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Why Muni Wireless is a Supplemental Offering

Ipsos believes that municipal wireless Internet access services -- or muni Wi-Fi -- could attract some of today's Internet user population to switch their current ISP to public sector sponsored services that potentially provide broadband wireless access.

As part of a wider survey of U.S. adults on technology and communications trends, over one-third of all adult Internet users indicate they would be interested in signing-up for municipal Wi-Fi service -- if and when this service becomes available in the city they currently live -- while interest is highest among those age 18-34, indicating this service may have stronger appeal with the more youthful early-adopter market.

The growing availability of municipal Wi-Fi service in the U.S., particularly given the number of municipal Wi-Fi projects being developed for major cities such as Anaheim, Houston, Minneapolis and New Orleans, suggest the days of tethered Internet access are indeed numbered for many Americans, according to the Ipsos assessment.

The implications of the "potential market shift" in Internet services that this would create are substantial, explains Adam Wright, Director with Ipsos Insight's Technology and Communications practice. "Today, there are about 100 million Americans that access the Internet using some kind of broadband technology, with an additional 30 million that utilize dial-up connections. The volume of users that could migrate to municipal Wi-Fi access has the potential to disrupt the online status quo in the U.S., since users would not only likely switch Internet service providers, but likely their current home pages and web search preferences as well. This also could include a greater focus on location-driven search requests and results."

However, given the results of the U.S. deployments thus far, I would have to disagree with this assessment. While muni Wi-Fi projects have improved the availability of internet access in open spaces such as public parks, and indoor spaces such as convention centers, there's little evidence that a meaningful number of people are actually using the service in their homes -- and thereby displacing the incumbent carrier. Muni Wi-Fi seems destined to continue as a supplemental public hotspot service.

According to Ipsos, of those adults surveyed who are interested in jumping to muni Wi-Fi service, an equal percentage indicated they would sign-up for the speedier premium service that would require a reduced monthly fee (40 percent) as would sign up for the slower free wireless service option (40 percent).

In contrast, the majority of those (>60 percent) who either rely on dial-up connections at home right now or do not have Internet access at home would opt for the free-service. On one hand, this may imply that those Wi-Fi networks partially reliant on revenues from premium service subscriptions will need to target existing broadband users in these areas -- since significant direct revenue to support these networks isn't likely to come from the "laggards" who haven't yet adopted broadband Internet use.

On the other hand, migration of existing dial-up users to Wi-Fi-based broadband may represent an attractive expansion of rich media and location-specific advertising targets for some market players. Again, assuming that the Wi-Fi signal actually reaches into people's homes, and the service is considered usable and reliable. Frankly, that's a very speculative assumption, given the past deployment results. Again, the most likely applications will still be in limited public spaces.

In addition, if the early adopters of muni Wi-Fi will be existing broadband users, it will also be important to ensure a quality user experience -- an issue that is already surfacing in many of the larger U.S. cities that offer this service to residents, according to Ipsos.

"Those who are already utilizing broadband at home will expect a similar Internet experience should they jump to muni Wi-Fi. This means consistent coverage in and around their homes, as well as sufficient connection speeds that allow them to enjoy the multi-media activities they've grown accustomed to today," adds Wright. "The other element at play is that muni Wi-Fi simply represents another ISP option for broadband users -- as we've learned in other service industries, choice is a very compelling value proposition."

While a third of today's Internet users are interested in muni Wi-Fi, those who already own wireless devices are the most likely to consider embracing muni Wi-Fi service. Nearly half of all notebook owners (47 percent) and MP3 player owners (45 percent) are interested in signing-up for municipal wireless Internet service.

Thus it would seem that the potential market for muni Wi-Fi service grows with every new notebook PC or Apple iPod that is sold -- an implication that device manufacturers appear to be well aware of, as nearly all notebook PCs today include built-in Wi-Fi capability, as do many of the new wireless gadgets on the market, such as Sony's PSP, Microsoft's Zune and Apple's upcoming iPhone.

All of this seems to be changing the mindset of today's technology users, explains Wright. "The device culture in the U.S. is changing rapidly, as more households adopt notebook PCs and other wireless devices, and begin to realize the virtues of wireless Internet connections. This will likely spawn increasing consumer demand for and expectation of wide-spread wireless Internet services in the communities and cities they live in. Conceptually, municipal Wi-Fi service presents a very compelling offer to today's Internet users -- universal wireless connectivity at a subsidized rate."

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