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SF Net to Go Public?

Light Reading
LR Mobile News Analysis
Light Reading
9/28/2006

The fate of San Francisco's municipal wireless network, arguably the most vaunted citywide WiFi project in the country, rose higher in the air this week as the city agreed to examine the possibility of building a publicly owned network.

Pursuing that model would mean tearing up the preliminary agreement the city reached last March to have EarthLink Inc. (Nasdaq: ELNK) and Google (Nasdaq: GOOG) build a privately owned network that would theoretically offer a tiered service to all residents, including a free 300Kbit/s service plus higher speed offerings for yet-to-be-determined fees.

Chris Sacca, the Google executive heading the search giant's part of the San Francisco project, derided the effort in interviews last week, saying the process is not moving forward as planned. Negotiations between the two companies and the city for a final contract are ongoing. (See Imbroglio by the Bay.)

San Francisco has joined a list of cities from Chaska, Minn. to St. Cloud, Fla. where ambitious WiFi projects have run into unforeseen obstacles. The agreement between EarthLink, Google, and the city was announced with great fanfare earlier this year by Mayor Gavin Newsom's office, with the companies portraying the network as a testbed for future wireless services blanketing American cities and the city trumpeting itself as a pioneer in ubiquitous broadband technologies.

Critics of the proposed network, however, have gained wide support in recent months by portraying the arrangement with Google and EarthLink as "a backroom deal" that would fail to live up to its lofty goals of pervasive coverage and "digital inclusion."

Kimo Crossman, a technical project manager at Charles Schwab who has become one of the leading gadflies on the San Francisco wireless initiative, says the Google/EarthLink deal went forward with no serious examination of alternative models.

"San Francisco is the most unwired city in whole nation," points out Crossman. "You can't throw a stone without hitting a café that has free Internet. There's no rush here."

Agreeing with Crossman and other critics, the city's Rules Committee on Monday passed a resolution to fund a study of a city-owned WiFi alternative to the Google/Earthlink project. The city's budget analyst expects the study to be complete by the end of the year -- around the same time the contract with the two private firms is expected to be finalized. Supervisor Jake McGoldrick, who submitted the resolution, said his intent is not to sabotage the Google/EarthLink talks: “I am not going to ask anybody to make a decision until we have enough facts on the table,” McGoldrick told the San Francisco Examiner.

Backing arguments for a public network is a study released this week by the Institute for Local Self-Reliance and the Oakland, Calif.-based Media Alliance, two groups that have been critical of private municipal wireless projects. The report claims that a publicly owned network, based on public-utility models such as water and power , would pay back the original investment in less than five years and generate " at least $6.1 million in surplus revenues over the first five years."

Such claims are hard to substantiate since few publicly owned networks have been built, and none in major cities. Down the peninsula, in San Jose, Calif., the Wireless Silicon Valley Task Force earlier this month chose a consortium headed by Cisco Systems Inc. (Nasdaq: CSCO) to build a fully private systems that will encompass 40 communities and offer service to some 2.4 million users. And in Boston, the city said last month it will seek a nonprofit corporation to raise some $20 million to build and operate a city-wide WiFi network over the next two years. (See Cisco & Pals to Unwire Silicon Valley and New Muni Models.)

— Richard Martin, Senior Editor, Unstrung

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