Tales of the Sausage Factory

St. Cloud Muni System Saved by Citizen Users — “Waste” or “Success.”

As reported by Esme Vos at Munireless, the St. Cloud Muniwireless system has been granted a reprieve. In an effort to lower municipal costs to avoid raising taxes, the town council voted on September 30 to shut down the wireless network. At a city council meeting two days later, a crowd of local residents showed up to protest the decision, resulting in a 120-day extension to reexamine the question.

St. Cloud’s political fight over its municipal wireless network cuts to the heart of one of the core debates in the national broadband plan. Do we regard connectivity as a service on the same level as schools, sewage, and public transportation — where we expect the city to subsidize the service because it provides needed social benefits? Or do we insist that we only provide broadband where it can pay for itself on a going forward basis (after some initial stimulus money to get the network built and get the ball rolling)? There is no doubt that for a city of 30,000, a fair number of people use the St. Cloud wireless network (at least 8500 unique connections/month) and enough regard it as sufficiently important to lobby their city council to keep the network in the face of a financial shortfall. At the same time, no one argues with the fact that the network costs the city $30K/month and seems likely to do so for the foreseeable future.

So how do we measure waste or success? I’ve argued on more than one occasion that we should look on these networks as the equivalent of a public transportation system. They don’t compete with cabs or car sales despite the fact that many people rely on them to avoid driving. In fact, cabs and auto dealers benefit because public transportation systems because they keep traffic manageable. And, as the iPhone and other smartphones continue to increase the demand for spectrum for data traffic, licensed wireless operators like AT&T are finding it beneficial to encourage customers to use wifi hotspots and offload the traffic whereas previously carriers resisted letting customers use wifi at all.

We have until February to debate how we want to incorporate this into our national broadband plan. Broadband as utility — where we encourage local governments to offer services like St. Cloud for the positive externalities for everyone even if it requires continuing subsidy? Or does it only make sense to have municipal broadband where it can pay for itself? With the final decision on St. Cloud now due in January 2010 — a month before the National Broadband Plan — it will be very interesting to see what the citizens of St. Cloud and their local government decide.

Stay tuned . . . .

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Tales of the Sausage Factory

I Go Delphic, Snort Oak Leaves, And Give Four Reasons Why Google Will Bid To Win in the 700 MHz Auction (despite what the smart money says)

Analysts who watch Google and watch the wireless world really, really, really don’t want to think of Google as getting into the wireless biz. This spring, I heard an awful lot of “Google won’t bid” or “Google can’t win” or, my personal favorite, “you think Google is going to bid? Are you on crack?”

As regular readers know, while I have occasionally been a shade grumpy about how Google worshipers have attributed all things in the auction to our Great Google Overlords, I have been surprised at the reluctance of most analysts to accept that Google really does want to win licenses. For example, when Verizon announced it would open its network to third party devices, analysts suggested this would take the pressure off Google to win licenses itself. When Google announced it definitely would participate in the auction, a number of analysts again questioned whether Google was really serious about winning or whether it just wanted to insure the $4.6 billion C Block reserve got met. Although as shown in this article here, some analysts expect Google to press hard to win, the conventional wisdom among analysts has jelled into “Google is only bidding to make sure the C Block conditions stay in place.”

These analysts have sound reasons for thinking Google would be mad to bid. Google never wanted to be a network provider. Sure, they’ve dabbled a bit by investing in broadband over power line (BPL) and dipping a toe in muniwireless (neither of which has amounted to very much). But Google never took the potentially ruinous plunge from being an applications provider (its realm of dominance) to becoming a network provider. Worse, the estimated $5-$6 billion price tag for the C Block licenses is only the beginning of the cost to actually build a network. According to one widely reported estimate by Google itself, it would cost another $12 billion to build the network once Google has the licenses.

Nor is the wireless industry considered ripe for expansion. If anything, analysts expect further consolidation as smaller carriers find it tough sledding against the vertically integrated giants AT&T and Verizon (which jointly control the bulk of residential subscribers, can offer a nice set of wireless and wireline bundles, and enjoy other advantages that make them tough to beat). Even with Google’s genius for creating new capital opportunities, the conventional wisdom goes, how on Earth can Google ever recoup this mammoth investment as yet-another-wireless carrier in the highly-commoditized world of wireless telephony. And the one thing that might have worked, creating its own compelling “walled garden” that encourages users to go with Google wireless to enjoy access to features they routinely access in the wireline world, is the one thing Google has sworn up and down it won’t do. To put icing on the cake, the formation of Android and the inclusion of national carriers T-Mobile and Sprint make it impossible for Google to create its own walled garden if it changes its mind after winning.

With all this to consider, small wonder analysts by and large don’t see much chance of Google making a serious run to win. They believe that Google wants someone else to win, but offer an open network Google can ride on. So while bidding to make sure the spectrum gets bought makes sense, actually wanting to win the licenses doesn’t. Hence the convergence of the conventional wisdom that Google will leave it to Verizon or someone else rather than tie a multi-billion dollar albatros around its neck and potentially crash its stock valuation (especially if you hold Google stock).

For the reasons given below, I will play the contrarian. I think Google will bid and fight hard to win licenses. Indeed, while I expect Google to target C Block, it may well go after D Block or some of the other licenses as well, if that’s what it takes to build a national footprint. Google might still get outb id by Verizon and other carriers, but I don’t think that’s Google’s plan. I think they are in to win.

Why? See below . . . . .

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Tales of the Sausage Factory

Round One to AT&T in Indiana

So far, the latest Bell startegy is working. According to Esme Vos’ Muniwireless.com, the Indiana Senate Subcommittee voted out SB 245 8-2. SB 245 will now move to the full Senate. If approved, there are apparently sponsors prepared to introduce a similar bill in the Indiana House of Reps.

Stay tuned . . . .

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Tales of the Sausage Factory

My speech in SF

Sorry to go dark so long. I was on the West Coast pretty much all last week, then came home in time for the Jewish New Year. Lots of stuff to blog about and will try to do updates over the next week or so.

Last week, I was at the amzing and cool conference put together by Esme Vos of muniwireless.com. Esme is proof of why the Internet is such a wonderful tool. With nothing more than interest and dedication two years ago, she created the muniwireless website which is now a central news source and repository of information about municipal wifi.

I’ve attached below the speech I gave at the conference last week. It’s 6 pages, so it’s kinda long.

Stay tuned . . . .

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Tales of the Sausage Factory

Tales of the Sausage Factory: A Win In Indiana!

Sorry I’m behind, but there is a _lot_ going on. First, the good news: as reported Muniwireless and elsewhere, the Indiana anti-muni bill has gone down in flaming defeat!

Score one for the good guys and reinvigorate my faith in democracy. For more, see below . . .

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Tales of the Sausage Factory

Tales of the Sausage Factory: Ohio the New PA? I don't think so.

It appears to be my day to pick on poor Esme at the truly amazing and wonderful Muniwireless website. Recently, she published this article on Ohio House Bill 591. Esme and others think it is the next in a series of bills like the recent HB 30 signed into law by Governor Rendell. Me, I’m not so sure. My analysis of Ohio’s 591 (and why, even if stupid, it is not evil) below.

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