iSean

this morning, i came across andy kessler’s blog. kessler is a frequent contributor to the wall street journal’s op-ed page as well as many other rags. he has an expertise in investment trends in technology and communications. well, the current blog entry deals with the issue of municipalities versus the telecommunications industry with regard to providing wireless internet access.

the telecommunications industry (e.g., SBC, Verizon, etc.) is fighting tooth-and-nail to keep cities out of the business of providing wireless on their own because they stand to lose a gazillion dollars, at least. cities, meanwhile, are tired of waiting for the big telecommunication corporations to provide cheap and wireless technologies for its residents. so, many cities and communities are starting their own efforts to go wireless. free market capitalists are claiming that this isn’t something that the gov’t should do (e.g., like most cities do with water — is internet access as basic as water?). and, communities are fighting back saying that even the poorest of their citizens should have access to information (via wireless). but, kessler examines the behind the scenes nooks and crannies and this blog entry is quite enlightening and worth a read. Andy Kessler: WSJ: Philadel-Fi

here’s a snippet:

But it turns out cities get to sort of cheat, cite eminent domain, and place a lot of gear on their own light poles and radio towers. No startup gets that deal. And new mesh technologies mean Philly can plug into the Internet just once, paying wholesale rates, unlike the folks that run Starbucks or hotel hotspots, who overpay (probably to Verizon) for the Internet connection their Wi-Fi users share.

But the real whopper is that - as Ms. Neff claims - by the third year, Philly will be saving $2 million a year on their $150 million IT budget by not having to pay Verizon for Internet access at their 24,000-employee city offices. Hmmm. That whole disadvantaged thing is just icing. Sounds like some sort of arbitrage.

It is, and its not going to be pretty for Verizon. By rigging the city with wireless hotspots, under the guise of helping the disadvantaged, Philadelphia may completely bypass Verizon. A T-1 line from Verizon, which is 1.5 megabits of data per second, runs anywhere from $400 to $1300 dollars a month. With Municipal Wi-Fi (Mu-Fi), that could drop to $300, heck, maybe even $20 a month. Consumers (read voters) are happy and small businesses will save tons of money. No wonder phone companies are circling the wagons. Think of it as a Telco tax cut. Cheese steak sales are gonna boom.

Its about time (for cheaper access, not cheese steaks). If municipalities across the U.S. are willing to lose $1 million a year to save $2 million, this is going to spread like wildfire.