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Citywide Wi-Fi spending could hit $3 billion

Market watcher predicts that more than $3 billion will be spent on citywide or regional Wi-Fi networks in the next four years.

More than $3 billion will be spent during the next four years to build and operate public wireless networks for U.S. municipalities, according to a new research report by

Interest among U.S. cities and counties to deploy their own public wireless networks is exceeding earlier expectations, said Esme Vos, founder of, which tracks the muni-wireless market.

Last year, predicted that cities and counties would spend about $177 million in 2006 to build wireless networks. But the actual figure is much higher--about $235 million will be spent in 2006 on these networks, according to the new report.

Citywide Wi-Fi networks, which are built and managed by a city alone or in partnership with a private company, have come into vogue in the past couple of years. Large cities such as Philadelphia, New Orleans and San Francisco have led the charge, despite strong political and industry opposition. With these new networks, they've promised to provide affordable or free broadband access to residents.

Large counties and regional municipal coalitions are also looking into building Wi-Fi networks, Vos said. For instance, the three-county, 40-city Smart Valley consortium in California's Silicon Valley last month named a three-company team of vendors to build its network.

"We are now long past the stage where municipal wireless was something primarily for small communities that had been bypassed by incumbent service providers," Vos said in a statement. "Cities and counties throughout the country--and around the world--have begun to get it: Public wireless networks are an essential part of local quality-of-life and public-policy strategies."

It's not surprising that cities and regional governments would consider using Wi-Fi to build their own broadband networks, since the technology doesn't require expensive radio licenses and is readily accessible by just about every laptop in the market today. What's more, putting radios on utility poles and lamp posts is much less expensive than digging up streets to lay fiber-optic cable.

But the technology is not without challenges, as cities such as Tempe, Ariz.,, have discovered. Because Wi-Fi uses unlicensed spectrum, interference from other wireless devices can be a problem. Coverage can also be an issue, since signals often don't reach inside homes without special devices to boost the signal indoors.

While many cities are exploring proposals for building citywide Wi-Fi networks, and several others have already selected vendors to build their networks, only a handful of major deployments are actually up and running today. As a result, the growth of the municipal Wi-Fi market will likely depend on whether the networks currently being built perform as expected and provide the intended benefits that local government officials hope to achieve.