If you can't beat 'em, join 'em.
That seems to be the philosophy AT&T has taken when it comes to citywide Wi-Fi. Only a few years ago, AT&T was lobbying in city councils and statehouses around the country trying to prevent cities from building their own broadband networks. AT&T and other service providers argued that these new networks would compete unfairly with their own broadband services.
But a little over a year ago, the company had a change of heart. And instead of battling local governments in court and in the legislature, AT&T joined forces with them to give them what they all seem to want--low cost, high-speed Internet access using Wi-Fi.
James Cicconi, senior executive vice president of legislative and external affairs for AT&T, speaking at the MuniWireless conference in Santa Clara, Calif., on Tuesday, said AT&T is taking a fresh view of the citywide Wi-Fi movement.
"Our position on citywide Wi-Fi has evolved," he said in an interview. "Cities have also evolved in how they think about citywide Wi-Fi. It's a very different scenario when a city is looking to partner with the private sector than if they go out and use taxpayer money and issue bonds to build a network that will compete with services already offered by the private sector."
Cicconi said AT&T's change of heart shouldn't come as a surprise. The company already provides thousands of Wi-Fi hotspots in cafes and other public places around the country. And the company sees Wi-Fi as simply another access technology for connecting users to broadband service.
"Connecting people with broadband service is our business," he said. "And if you think about it, Wi-Fi is eventually connected to fixed infrastructure somewhere, so we felt like citywide W-Fi is a good thing for us to be doing.
But the citywide Wi-Fi movement has hit a few roadblocks as some of the public/private partnerships forged in these cities have begun to fall apart. In the past six months, EarthLink, one of the most aggressive companies touting the citywide Wi-Fi deployments, has scaled back its efforts and pulled out of several contracts, including ones to build networks in San Francisco and Houston.
AT&T also seems to be treading lightly in this market as cities and service providers try to work out viable business models for these networks. In August, AT&T abandoned plans to build a citywide Wi-Fi network in Springfield, Ill. In nearby Chicago, AT&T also dropped out of the race to build a major Wi-Fi network. The city has since tabled its plans and is re-evaluating plans for a network.
But AT&T said it's moving forward in other cities, where Cicconi said the business case makes sense. For the most part, AT&T is looking for cities that will commit to being anchor tenants. This means the cities themselves are required to become customers of the service and commit to using a certain amount of service each year.
Cicconi said the network AT&T has built in Riverside, Calif., is a good example of this strategy. Riverside is using the network to assist in public safety and to enable other mobile government services. AT&T is also building a network in St. Louis, where the city is also expected to become a customer of the Wi-Fi service.
"Having the city as an anchor tenant is one business model that we think could work," he said. "There are a variety of applications that cities could use where Wi-Fi could be used. And then once the network is built, cities can think about using the excess capacity to do other things."
While AT&T has stepped into this market, the company hasn't been particularly aggressive about using Wi-Fi as a major part of its strategy. The reason is simple. AT&T also owns a cellular network and it's in the midst of deploying 3G broadband service for that network, too. And as AT&T's traditional landline business continues to lose subscribers, the company is counting on growth in its cellular business to drive profits. On Tuesday, the company reported a 41.5 percent rise in quarterly net profit for the third quarter of 2007 based mainly on growth in its cellular business.
Because of this conflict, experts say AT&T will likely continue to move slowly in this market, picking and choosing deployments very carefully.
"AT&T's heart really isn't in citywide Wi-Fi," said Ken Biba, managing director of Novarum, a company that tests and consults in the wireless broadband market. "It's more likely the company is just trying to cover its bases."