Criticism Mounts in SF Muni Deal
If anything the chorus of objections to the EarthLink deal is louder now than before the agreement was reached, and this week's release of an independent budget analyst's report, which both criticizes the contract as submitted and says a city-owned municipal network is a viable alternative, has added to the chances that the agreement will fail.
The city's 11-member Board of Supervisors has 180 days to vote on approving the contract, and several members have already voiced their opposition.
One of the earliest and most vaunted muni networking projects, the San Francisco deal has been held up for months by concerns over residents' privacy and whether the city was getting the best deal it could. In September, at the behest of the Board, the city government agreed to fund a study of a city-owned WiFi alternative to the EarthLink project. (Named as an original partner in the joint venture to build and manage the San Francisco system, Google (Nasdaq: GOOG) was not named in the actual contract but still plans to offer a free Internet service over the network.) (See SF Net to Go Public?)
In his report, city budget analyst Harvey Rose wrote, “It may be fiscally feasible to build a municipally-owned wireless network.” A city-owned network could cost San Francisco taxpayers up to $1.44 million a year, he concluded -- or it could generate revenue of $923,000. Or anything in between. [Ed note: Did this guy train at the Pentagon?]
“To assure initial fiscal feasibility and sustain future fiscal feasibility," Rose added in High Bureaucratese, "the city would need to continually work to contain and manage financial risk in the future in order to maintain a viable wireless service for all of San Francisco."
Rose also noted that EarthLink's position as both the seller of wholesale access and one of the retail access providers gives rise to conflict of interest issues -- a concern that EarthLink officials in interviews with Unstrung have repeatedly dismissed.
From the service providers' side, euphoria has given way to grim resolution in the face of mounting criticism from the public and from local media about the alleged back-room nature of the original handshake deal.
Sounding a bit like President Bush in "Mistakes were made" mode, EarthLink executive vice president Donald Berryman, speaking at a Wireless Communications Association conference in San Jose Tuesday, acknowledged that the company had underestimated the political hurdles, the difficulty in obtaining rooftop leases, and the density of nodes required to build a network with the advertised coverage and service levels.
“We’re in the infant stages of this,” Berryman said. “EarthLink is a company who really needs this to work.”
Indeed, Kimo Crossman, a technical project manager at Charles Schwab who has become of the leading gadflies on the San Francisco wireless initiative, remarks that "EarthLink really needs this to be successful -- their whole business model for municipal networks depends on it."
Both EarthLink and the mayor have embarked on PR campaigns to sell the deal to the public and to recalcitrant supervisors. But time, says Oakland-based muni-wireless consultant Craig Settles, is not on the side of the deal makers.
"The mayor has started his campaign to save the deal, but the problem will be that the longer it goes on, the more chances are that the positions on both sides could become intractable," says Settles. "We really need a major concession point soon to get this thing done quicker rather than the full 180 days."
— Richard Martin, Senior Editor, Unstrung