Toronto Hydro assailed for city-wide WiFi plan
Phone companies question incursion by public utility
Mark Evans, National Post
Published: Tuesday, March 07, 2006
TORONTO - Hydro's plans to launch a city-wide wireless network have drawn the wrath of large telephone companies who question why a public utility needs to compete with the private sector in a well-served market.
Mike Lee, chief strategy officer with Rogers Communications Inc., said he cannot understand why Toronto Hydro, which is owned by the cash-strapped city of Toronto, wants to enter the Internet access business, because it can be expensive to operate and maintain.
"It will not be an easy business," he said.
"In this day and age, the focus should be on core operations more than anything. I was surprised to see they are looking to get into this business," Mr. Lee said.
Chris Langdon, vice-president of wireless solutions with Telus Corp., said many municipalities have launched wireless networks over the past 15 years, only to return to private suppliers. Instead of Toronto Hydro launching its own wireless network, the utility should look to partner with a private-sector business that would run and maintain the network, he said.
In a news release, Toronto Hydro said it will unveil a wireless strategy that will see "Canada's largest municipal electrical utility ... compete directly with established carriers for a share in Canada's $8-billion -- and growing -- wireless market."
At a news conference today, Toronto Mayor David Miller and David Dobbin, president of Toronto Hydro Telecom, will reveal the details of the wireless network, which will let people connect their laptops and hand-held devices to the Internet.
It is expected Toronto Hydro will charge a fee and target such high-traffic areas as schools, coffee shops and train stations.
Toronto Hydro will launch the service by installing wireless equipment on hydro poles and traffic lights. This equipment will be connected to the Internet via the utility's network.
A key question is why Toronto Hydro believes it needs to get into the wireless market. It may be that wireless connectivity is a logical extension of its existing telecom business that provides no-frills high-speed Internet access to businesses.
Telecom consultant Mark Goldberg said another strategic issue may be Toronto Hydro's desire to have a network that can communicate with smart meters to quickly determine how much energy a household is using. This would give the utility the ability to charge different rates at different times of the day depending on supply and demand. Using smart meters, consumers would also be able to track their electricity usage online.
The launch of wireless networks by municipalities has been on the rise in the past year as cities look to make themselves more business-friendly. Fredericton, N.B., for example, launched a free wireless service in 2004 that serves the downtown core, universities, industrial parks and some residential customers.
In the United States, Philadelphia plans to build a large wireless network through a partnership with EarthLink Inc., a large Internet service provider that will build, manage and maintain the operation. Earthlink will provide 350 square kilometres of coverage by installing wireless equipment on about 4,000 hydro poles.
Another U.S. city getting into the wireless market is San Francisco, which is currently accepting bids. Among the companies interested in building the city-wide network are EarthLink and Google Inc., which have submitted a joint proposal that could see two services launched: a free service from Google and a fee-based service featuring higher speeds from Earthlink.
Across Canada, the three major wireless carriers -- Rogers, Telus and Bell Mobility -- offer wireless Internet access at 1,200 locations such as airports, train stations, restaurants and coffee shops under the "hotspot" banner. Customers can charge their access fees to their wireless phone accounts or pay using a credit card. Bell charges $7.50 an hour or $25 a month for the service, while Telus's fees are $10 an hour or $40 a month.
Mr. Lee said while wireless networks are relatively inexpensive to launch, running them can be expensive. Costs include operating expenses, the need to upgrade equipment to provide high-quality service, customer service and bill collection.
"It's one thing to collect on a hydro bill when you can just turn off the power when they don't pay," he said. "It is another thing to have an account where people aren't fulfilling their payment obligations. The ongoing costs of these networks are quite significant and quite high relative to the upfront costs to get going."