City thinks it could actually profit from free services, via advertising, following in Google, et al.'s line

The mayor America's most densely populated major city, New York City, this week called for proposals to develop a free public Wi-Fi system.  Mayor Mayor Bill de Blasio remarked:

This administration has committed to making New York City work better for every community, and this RFP for free outdoor Wi-Fi is a down payment on that promise.  For years, the question was, ‘What to do with payphones?’ and now we have an answer. By using a historic part of New York’s street fabric, we can significantly enhance public availability of increasingly-vital broadband access, invite new and innovative digital services, and increase revenue to the city—all at absolutely no cost to taxpayers.

The system will look to replace public payphones with Wi-Fi hotspots, modernizing the city's public iinfrastructure.  The plan is being managed by the NYC Department of Information Technology and Telecommunications (DoITT).  The goal is to pick one or more commercial partners to help deploy the solution, saving the city costs.

If you're having a "wait, where have I heard this before?" moment, you're indeed correct.  The idea of public Wi-Fi was red hot about a decade ago.  San Francisco targeted it, Houston targeted it, San Jose targeted it... the list goes on and on.  Basically all of these projects disappointed to various degrees, with some outright imploding and being abandoned amid soaring costs, and others surviving, but falling short of their original goals and seeing more mild budget overshoots.

NYC thinks it can change that.  A key reason why various public Wi-Fi projects flopped is that they were all money losers that relied on the premise of deploying infrastructure at dirt cheap rates.  Deploying infrastructure general isn't that cheap, which is part of why cable companies command high monthly premiums.

NYC phone booth internet
This phone booth in New York City's Columbus Circle was converted as a demonstration Wi-Fi hotspot. [Image Source: Anna Solo]

But NYC has proposed a seemingly obvious cure to the revenue deficit -- follow the same model that Facebook, Inc. (FB), Apple, Inc. (AAPL), and Google Inc. (GOOG) have successfully demonstrated, delivering free offerings that make money from advertising.  Both Google and Facebook are exploring deploying free internet to underserved regions using drones and other technologies. Clearly they believe that the gains in advertising revenues will eventually offset the costs.  So NYC's plan -- first proposed in more rudimentary form back in 2012 -- may not be as hopeless as it seems.

The city writes of the requirements:

Based on public input, the new RFP is structured to allow the maximum range of proposals—from relatively simple designs to more elaborate, high-tech communication devices with a variety of service offerings and capabilities. In addition to 24/7 free Wi-Fi, the communication structures will continue to offer phone services, including free 911 and 311 calls. New services may include cell phone charging stations and touch screens that provide information or facilitate business transactions. These installations will also provide the city with an additional means of disseminating emergency notifications and information during citywide events. Proposers are also encouraged to include the use of independent power sources, such as solar energy.

Designs will be evaluated on the basis of functional efficiency, aesthetics, security, durability, adaptability for various environments around the city—including historic districts and individual landmarks—and accommodation of people with disabilities. Preference will be given to proposals that demonstrate the greatest public benefit from the services and the local economic opportunities presented by this initiative. In addition to the creation of new jobs for the development, servicing and maintenance of the communication structures, the city expects that the services themselves will help support job seekers, freelancers, residents in need of affordable broadband services, small businesses, the local tech industry, and visitors.

The winning proposal will provide for the installation, operation, and maintenance of up to 10,000 public communication points distributed across the five boroughs. These structures will replace and supplement the roughly 7,300 current public payphone installations across New York City. New structures will be funded primarily through the sale of digital advertising in commercial corridors and must be deployed within four years. The franchise will produce $17.5 million in guaranteed annual revenue for the City of New York through the end of the franchise in June 2026.

For those unfamiliar, NYC is subdivided into five districts called "burroughs" -- the Bronx, Brooklyn, Manhattan, Queens, and Staten Island; this project intends to cover all of them.  Burroughs are subdivided into familiar neighborhoods, e.g. Harlem, which is part of Manhattan.

Facebook ads
The NYC network will look to break even via the same strategy as Google, Facebook, and others -- advertising revenue. [Image Source: Technorati]

It's clear that some of the city's goals (e.g. solar power) may run counter to some of its other objectives (creating a service that cost little enought to deploy to be cash positive via advertising).  It should be interesting to see what kind of proposals the city receives and whether it can come close to realizing its ambitious plans.

One thing is for sure: it has a lot more feasible model, as its free Wi-Fi will actually look to generate revenue.  In that regard even if it falls short in some of its goals, there's hope that the project will bring free Wi-Fi to parts of the city and not be a total disaster, although there's always room for surprises both negative and positive.

Source: NYC [press release]

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