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How govts are coping with economics of free wi-fi in cities

It seems the government is still trying to figure out the economics of providing the service in the entire city.

Footing the Bill

When the Aam Aadmi Party said in its manifesto for Delhi elections that it would provide free Wi-Fi services in the city, it became a talking point. (Photo: Reuters)

It is believed that election promises are not given much thought. When the Aam Aadmi Party (AAP) said in its manifesto for Delhi elections that it would provide free Wi-Fi services in the city, it became a talking point.

Three months after coming to power, the government is yet to deliver. Recently, Adarsh Shastri, parliamentary secretary to the state IT minister, said around 700 Wi-Fi hotspots would be set up by February 2016. The entire city would be covered in two years, he said.

It seems the government is still trying to figure out the economics of providing free Wi-Fi in the entire city. This is because it is very different from providing the service in smaller areas such as restaurants, colleges, hospitals, markets and transit zones such as airports and railway stations.

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Illustration: Ajay Thakuri


Take Indian Railways. Last year, it set a target of providing Wi-Fi at 400 railway stations. Telecom operator MTS India has rolled out Wi-Fi hotspots in six stations where each traveller can use Internet for 30 minutes a day free of charge. MTS is bearing the entire cost. "The idea is not to look for returns. We want people in high-traffic areas to experience our services. This is like FMCG companies giving free samples," says Ashwani Khillan, CTO, MTS India.

For smaller projects, Indian operators have to take a different approach, says Sanjeev Sarin, founder of Ozone Networks, a Wi-Fi service provider. For instance, in the US, McDonald's, Starbucks and Subway pay operators for Wi-Fi services on their premises. In India, the entire investment - hardware, broadband connection and maintenance - is done by the service provider.


While a Wi-Fi hotspot costs over Rs 35 lakh, covering the entire city may cost Rs 300 crore

Ozone, which also runs a free Wi-Fi service at Mumbai airport, says consumers can access free Internet up to a certain speed, 512 kbps, and have to buy packs for higher speeds. "There is no such thing as a free lunch. We have to find a way to make money," he says.

Experts say the Delhi government has realised that the free model is not sustainable over the long term. While a Wi-Fi hotspot at a metro station would cost over Rs 35 lakh, covering the entire city might cost around Rs 300 crore. The government has two options. Either it spends from its own pocket or asks a service provider to invest. The earlier option will put a burden on the exchequer. There will be recurring costs as well.

Unless there's a strong business model, no private operator will make such a big investment. Global examples of free Wi-Fi in entire cities are limited. Seoul, Paris, Taipei and Helsinki have been offering it for a couple of years but London and New York don't have city-wide free public Wi-Fi networks.

There are ways to monetise networks spread over entire cities. For instance, in Delhi, the private company offering free Wi-Fi can be allowed to provide broadband services at homes for making money. It can also charge private utilities or government agencies for using their bandwidth.

With mobile networks congested and people demanding higher browsing speeds, Wi-Fi networks are a way forward. Their future depends upon how companies and governments get the economics right.

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