were/are further in
their development, with more information available)
• Initiative must be in operation (7 cases) or in preparatory phase,
with business models being announced (8 cases)
• Nearly all initiatives were driven by the city (“public driven”) with the
exception of Leiden, NL (community driven), Turku, FI (private /
community driven) and Cardiff, UK (private)
Introduction to the 15 cases
City Short description Phase Key driver
Bologna (IT) Iperbole Wireless Network: Experimental WiFi network providing wireless internet access to selected groups
Pilot Public: City of Bologna
Boston (US) Gradual expansion of Boston Main Streets WiFi project providing wireless internet access to entire city
Request for proposal
Public: Boston Main Street
Bristol (UK) Bristol Hot Zone: WiFi hotspot zone providing wireless internet access and walled garden services
Operational Public: City of Bristol
Cardiff (UK) BT Openzone: WiFi hotspots and zones providing wireless internet access
Operational Private: British Telecom
Leiden (NL) Wireless Leiden: community network of wireless nodes sharing internet connections
Operational Local Community
Paris a (FR) Establishment of 400 WiFi access points Information phase
Public: City of Paris
Paris b (FR) Site provisioning to private operators with the objective of full WiFi coverage of Paris
Information phase
Public: City of Paris
Philadelphia (US)
Wireless Philadelphia: large-scale WiFi network providing wireless internet access
Roll-out Public: City of Philadelphia
Introduction to the 15 cases
Portland (US) WiFi/WiMAX network providing wireless internet access to citizens, companies and city workers
Tendering phase
Public: City of Portland
Sacramento (US)
Large-scale WiFi network for wireless internet access and additional services
Tendering phase
Public: City of Sacramento
San Francisco (US)
WiFi network covering the entire city for wireless internet access
Request for proposal
Public: City of San Francisco
Saint Cloud (US)
Cyber Spot: Full coverage of city with WiFi/WiMAX network providing wireless internet access
Operational Public: City of Saint Cloud
Stockholm (SW) Stockholm Mobile Connect: WiMAX network providing wireless internet access
Roll-out Public: City of Stockholm
Turku (FI) OpenSpark: WiFi community network providing wireless internet access
Operational Private / Local Community: Sparknet
Westminster (UK)
WiFi network for closed circuit television and other services
Operational Public: City of Westminster
City Short description Phase Key driver
State aid considerations: wireless is ‘fibre revisited’
• Criteria used by the European Commission– White or grey areas (rather than areas with no clear market failure)– Basic facilities and open infrastructures (rather than retail services)– Open tender– Technology neutrality– Open access– Use of existing infrastructure– Short duration, small aid amount and intensity– Reverse payment mechanism– Cost allocation transparency and monitoring– Minimization of price distortion
• Ook criteria voor alternatieven zoals “invest on market terms”
Discourse on goals
Multiple goals
• Most cities pursue multiple goals
– Digital divide prominent (e.g. Philadelphia)
– BUT other goals often underlying driver
• E-gov applications (security, metering, etc.)
• Saving on government communication costs
• Innovation and economic city development
GoalsIntegration in broader policy
• Integration in broader policy– Supporting attractiveness of specific zones or whole city– Platform for developing new services/applications– Security policy– Modernisation of government service delivery– No specific connection to poverty reduction policies
• Bridging digital divide by giving people free access
• NOT by specifically focusing on disadvantaged groups
• Some cities introduced additional measures or programs
Technology, topology and coverage
Technology, topology and coverage
• Technology– Mostly based on WiFi– Often in combination with WiMAX
• Backhaul and backbone, only seldom access • In certain cases upgrade to WiMAX access network foreseen• Düsseldorf case with WiMAX stopped
– Uncertainty about frequencies– Other communication infrastructures available
• Most cases (especially those in early phases) use mesh• Coverage
– 3 main types: Hotspots, Hotzones and Clouds– Often ambition to arrive at Wireless Clouds– In half of cases, indoor connectivity is one of the objectives
Technology, topology and coverage
• Coverage
– Difficult to cover whole area
– Difficulty with quality of service
• City centres with tall buildings and bad coverage
• Remote areas bad coverage
This questions Digital Divide goals
• Indoor coverage
– Indoor coverage not optimal (lowers speed considerably)
– Individual investment in repeaters/antennas
• Roaming and VoIP
– Possible but not optimal
Business models
• The business model and “the deal” between public and private players are influenced by several factors
– How the wireless city network fits the overall policy objectives of a city (e.g. business climate, social, eGov)
– Fit with strategy of the firms and (research) organisations involved (e.g. type of sectors, location of R&D)
– Coverage and quality of existing broadband infrastructures (fixed, mobile, wireless)
– Tariffs of existing access services and applications
– State aid considerations and case law
Business model: roles / activities
Main factors to differentiatebetween business models
Network ownership / operation
Private concession: one private player
Private concession: one private player
Public / Non-profit: one or several public players
Public / Non-profit:one public player, e.g. the city itself
Wholesale: several private players build on a wholesale access offer
Open site model: several players
No specific ISP, e.g. “using” existing ISPsCommunity model: communities of individuals or organisations
Service provisioning
1. Private concession
2. Public / Non-profit
3. Open site model
4. Community model
A. Private concession
B. Public / Non-profit
C. Wholesale
D. No specific ISP
Network ownership / operation Service provisioning
Six business model configurations
1
2
1: Private-Private model: Bristol, Cardiff, Paris (a) and Westminster: either small area
or municipal employees, due to state-aid considerations
2: Private-Wholesale model: Philadelphia, Portland, Sacramento, SF: large areas
1. Private concession
2. Public / Non-profit
3. Open site model
4. Community model
A. Private concession
B. Public / Non-profit
C. Wholesale
D. No specific ISP
Six business model configurations
3
4
3: Public-Public model: St. Cloud: small city, full coverage, outdoors and indoors
4: Public-Wholesale model: Stockholm and Boston: large areas
Network ownership / operation Service provisioning
1. Private concession
2. Public / Non-profit
3. Open site model
4. Community model
A. Private concession
B. Public / Non-profit
C. Wholesale
D. No specific ISP
Six business model configurations
5
5: Open site model: Paris (b) and Bologna, with one private service provider
(possibly more) with a concession (e.g. with restrictions on tariffs).
The service provider may decide to provide wholesale access services to resellers
Network ownership / operation Service provisioning
1. Private concession
2. Public / Non-profit
3. Open site model
4. Community model
A. Private concession
B. Public / Non-profit
C. Wholesale
D. No specific ISP
Six business model configurations
6
6: Community model: Leiden and Turku: often facilitated by cities, the model is
possible with no specific ISP or with a community driven ISP (OpenSpark in Turku)
Network ownership / operation Service provisioning
Public inputs and returns
Public inputs Public returns
Site provisioning / rental Influence on prices
Number of ISPsSubsidies
Coverage, e.g. specific areasLicenses, e.g. exclusive, special
Financial returnPublic backbone (backhaul)
Type of applicationsProcurement, city as anchor tenant
OtherOther
Public inputs and returns
City Input Description Influence Description
1. Private-Private Model
Bristol Low - Site provision- Co-financing of pilot
Low / Medium
- City has the right to offer municipal services within walled garden environment - Limited period of free Internet, financed by advert.
Cardiff Low - Site rental Low / Medium
- Limited number of free accounts for city employees - City collects rental fee
Paris (a) Very High
- Full network financing- Site provision- Outsourcing of network operation and service prov.
Very high - Outsourcing contract- Free access to hotspots for all citizens
Westminster Very High
- Full network financing- Site provision- Outsourcing of network operation and site provision
Very high - Outsourcing contract- Only dedicated services for municipality are offered
Public inputs and returns
City Input Description Influence Description
2. Private-Wholesale Model (two examples)
Philadelphia
Low - Site rental- Exclusive license for 10 years- City as ‘anchor tenant’
Medium / High
- Wholesale offering- License and rental fees- Limited coverage requirements - Price cap on wholesale tariff- Low subscription rate for socially disadvantaged- “Free hotspots” at limited number of strategic locations- Free accounts for city empl.
Sacramento Low / Medium
- Site provision- Access to City backbone network for backhaul- License for 5 years- City as ‘anchor tenant’
Medium / High
- Initially, free subscriptions for all were demanded by city; this is being re-examined- Plans involve limited basic free service and subsidies for socially disadvantaged- Free access for schools- Preferential service for municipal services
Public inputs and returns
City Input Description Influence Description
3. Public-Public model
St Cloud Full - Fully public financing , ownership and operation of the network
Full - Full control over coverage, services- Completely free access
4. Public-Wholesale model
Boston Medium - Site provision- Set-up of Non-profit organization for building network and making wholesale offering to service providers- Limited co-financing by city
Medium? - Not known as project is still in information phase
Stockholm High - Site provision- Building network and making wholesale offering to service providers through non-profit organization
Medium? - Not known as project is still in information phase
Public inputs and returns
City Input Description Influence Description
5. Open site model
Bologna Low - Site provision to multiple actors
Low? - In the pilot phase, a limited free access service was demanded by the city. It is recognized that this requirement is probably ‘untenable’ after the pilot, within the open site model
Paris (b) Low - Site provision to multiple actors
Low - Stimulus for competition
6. Community model
Leiden Low - Site provision- Subsidy of one specific application
Low - Some influence on topology by integration of city’s own nodes
Turku Low - Site provision- Provision of additional access points
Low - Some influence on topology by integration of city’s own nodes and additional access points
Business Model Problems
• Recent evolutions– San Francisco, Milwaukee: halting or delaying plans– Philadelphia: slower implementation– New initiatives cities: difficult to attract interest– Operators: MetroFi, Earthlink (withdrawel), AT&T stop bidding
• Reasons: flawed forecast– Expected market penetration of 15-30%– Actual market penetration of 1-2%
• Reasons:– Incumbents drop prices for fixed broadband– Fixed broadband often higher bandwidth– So Wifi often not a substitution for fixed
• Result: Cities become important as anchor tenant
Conclusion
• Roll-out in large areas: private-private and public-public models may be effective, with public-wholesale creating less state aid concerns
• If other goals are leading (e.g. eGov, competition), and if financial resources are limited: open site or community model
• Need to disentangle and prioritise the policy goals
• One of the main inputs: city as anchor tenant
• The assumptions and calculations had to be updated, e.g. take-up by users (access and services), interest by operators, commercial tariffs
• State aid cases will influence the choice between support for roll-out and/or alternatives with a focus on innovation and services
ConclusionsImportance of contextual factors
• US market fundamentally different– Government mobile networks older
• After 9/11 drive to invest in networks for security
– Mobile networks in general weaker• Limited coverage and problems of interoperability
– Broadband penetration relatively low• Operators do not have full coverage
• Do not provide BB in certain city areas
– Factors might explain why so many initiatives in US• Focus on BOTH e-government, e-securty
• AND bridging digital divide
Contact
• Leo Van Audenhove IBBT-SMIT– [email protected]