Caution Warranted on Toledo Wi-Fi
The residents of Toledo are being told by their elected officials that they will soon have a wireless Internet system, available to all city residents, and it will not cost them a thing. It sounds too good to be true, and it probably is. The plan's details sketchy, but the history of other municipal wireless ventures suggests that taxpayers will pay for more than they expect. And service will be worse than promised, or both. Residents of Toledo should proceed with caution when considering this wi-fi venture.
Municipal wireless ventures have been the “hot thing” among city officials for a few years. The concept has evolved over time, however. A couple of years ago, cities were setting up the systems with taxpayer dollars. The government owned and operated them. It proved a flawed for taxpayers and users alike. Companies then began to offer “free” service, as long as cities promise some taxpayer money.
Policymakers and wireless suppliers contend that these systems will offer a variety of benefits. What has been the experience of cities? In almost every case, the systems have either been far more expensive than expected or worked poorly.
What can Toledo expect if the city goes through with this plan? For one, it is highly unlikely that 90 percent of the city will have wi-fi access within six months as city officials have claimed. Foster City, California, for instance – which has a system operated by MetroFi, the same company vying to provide Toledo’s service – promised residents that 95 percent of the town would be covered. The reality? Only 40 percent of the city has coverage. The situation is the same in other areas.
It is also unclear whether there will be enough revenue to make it worthwhile for MetroFi. While Toledo is providing $2 million to the company in exchange for wireless access for police and firefighters, it is unlikely that there will be many other people signing up for the service.
There will be two tiers of service: one free but slower service paid for by advertisements and another faster subscription only service. Other cities, however, have seen far fewer subscribers than expected and less advertising revenue than needed. In short, not many people are using these networks.
In fact, the lack of customers is one reason MetroFi recently changed its business plan. Previously, MetroFi did not require cities purchase its services up front. It simply built its network and relied on advertising and customer support to make money. Now, however, if Toledo wants this service, MetroFi needs the promise of taxpayer money. That is a sure indication that this type of wireless technology does not have a high demand from customers.
The low demand is easily explained once you look past the hype of city officials and the businesses that are trying to get taxpayer money. The reality is that the technology is just not that good. City-wide wi-fi is often slow, unreliable, and unavailable in many buildings. While it may be OK for occasional use, most of these wi-fi systems are not suitable for sustained, high-speed usage.
City officials are promising that this system will be “budget neutral.” They must also pledge not to use additional tax dollars to bailout MetroFi if its system – like other city-backed wi-fi systems - falters.
Toledo taxpayers would be best served if the city were not using tax dollars for this endeavor. If consumers really wanted citywide wi-fi, MetroFi would not need to be subsidized by tax dollars. However, if officials go through with their plans, taxpayers need to understand the pitfalls other cities have faced. Toledo should not expect too much from citywide wi-fi.
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.
