Proposed Tasmanian

Government Free
Public WiFi Plan
E.R.A.G. Submission

The Meander Valley Economic Renewal Action Group

(ERAG) is currently engaged in a trial of free Public WiFi at
Deloraine and has conducted considerable research into
this subject

Technology, Education & Services Portfolio

16th September, 2014

Table of Contents
Introduction ................................................................................................................................................3
Background.................................................................................................................................................3
Proposed Public WiFi Scheme..............................................................................................................4
Delivery Model..5
Conclusion & Recommendations....5
About the Economic Renewal Action Group.6
Contact Details.6
Appendix 1: Evaluation of Public WiFi Trial Deloraine...........................................................7

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 Submission on Proposed Tasmanian Government Public WiFi Initiative

E.R.A.G.

Authors: Robert Crews

Mike Muller

16th September, 2014

Introduction

The Tasmanian Government is proposing to fund 60% of the cost of rolling out public WiFi
hotspots across the State in cities and towns. Partner organisations such as Councils and Tourist
bodies are expected to meet the remaining 40% commitment. The government funding is a one-
off initiative and any future network upgrades or replacements plus ongoing running costs will
be the responsibility of the partner organisation.

Rationale for the WiFi network is as an enabler for the tourist industry to connect with tourists
and provide visitation services. No business case is provided as to how the network can be
monetised, with the partner organisations responsible for investigating such potential.

ERAG has undertaken extensive research into the provision of free public WiFi and has
progressed to trial stage (see Appendix 1). Installation of public WiFi in other areas has been
undertaken without any clear direction as to the aims and objectives or identification of a
potential return on investment.

Background

Free WiFi has been provided by many corporate bodies as an inducement to customers to
purchase their products or services. Public WiFi is a rapidly expanding extension of WiFi but
the rationale for its provision is less clear. Sufficient studies have now been conducted to
provide an understanding of end use of public WiFi and therefore predict emerging trends.

A survey of 2540 wifi users by Purple WiFi (http://www.purplewifi.net/latest-survey-people-

use-wifi-public-places/) revealed that 72% of respondents used public WiFi and tend to remain
longer where it is offered, with two thirds of these were more likely to spend more money as
well. Average time spent on WiFi was up to 30 minutes and 38% were online up to 1.5 hours.
The main purpose for logging on was to check emails and connect to social network sites and
general browsing.

The Wireless Broadband Alliance Industry Report 2013: Global Trends in Public Wi-Fi
(http://www.wballiance.com/wba/wp-content/uploads/downloads/2013/11/WBA-Industry-
Report-2013.pdf) identifies the uptake of WiFi enabled mobile devices as the driver for public
WiFi, with outdoor hotzones as taking up 46% of future usage growth. Thus, based on the
potential cost savings and operator commitments, it is forecasted that Next Generation
Hotspot Wi-Fi will account for 9% of global mobile traffic and reach $150 billion USD in
operator revenue by 2018 (WBA, P8). Pure tourist usage of public WiFi is now a minor
element, with handset owners wishing to be connected at all times. In areas of high consumer
footfall, hand-held devices are constantly engaged with searches for information on intended
purchases, consulting with friends or sharing images. There is a general reluctance of wifi users

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to take up pay-as-you-go packages.

A further overseas important use of free WiFi is to offload data demand from cellular networks
to improve the operation of 3G and 4G mobile spectrums.

Analysis of 732 reviews on Tripadvisor of wifi use at Federation Square in Melbourne, a prime
public WiFi hotspot, show only 11% made reference to the free wifi, whereas 25% had visited
the Visitor Information Office. Uptake of public WiFi at Federation Square is predominately by
regular patrons from the CBD rather than transient tourists.

Proposed Public WiFi Scheme

The outline of the proposed public WiFi involves a commitment to spend $500,000 over a four
year period to build a public WiFi network across Tasmania for the benefit of tourists.
Involvement with the project requires partner organisations to contribute a further $330,000 or
40% of the total to meet the ongoing running and replacement costs.

Given that the average cost per installation is estimated at $10,000, there will be in the order of
50 maximum towns and cities potentially connected. This precludes connection to the network
of any of the smaller villages and hamlets and larger centres will take a greater proportion of the
funding. In terms of equity and disadvantage need, smaller centres are even more
communications deprived than larger ones.

Pivotal to the project is the creation of a ubiquitous seamless wifi network with continuous login
of users between Access Points (APs) without having to re-establish authorisation. Consistency
of identity of Landing Pages is also seen as beneficial, but allowing for promotion of local icons
and services.

Based on other passive tourist-based public WiFi, concurrent logons would be of low order; as
few as 20 to 50 users per day and fluctuating according to seasonal visitor variation. Costs
associated with the on-going data management and servicing will be consistent across the year,
making it difficult to achieve any positive cost-benefit by precluding ebb and flow cost shedding
if a central commercial operator is contracted. The imperative will be to achieve a profit result
for the contractor.

Centralised operation is suggested as necessary to enable rapid response to any technical issues.
Given that the network will cover centres across the State, one central operator would be less
able to resolve geographically isolated problems more efficiently than individual local sources.
The state of technology involved with wifi APs is basically plug&play, requiring a lower level of
technical skills to service. Programming and management of the user interface is equally of a
more user-friendly nature. Advances in technology are exponential, thus investment in the upper
expense range cannot be justified based on longevity of usefulness. Monetisation options for
public WiFi are limited and require active content management at the point of dissemination.
Having central authorisation to maintain a consistent image would likely lead to delays and
disagreement.

A centralised model provides little or no local economic benefit from the initial expenditure,
going mostly to the prime contractor. Up-skilling of local workers does not occur; critical in a
State with chronic unemployment.

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Delivery Model

Three delivery models are proposed:

1. A centrally coordinated service responsible for installation and ongoing operational

supervision and servicing. This would in effect be a monopolistic model and likely to be
the most costly and producing the lowest return on investment.

2. Established and managed by local organisations. Given the simplicity of installation and
operation of current generation wifi related equipment, most of the targeted communities
would be capable of implementing installation.

Formulation of DIY kits and instruction manuals by a user body for supply to
communities would create ease of installation and significant cost savings; APs can be
purchased at discount in bundles of 12. The skills gained from installation would provide
for ongoing service capabilities locally and expeditiously.

This option is the most cost effective and provides for a potential return on investment.

3. WiFi installed and provided by individual businesses. Would fragment the business
model and is subject to self-interest bias rather than overall community needs. A very
hard model to maintain any level of continuity.

Conclusion and Recommendation

ERAG, in partnership with the Meander Valley Council is currently conducting a trial of
community installed and operated public WiFi, with a reporting date of the end of November.
This trial will collect valuable analytical data on the usage patterns of wifi users and direct the
rollout of a dedicated public WiFi for the Deloraine CBD. ERAG carried out a similar
evaluation of the three proposals as identified by the Tasmanian Government paper. It was
found that there would be no economic benefit from the commercially based model. A
fragmented and a costly operation by individual businesses would entail constant logons and
varied level of service. A wider user need than that presented purely by the tourism sector is
essential to achieve a sustainable return on investment.

On a cost benefit basis, it was shown that a community instigated and controlled model would
give a return on investment of 3:1 within two years, create opportunities for skills-based job
creation and allow for the integration of cutting edge technologies not currently forming part of
public WiFi networks. Such a network would benefit all sectors of the community.

It is RECOMMENDED that the Tasmanian Government defer any decision on the direction
of a public WiFi network until the conclusion of the ERAG trial in November. It is further
RECOMMENDED that economic development and skills transferral to participating
communities form a mandatory component of any final outcome.

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About the Economic Renewal Action Group

The Meander Valley Economic Renewal Action Group (ERAG) was formed in 2013 following
completion of a community consultation process conducted for the Meander Valley Council.
The consultation process investigated and provided a number of recommendations for an
Economic Renewal strategy for the region.

ERAG's purpose is to respond to council and community strategies to support development in

the Meander Valley in key areas of:

Investment
Employment opportunities
Tourism

ERAG operates as an advisory, think-tank and project development body for community groups
in the Meander Valley as an independent group of experienced business and professionals widely
representative of the Meander Valley community. ERAG receives administrative support from
the Meander Valley Enterprise Centre and provides reports on its activities to both the MV
Council and the MVEC Board.

Contact Details

Robert Crews MAI&E, G Dip LS, G Cert AI, Cert St Mgt, MGKHS

Email: robertcrews@bigpond.com
Mobile: 0429 705358

Leon Porter
ERAG Chairman

Email: leon.porter@sibelco.com.au

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Appendix 1: Evaluation of Public WiFi Trial - Deloraine

Deloraine Public WiFi Project Evaluation

E.R.A.G

September 2014

Prepared by Robert Crews Technology Portfolio

PROJECT CHARTER:

Examine the potential of Public WiFi to create an economic benefit to the Meander Valley.

PROJECT PARAMETERS:

The Project must be operationally cost-neutral. Ongoing recurrent expenditure must be met or
exceeded by associated income. This may be achieved by integration with other initiatives or, if
deemed of social benefit, cross subsidisation.

A formal Cost Benefit Analysis will be required before committing to the full network.

ERAG has been delegated the task of analysing and selecting a preferred option.

Project deliverables must be capable of being easily replicated at similar costs in other areas
throughout the Meander Valley. Documentation must be provided which details the
infrastructure, strategy and roles that are required for a successful implementation. Additionally,
the resulting documentation must specify the realised benefits to community; including skills
transfer, education, monetisation strategy and utilisation trends. In addition to the benefits
realised by businesses located within the range of the Public Wifi network, the trial should also
outline both realised and potential benefits that business located in outlying areas can expect.

BUSINESS CASE:

There is currently a very low adoption of Information Technology (IT) within the rural
catchment of Meander Valley. With the rapid uptake of mobile communication devices (65% of
Australian users have smart phones), mobile data transfer is considered essential to local
residents, tourists and local business. Current signal strength and availability is inconsistent or
inadequate to properly cater for current demand and provide the foundations for business
innovation.

By providing free Public WiFi, it is considered that the problem of signal strength and currently
high data cost on the 3G and 4G networks, presents an opportunity to attract business activity to
village Central Business Districts (CBD). Studies of other areas adopting this philosophy have
shown that this is not the case and that there is very little incremental increase in overall trade.

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Individual businesses may provide internal free wifi as an inducement, such as a Cafe. This
presumes that the prospective clients will have foreknowledge of the availability of the service.
As an attractant to off-highway traffic, this is not ideal as the business may be closed when
access is sought. Additionally, the existence of disparate networks throughout the CBD results
in reduced utilisation due to the complexity of managing connections for each private network.
Similarly the ability to effectively generate and store statistics regarding utilisation and economic
trends is adversely complicated. Due to these factors, the implementation of innovative business
practices can be severely hindered.

It is imperative that any wifi provision be available 24/7, so as to ensure reliability of the
product offering. Utilisation statistics of WIFI access points must be able to be recorded and
reported against economic trends in order to identify areas of opportunity. Businesses must
have a consistent foundation upon which they can introduce innovation which removes the
traditional barriers of doing business in the rural sector.

Public WiFi, if integrated as a business tool, can eliminate the need for individual businesses to
install and operate their own service. Cost savings through scaling up the technology and data
time purchasing, provides a very low cost contribution requirement of local benefiting businesses
for the on-going management; as little as $30 per business per year compared to a minimum
$500 per year if the business installs its own wifi. By providing a single wireless network that
spans the CBD area, we are able to collect utilisation statistics and identify trends. This
information is then able to be used as the basis for the successful implementation of innovative
business practices. Such innovation has the potential to directly improve the economic viability
of local business. These innovative strategies can also span out to areas that are not covered by
the Public Wireless network, thus providing a direct benefit to remotely located businesses.

TECHNOLOGICAL ADVANCES:

There has been and continues to be a rapid advance in mobile technology. Passive Public WiFi,
as installed recently at Launceston is last generation technology. International developments
now link free wifi to mobile applications and data harvesting. Data harvesting is a central
monetisation element of the internet.

A key element of the Project is the development of a dynamic interactive Public WiFi platform;
an entirely new concept with significant competitive advantage and is commercial-in-
confidence and the intellectual property of ERAG.

LEGAL STATUS:

The legal status of the Project raises various issues due to the need to site components on both
public and private premises. There will be a need to obtain formal written consents from all
parties before any permanent installation takes place.

Insurance cover against accidental damage and public liability will also be required but may be
acquitted by annotation to an existing policy.

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ENVIRONMENTAL IMPACT:

Whilst there are some concerns with the radio transmissions associated with mobile phone
towers, the low power output of the wifi Access Points (APs) should not present any
environmental impacts.

APs have a very small visual footprint and associated work should have negligible visual
intrusions.

SOCIAL NEED:

In Tasmanian rural small towns and hamlets, significant social disadvantage exists. A side benefit
of the Project is the provision of access to the internet for those who cannot afford it or at times
when other community internet centres are closed.

PROJECT SELECTION:

Three alternative implementation strategies were evaluated by ERAG:

1. Fully commercially installed and managed as a static Public WiFi (Launceston Model);

2. A commercially installed and managed network with community access for operational
input; and

3. A fully community installed, managed and operated network.

An in-depth analysis of the three options showed that whilst Options 1 & 2 were the easiest to
install, they would be the most costly and either present a zero Return on Investment (ROI) for
Option 1 or a limited ROI for Option 2.

Option 3 was found to be consistent with the Strategic Management Plan of ERAG, in that it
provides for the economic enhancement of Meander Valley through skills acquisition, business
aggregation for marketing purposes and the rapid adoption of internet-based technology. The
current state of WiFi technology is essentially plug-and-play, presenting limited difficulty with
installation and with necessary skills available locally.

A further benefit will be the retention within the community of the greatest percentage of the
budget, whereas Option 1 in particular would see nil retention of the budget locally; there would
be no creation of a multiplier effect.

SIMPLE COST BENEFIT RATIO:

The total budget for the Project is $20,000. Of this, the current proposed limited trial is
estimated at a maximum of $5,000 or 25% of the budget.

ERAG, as the body made responsible by Council (the Funder) to select the preferred option,
operates as a voluntary consortium of skilled local individuals. If Council were to obtain a
similar evaluation from a commercial consultancy service as that conducted by ERAG, it would
cost the equivalent of the entire $20,000 budget. Thus, before any action or funds have been
expended, a benefit of $20,000 has been obtained, giving a 1:1 benefit ratio. As ERAG proposes
a limited trial to prove the Public WiFi network is viable at a cost of $5,000, the benefit ratio

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becomes 4:1. This is before any benefit accrues from the actual usage of the Project and all such
benefits are therefore automatically positive contributors to the Internal Rate of Return (IRR).

OPPORTUNITY COST:

As a publicly funded Project, Council needs to consider whether the monies could provide a
better return to ratepayers if utilised for other purposes.

Firstly, there is a question of equity as the Project only extends to the CBD of Deloraine. As the
Project forms a template model that, once proven, can and should be extended to other areas of
the Meander Valley, forming part of a unified IT network, equity will be equally shared.

Secondly, does the Project deprive another worthy need? Based on the projected cost-benefit,
the Project should enable funds greater than the outlay to be returned to the community in both
cash and intangibles.

BREAK EVEN:

As this is a one-off funded project, the period of Break-Even must be shorter than the expected
committed cash-flow and be able to finance both recurrent expenses and capital equipment
replacement (life expectancy 4 years). Break-Even is identified as 1 year, being calculated by
proving the conceptual value to benefiting businesses and receiving a satisfactory subsequent
annual contribution rate.

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