Free Wi-Fi in S.F. more than flipping a switch

San Francisco politicians, like many of their counterparts in cities throughout the country, view affordable broadband access for all citizens as essential, like providing water or electricity. In October 2004, San Francisco Mayor Gavin Newsom announced that he intended to provide free wireless access for the city.

He's trying to fill a gap in the city's existing, piecemeal Wi-Fi network. San Francisco is already filled with hundreds of smaller Wi-Fi hotspots offered through coffee shops, retailers or neighborhood groups. But Chris Vein, executive director of the city's department of telecom and information services, said that the goal of the citywide Wi-Fi project is to bring free "universal" Wi-Fi to residents.

"The Wi-Fi hot spots today are not covering all 49 square miles and don't reach out to poorer areas," he said in an interview with CNET News.com.

In April, the city announced that it had selected Google and EarthLink to build, manage and provide service over the network. The companies have laid out a plan that is expected to meet the city's demands for ubiquitous and low-cost access for nearly 90 percent of the population. And they say they can do it for $15 million--including maintenance and upgrades--in the next 10 years.

Critics wonder: Is that possible in a city with downtown high-rises and a 900-foot hill smack in the middle?

The EarthLink/Google plan includes two main options for broadband service: One allows subscribers to pay about $20 per month for a 1Mbps connection from EarthLink or another Internet service provider leasing capacity on the Wi-Fi network. The second option allows anyone to get 300Kbps download service for free in exchange for viewing local advertisements through Google.

Video: Ups and downs of San Francisco
Google and EarthLink have partnered in a project to bring universal Wi-Fi to San Francisco. Here, a view of the hilly terrain challenging the install.

EarthLink said it expects the project to run to between $6 million and $8 million in initial costs, which include attaching radios and receivers to utility poles throughout the city. Within 10 years it expects the whole network, complete with upgrades and maintenance, to cost about $15 million.

Finer financial details of the project haven't been made public, but the plan calls for EarthLink and Google to contribute to the initial cost of building the network. It's not clear what the split between the two companies will be. Once the network is built, Google will pay EarthLink for access to the network on a wholesale basis. In order to make access free to people in San Francisco, Google will use revenue generated from local advertisements to pay for access to the EarthLink network.

San Francisco may well be one of several test markets for Google and local ads. Finding local information over the Internet is a highly fragmented business, divided among search engines, interactive yellow pages, local business sites, wireless carriers and so on. Google wants to pull those strands together and make targeted, useful ads a reality.

Google and Yahoo are after the same local ad dollars. But the two companies are making different bets as to how consumers will access digital data ultimately. Yahoo, for example, has teamed with local phone companies to be the default search destination when someone signs up for the $19.95 Digital Subsciber Line (DSL) service. Meanwhile, Google is teaming with EarthLink (and likely others) to be the default provider of ad-supported Wi-Fi. Its projects in Mountain View, Calif., and San Francisco are likely be just the beginning.

While the Wi-Fi plan sounds compelling to many, some critics say EarthLink has underestimated the cost and overestimated its ability to reach most of San Francisco's residents. Others are skeptical that Google will be able to sustain its free model with advertisements alone.

Among the technical concerns are San Francisco's famous hills and tall buildings that get in the way of radio waves. Just finding adequate cell phone service can be a hassle in certain parts of the city.

Don Berryman, executive vice president of EarthLink in charge of municipal wireless deployments, acknowledges that deploying Wi-Fi in San Francisco will be tricky.

"I would never say that San Francisco will be an easy place to deploy Wi-Fi," Berryman said. "There will be a number of challenges. But I think most of the critics aren't looking at today's technology. We aren't talking about using Linksys routers to set up a hotspot. These are high-powered radios that send signals 600 to 1,000 feet."

Ellen Kirk, vice president of marketing for Tropos, which makes the Wi-Fi gear being used to build the network, said that Wi-Fi is actually better suited for hilly terrain than cellular technology. Cellular towers are typically deployed high above the ground to maximize reach, which makes it difficult to engineer radio waves around buildings and hills. But Wi-Fi radios are deployed much closer to the ground. And they are typically grouped closer together, making it easier to move them and point them away from obstacles.

Berryman also said that because of San Francisco's topography, the company plans to put more radios closer together than it would in other deployments. In total, EarthLink will deploy 1,700 nodes on utility poles, averaging about 30 to 36 nodes per square mile.

By contrast, in Chaska, Minn., one of the first cities to deploy citywide Wi-Fi, the city initially deployed only 17 nodes per square mile. Eventually, it increased that to 24 nodes per square mile to improve performance and coverage.

Berryman acknowledges that the network will not be able to reach residents living above 30 feet or what is typically the third floor of a building. And like other cities with citywide Wi-Fi networks, some residents will need to get a wireless bridge that sits in their home to boost the signal indoors. EarthLink customers will get this device for free, but people using Google's free service will have to buy the customer premise equipment at a local electronics store for about $100 to $120.

"This is our business," Berryman said. "We have to make sure the network is reliable and provides reasonable speeds or it wouldn't be worth it for us to sell it as a service. We won't put our name on a network that isn't reliable."

EarthLink is banking on at least 15 percent of San Francisco's residents either buying service directly from EarthLink or using the network through another ISP or from Google within the first 18 months of service. EarthLink will get a portion of the advertising revenue generated through Google's advertising. It also plans to sell higher bandwidth service between 1.5Mbps to 3Mbps to businesses in San Francisco.

Some critics wonder if Google's ad-based model for providing free Internet access will really work. Traditional local advertising in the form of radio, billboards, and fliers, is worth billions of dollars annually. But for now, local digital advertising is only a small fraction of that. In fact, Greg Sterling, principal analyst at Sterling Market Intelligence, estimates digital ads are only worth about $2 billion a year out of a total of $102 billion in 2006.

Google seems to think there is a lot of potential in local search. The company's CEO Eric Schmidt said during Google's first quarter earnings call that local advertising is an "increasingly meaningful contributor to revenue, and much more is coming."

Wi-Fi should also improve the accuracy of local advertising, which could make it even more valuable to advertisers.

"At the 30,000 foot level it looks very promising," Sterling said. "But no one can predict how quickly these revenues are going to come together or how much they will be. First it has to be installed, then consumers have to get on and then advertisers will come."

Google, which is also using local ads to fuel deployment of a network in its hometown, declined an interview to talk about its advertising strategy in San Francisco. But other companies with similar strategies in other cities say they have seen some early success.

Metrofi, which also bid on the San Francisco project, offers free municipal Wi-Fi in nearby Santa Clara, Calif., and recently won a bid to offer the same service in Portland, Ore. Chuck Haas, the company's CEO, said the Portland network will cost less than $5 million to build. With roughly 10 percent to 20 percent of residents regularly using the network, he said advertising revenues will pay for network construction and operating expenses within 24 months.

"If revenue didn't exceed the expense," he said, "I sure wouldn't be doing this."