May 5, 2006 4:00 AM PDT
Free Wi-Fi in S.F. more than flipping a switch
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Ellen Kirk, vice president of marketing for Tropos, which makes the Wi-Fi gear being used to build the network, said that Wi-Fi is actually better suited for hilly terrain than cellular technology. Cellular towers are typically deployed high above the ground to maximize reach, which makes it difficult to engineer radio waves around buildings and hills. But Wi-Fi radios are deployed much closer to the ground. And they are typically grouped closer together, making it easier to move them and point them away from obstacles.
Berryman also said that because of San Francisco's topography, the company plans to put more radios closer together than it would in other deployments. In total, EarthLink will deploy 1,700 nodes on utility poles, averaging about 30 to 36 nodes per square mile.
By contrast, in Chaska, Minn., one of the first cities to deploy citywide Wi-Fi, the city initially deployed only 17 nodes per square mile. Eventually, it increased that to 24 nodes per square mile to improve performance and coverage.
Berryman acknowledges that the network will not be able to reach residents living above 30 feet or what is typically the third floor of a building. And like other cities with citywide Wi-Fi networks, some residents will need to get a wireless bridge that sits in their home to boost the signal indoors. EarthLink customers will get this device for free, but people using Google's free service will have to buy the customer premise equipment at a local electronics store for about $100 to $120.
"This is our business," Berryman said. "We have to make sure the network is reliable and provides reasonable speeds or it wouldn't be worth it for us to sell it as a service. We won't put our name on a network that isn't reliable."
EarthLink is banking on at least 15 percent of San Francisco's residents either buying service directly from EarthLink or using the network through another ISP or from Google within the first 18 months of service. EarthLink will get a portion of the advertising revenue generated through Google's advertising. It also plans to sell higher bandwidth service between 1.5Mbps to 3Mbps to businesses in San Francisco.
Some critics wonder if Google's ad-based model for providing free Internet access will really work. Traditional local advertising in the form of radio, billboards, and fliers, is worth billions of dollars annually. But for now, local digital advertising is only a small fraction of that. In fact, Greg Sterling, principal analyst at Sterling Market Intelligence, estimates digital ads are only worth about $2 billion a year out of a total of $102 billion in 2006.
Google seems to think there is a lot of potential in local search. The company's CEO Eric Schmidt said during Google's first quarter earnings call that local advertising is an "increasingly meaningful contributor to revenue, and much more is coming."
Wi-Fi should also improve the accuracy of local advertising, which could make it even more valuable to advertisers.
"At the 30,000 foot level it looks very promising," Sterling said. "But no one can predict how quickly these revenues are going to come together or how much they will be. First it has to be installed, then consumers have to get on and then advertisers will come."
Google, which is also using local ads to fuel deployment of a network in its hometown, declined an interview to talk about its advertising strategy in San Francisco. But other companies with similar strategies in other cities say they have seen some early success.
Metrofi, which also bid on the San Francisco project, offers free municipal Wi-Fi in nearby Santa Clara, Calif., and recently won a bid to offer the same service in Portland, Ore. Chuck Haas, the company's CEO, said the Portland network will cost less than $5 million to build. With roughly 10 percent to 20 percent of residents regularly using the network, he said advertising revenues will pay for network construction and operating expenses within 24 months.
"If revenue didn't exceed the expense," he said, "I sure wouldn't be doing this."
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