A few years ago, many towns and cities reasoned that there are advantages to offering homegrown Wi-Fi.

For one thing, meter readers and other municipal employees out in the field would have an easy way to file data to the home office. Free municipal Wi-Fi for poorer areas could, in theory, ease the digital divide. Another benefit is that municipal Wi-Fi could provide new revenues if small and mid-sized businesses proved receptive to the idea. So far, the jury’s out on the latter application.

Municipal Wi-Fi is still so new that it’s too early to gauge whether it will be a hit with small and mid-size business users. Nevertheless, there are reasons why some businesses may want to consider opting for such services, providing that they understand the risks.

The rise of municipal Wi-Fi

Municipal Wi-Fi is a growing business. According to MuniWireless, a Garden City, N.Y., integrated media company that tracks the market, municipal Wi-Fi was a $116.9 million business in 2005, but jumped to $235.5 million in 2006 and is projected to hit $459.6 million by the end of this year. “It’s still a fairly young market, it’s still developing,” says Mike Perkowski, chief operating officer of MuniWireless.

In communities like Philadelphia, San Francisco and Anaheim, Calif., where municipal Wi-Fi is now available, small and mid-size businesses might want to consider the option, especially if they are looking for cut-rate pricing for broadband Internet access and/or have a lot of employees in the field locally who need to feed data back to headquarters.

Chris Silva, an analyst with Gartner Inc., of Stamford, Conn., says small businesses that have employees who are out of the office more than 50 percent of the time most likely already have some form of Wi-Fi, but those with employees that spend about 30 percent of time away should look into it. “It’s not for the traditional road warrior,” he says. “Folks that are thought of as not consistently on the road will be able to benefit from public Wi-Fi.”

Cheaper than traditional wireless plans

Municipal Wi-Fi tends to be cheaper than traditional wireless plans offered by telecommunications companies. “It’s not cost effective to roll out a $60-a-month plan for every employee,” Silva says, adding that his research shows 30 percent of businesses with fewer than 1,000 employees are already using some form of municipal Wi-Fi for at least one employee.

So far, the largest third-party contractor for municipal Wi-Fi has been EarthLink, the former dial-up Internet service provider that now offers broadband service. EarthLink offers an entry-level service costs $21.95 for a 1 Mbps download speed, says Tom Hulsebosch, vice president of municipal sales at the Atlanta-based company. “Small businesses do it if they tend to have a lot of salespeople in the field,” Hulsebosch adds.

EarthLink has so far rolled out municipal Wi-Fi in New Orleans, Philadelphia and Anaheim, Calif., and plans to launch service in Alexandria, Va.; Corpus Christi, Texas; and Pasadena, Calif., this year. As the list of locations expands, the company is also starting to market a fixed Wi-Fi offering targeted at stationary office environments. Such service starts at around $100 a month for a speed of about 3 Mbps. Hulsebosch says the service is up 99.9 percent of the time, but higher-end offerings will provide even less potential downtime. “We’re in the process of bringing those services online,” says Hulsebosch. “This is just the beginning.”