HomeMy WebLinkAbout2006/07/10 - ADMIN - Agenda Packets - City Council - Study SessionCity Council Study Session
July 10, 2006
6:00 PM
Council Chambers
6:00 p.m. Box Lunch
Discussion Items
Approximate
Times
1. 6:00 PM Communications Plan
2. 6:30 PM Sanitary Sewer Back-up Policy
3.
Post CC
Mtg
60 Min.
Interim Ordinance (moratorium) for Subdivisions in the R-1 Zoning
District
4.
Post CC
Mtg
15 Min.
Future Study Session Agenda Planning
9:55 PM Adjourn
Written Items
5. Legislative Update
6. City Wireless Project Update
Auxiliary aids for individuals with disabilities are available upon request. To make
arrangements, please call the Administrative Services Department at (952) 924-2525 (TDD
(952) 924-2518) at least 96 hours in advance of meeting.
City Council Study Session
Discussion Item: 071006 - 1 - Communications Plan
Page 1
1. Communications Plan Administrative Services
PURPOSE OF DISCUSSION:
Staff desires to share with the Council a copy of the final draft of the Communications Plan and
advise Council on the next steps staff will be taking to continue to enhance our communication
functions.
BACKGROUND:
Over the past year requests have been made for improved services in communications. Council
and staff have requested more and different ways to get information out to our residents and
customers. As a result of this, we have made a number of major changes with communications:
• Web work was separated from graphics and the web function was moved to the
Technology and Support Services Department and a new full time Web position was
filled.
• The City’s web site has been completely rebuilt with several new web functions now in
place.
• The Communications Coordinator position became vacant when our employee accepted a
position with the State of Minnesota.
• Cable is working more closely with overall communications and there are changes in
Cable TV which will affect local origination.
Before jumping ahead or making other changes in communications, we determined that we
needed to take time to review communications functions and analyze our business needs. To do
this and meet production demands and day to day needs, we interviewed a number of consultants
and hired the firm CityImage. The work of CityImage includes coordination of internal and
external communication efforts, including writing, graphics and design for various publications
(Park Perspective, Park and Rec Brochure, Water Report, etc.), media relations, ads, and
graphics design assistance.
As discussed with Council, CityImage also developed the communications plan. The purpose of
the plan was to review current city communications methods and make recommendations on
options for communications and marketing to meet future needs. This included a general audit
of current practices and interviews with a number of focus groups consisting of staff, directors,
City C ouncil and external customers.
Communications Plan
The Communications Plan is complete and attached.
We have thoroughly reviewed the plan and determined a re-design and reallocation of resources
of the communications group is needed to get all pieces working together as effectively as
possible. As a part of this we also reviewed work/business needs and budget limitations.
Meetings were held with the City M anager and Department Directors about the communications
plan and the future of communications for our city. Based on these discussions, we are now
ready to move ahead with the re-design of our communications services. Below are next steps
which will allow us to move to a higher service level in communications with an emphasis on
marketing/branding in our community.
City Council Study Session
Discussion Item: 071006 - 1 - Communications Plan
Page 2
Next Steps
1. Hire Communications Coordinator to manage and connect all communications activities.
The position will be responsible for all communications functions including supervision
and coordination of Web and Cable.
2. Move all communications functions to Technology and Support Services. Web and
Cable functions currently reside in TSS.
3. Continue and expand the use of consulting services for assistance with production of
newsletters, print materials, graphics, design and media activities. Continued use of a
consultant will allow the Communication Coordinator to focus on large program
objectives while maintaining high standards of service to departments.
4. Layoff our part time Graphics Coordinator. The responsibilities assigned to this position
have been significantly reduced with the addition of our Web Coordinator in TSS.
Graphic needs will be filled via the use of our consultant.
5. Begin discussions of marketing/branding once the Communications Coordinator is hired.
Our Objectives:
• to provide high quality communications services to our customers to align with the
Mission, Vision and Values of the City of St. Louis Park
• to build capacity into the communications function to handle the increased
communications needs as reflected in the communications plan including new methods
and options to distribute information (ie: electronic newsletters/subscriptions)
• to increase support to all city departments in communications and marketing
• to coordinate all of our communications activities when delivering the message
including cable and web within budget constraints
• to begin the study on implementation of branding/marketing program for our city.
Attachment: Communications Plan
Prepared by: Nancy Gohman, Deputy City Manager
Approved by: Tom Harmening, City Manager
City Council Study Session
Discussion Item: 071006 - 2 - Sanitary Sewer Backup Policy
Page 1
2. Sanitary Sewer Back-Up Policy Public Works
PURPOSE OF DISCUSSION:
To determine if Council desires staff to reevaluate the City’s current policy on addressing
sanitary sewer backups in the City’s lines and return at a later date with options for Council
consideration. Background information is provided below to assist with this discussion.
BACKGROUND:
The St. Louis Park sanitary system handles over 2,000,000,000 gallons of sewage per year
through approximately 140 miles of pipe. There is always a possibility of failure or blockage in
the system which may cause a back-up in the city sewer main line and may cause private
property damage. Back-ups can occur for a variety of reasons such as structural failures, lift
station failure, power outages, lack of proper maintenance, improper disposal practices (grease,
diapers, other), environmental factors (roots), and even vandalism. However, experience
indicates most sanitary sewer back-ups in our city are caused by property owners cleaning their
sewer service line pushing tree roots and other debris into the city main line.
The current sewer maintenance program is designed to provide for routine cleaning as well as to
reduce the accumulation of grease and the invasion of roots in the city lines. Our program
provides for the cleaning of the entire system at least once every three years. There are certain
areas that are cleaned more often based upon a history of problems in that area of the system.
For example, a sewer line that services some restaurants is cleaned more often due to grease
deposits, than lines in a typical residential area and areas known to have root intrusion are
cleaned on a more frequent basis.
Current Practice:
In general, there are four types of sanitary sewer back-ups:
1. Sanitary sewer back-ups in a city line with no private property damage.
2. Sanitary sewer back-ups in a city line with some damage to private property and no
structural damage.
3. Sanitary sewer back-ups in a city line with structural damage to private property.
4. Sanitary sewer back-ups in the private service line from the main to the home
Under the current practice, when a back-up occurs (in the City’s line, not the private service
line), a property owner is told to file a claim for damages (if there are any) with the city.
Liability is determined by the city’s insurance carrier. If the city is determined to be negligent,
the city pays for the damages. Usually, the city is deemed negligent only if proper maintenance
was not completed, or the city had knowledge of a problem and did not take corrective action.
Proper maintenance generally means city lines should be cleaned at least once every five years or
more often if special conditions warrant. As stated above, our system is cleaned at least once
every three years and there are certain areas that are cleaned more often based upon a history of
problems in that area of the system.
City Council Study Session
Discussion Item: 071006 - 2 - Sanitary Sewer Backup Policy
Page 2
PAST HISTORY:
Between 1995 and 2005, City records show 126 back-ups were reported. The League of
Minnesota Cities Insurance Trust recorded 56 claims against the city for sanitary sewer back-ups
during that same period. The city paid losses on 22 of those 56 claims, totaling $79,011. The
average claim during that period was $3,591. There was one high claim during that 11 year
period for $39,434 in 1997. Without that one high claim, the average claim per year would be
$1,556.
Unfortunately, the city has no way of knowing exactly how many backups have actually
occurred or what the total clean up and repair costs may have been during the past eleven years.
If one assumes that there were actually 126 backups and, on average, each backup totaled about
$4,000 in cost, then one could project a possible total cost of $504,000 over the past eleven (11)
year period or possibly $46,000 per year.
So far in 2006 there have been nine reported backups. Two have clean up and repair costs
estimated to exceed $80,000. Repair and clean up costs on the other seven are unknown.
DISCUSSION:
Back-ups in our city lines can not be 100% eliminated regardless of how much effort we apply;
there are too many variables outside our control to completely eliminate back-ups.
When back-ups occur in the city sewer lines, the city generally has two ways it can process the
claims - 1) fault based: reimburse for damages when the city is determined negligent (current
practice) or 2) no-fault: reimburse for damages whenever back-ups occur in city lines regardless
of cause.
Fault Based (Current Practice): The intent of this practice is that a negligent party (if
any) pays for damages suffered by another. The city currently carries general liability insurance
through the League of MN Cities Insurance Trust (LMCIT) which provides liability coverage for
sewer back-ups. When a claim is received by the city, the LMCIT is contacted, investigates, and
determines the city’s liability associated with the claim. If the LMCIT determines that the city
is (negligent) liable, the claim is paid. This policy and insurance coverage is consistent with
statute and most of the cities in Minnesota.
No-Fault: The intent of this practice would be to reimburse damages caused by back-ups
whenever back-ups occur in city lines. This protects property owners from the inherent risk of
damage by being connected to the sanitary sewer system. This is the communal approach to
taking care of individual properties suffering back-up damages by having all properties with
sanitary connections collectively contribute to reimburse the costs of damages. Reimbursement
of all damages associated with this practice could range from fifty thousand up to possibly
several hundred thousand dollars per year. However, a no-fault practice could be modified or
limited in order to cap exposure. Limiting or capping costs, of course, would decrease protection
offered to properties suffering damages from back-ups.
City Council Study Session
Discussion Item: 071006 - 2 - Sanitary Sewer Backup Policy
Page 3
SUMMARY:
In summary, staff desires direction as to whether the Council wishes staff to reevaluate our
current policy and provide Council with details on other policy options e.g. No Fault policy.
Regardless of how Council decides to proceed, staff plans to begin educating residents later this
summer on the importance of having properly installed and maintained sanitary sewer back flow
prevention devices along with the need for back-up insurance coverage.
Attachments: “Sewer back-ups: What every homeowner should know.” LMCIT
Policy for Sewer Back-ups for area cities surveyed in 2003 by SLP PW staff
Prepared by: Mike Rardin, Public Works Director
Scott Anderson, Superintendent of Utilities
Sarah Hellekson, PW Administrative Specialist
Approved by: Tom Harmening, City Manager
City Council Study Session
Discussion Item: 071006 - 3 - Interim Ordinance (Moratorium) For Subdivisions In The
R-1 Zoning District
Page 1
3. Interim Ordinance (Moratorium) in the R-1 Zoning District Community Development
PURPOSE OF DISCUSSION:
To discuss the merits of an Interim Ordinance (Moratorium) for subdivisions in the R-1 zoning
district.
On June 26, 2006, the City Council continued this discussion item to the July 10, 2006 Study
Session. Attached is the previous Staff report.
The earliest timeline for adoption of an ordinance could be
July 17 – 1st reading;
August 7 – 2nd reading;
August 17 – publication;
September 1 - effective date.
Attachments: Council Report of June 26, 2006
Prepared by: Meg J. McMonigal
Reviewed by: Kevin Locke, Community Development Director
Approved by: Tom Harmening, City Manager
City Council Study Session
Discussion Item: 071006 - 4 - Future Study Session Agenda
Page 1
4. Future Study Session Agenda Planning Administrative Services
PURPOSE OF DISCUSSION:
To assist the City Council and the City Manager in setting the next Study Session agenda.
BACKGROUND:
At each study session, approximately 15 minutes is set aside to discuss the next study session
agenda. For this purpose, attached please find the tentative agenda and proposed discussion
items for the special study session on July 1 7, 2006. The Council meeting starts at 7:30 p.m., so
the study session items will be held before and after the business meetings.
Attachments: Future Study Session Agenda Planning
Prepared By: Marcia Honold, Management Assistant
Approved By: Tom Harmening, City Manager
City Council Study Session
Discussion Item: 071006 - 4 - Future Study Session Agenda
Page 2
Future Study Session Agenda Planning
Monday, July 17, 2006
5:30 p.m. Box Lunches Available
6:00 p.m. Study Session starts
Discussion Items
A. Off-sale Liquor Licenses – Admin. Serv., Police, & Comm. Development (45 minutes).
Staff to present options for the Council to consider for off-sale liquor establishments.
B. City Wireless Project Update – Technology and Support Services (45 minutes)
Staff will discuss the status of the current project and will present the current projections
for a potential city-wide wireless program.
Council meeting convenes at 7:30 p.m.
Study session resumes at the conclusion of the Council meeting – approximately 8:30 p.m.
C. Flame Metals – Inspections (45 minutes)
Update on Flame Metal processing.
D. Future Agenda Planning – Administrative Services (10 minutes)
9:55 p.m. End of Meeting
City Council Study Session
Written Report: 071006 - 5 - Legislative Update
Page 1
5. Legislative Update Administrative Services
PURPOSE OF DISCUSSION:
To provide Council with an update on specific initiatives we were involved in during the 2006
legislative session and to provide an update on other related funding initiatives.
BACKGROUND:
The City of St. Louis Park retained Joe Bagnoli and Sarah Psick from McGrann Shea Anderson
Carnival Straughn and Lamb to represent the city during the 2006 legislative session. With the
help of McGrann Shea and great support from our legislators, we were able to accomplish some
important things. McGrann Shea provided a summary of the 2006 session to the city and items
1-4 are excerpts from their overview.
1. Glencoe Switching Yard
H.F. 2982 and H.F. 3829 (Latz, Simon, Sykora, Abrams, Ruud, Newman)
S.F. 2863 (Dille, Kelley, Bonoff)
The Legislature approved $700,000 in bond proceeds for a grant to the McLeod County
Railroad Authority for land acquisition, design and construction costs to build a railroad
switching yard facility in Glencoe. The funds cannot be appropriated until the remaining
$2.3 million in non-state funding is secured and the commissioner of MnDOT determines
that there is enough non-state money to complete the project. Full funding of this project
means that rail blocking operations will be moved from developed residential areas and
relocated to an undeveloped area in Glencoe, thereby providing industrial development for
Glencoe and reducing noise and vibration levels for residents in St. Louis Park, Minnetonka
and Hopkins.
In addition, city staff has submitted a request for Federal funding through the offices of
Senator Mark Dayton, Senator Norm Coleman and Representative Martin Sabo. The request
was submitted in the Senate and is presently in committee waiting for a hearing, which will
hopefully result in its inclusion in the Federal omnibus bill.
2. Office David Day Pension Issue
In September 2005, the Public Employees Retirements Association (PERC) board adopted a
resolution expressing concern about the 2005 Special Session Public Employees Police and
Fire Retirement Plan survivor benefit change that amended the death benefit provision of the
PERA – P&F plan to allow a full duty survivor benefit to the widow of David Day (Amy
Day), who had less than one year of PERA-P&F service credit.
The Legislative Commission on Pensions and Retirement recommended language to be
included in the Omnibus Pension bill that would allow the City of St. Louis Park to pay the
actuarial cost of the survivor benefit to Amy Day and would reduce the city’s state aid if the
city declined to reimburse the PERA-P&F fund. This language recommendation was
included in the Omnibus Pension bill that was introduced in both houses.
In the Senate State and Local Government Operations Committee, the language was
amended to remove the requirement of the city of St. Louis Park to repay the PERA-P&F
fund and instead require an appropriation from the state’s General Fund. In the House
Government Operations and Veterans Affairs Committee, the language relating to this issue
City Council Study Session
Written Report: 071006 - 5 - Legislative Update
Page 2
was deleted completely from the bill. The final version of the Omnibus Pension bill included
the House position, which made no changes to the 2005 Special Session law.
Throughout the process, McGrann Shea worked with the Governor’s office in relation to this
issue as well as the House and Senate bill authors and committee members. Tom Harmening
and Sarah Psick both testified in committee on this matter.
3. Permit Exemption for Replacement of Certain Fixtures and Appliances
The Inspections Department initially sought legislation that would allow homeowners to
replace or update simple fixtures and appliances without obtaining an inspection permit. In
the Senate, language directing the Department of Labor and Industry to study the need for
these permits was amended to a bill relating to building officials. The amendment was later
dropped from the legislation with the approval of the city when the Commissioner of the
Department of Labor and Industry, Scott Brenner, provided a letter to the city indicating that
the department would study the language in the amendment without a legislative directive to
do so. Brian Hoffman and Joe Bagnoli will be working with the Department over the
legislative interim as the study is conducted.
4. Grade Separate Crossing at Highway 7 and Wooddale
H.F. 3054 (Latz, Simon)
S.F. 2864 (Kelley)
Legislation was introduced to appropriate $1 million in bond proceeds for a grant to the city
of St. Louis Park to assist in the reconstruction of the at-grade intersection of Wooddale
Avenue at Trunk Highway 7 to allow for separation of regional and local traffic. This bill
was introduced in both the House and Senate, but was not included in either body’s Omnibus
Bonding bill and did not receive final approval.
In addition to the success of the 2006 Legislative Session, St. Louis Park also benefited from the
Metropolitan Council Transportation Advisory Board’s (TAB) 2005 regional solicitation of
Federal transportation projects.
Public Works submitted a request for construction of a grade-separated interchange at the
intersection of Trunk Highway 7 and Wooddale Avenue. This request included a
dedicated pedestrian/bicycle facility on the bridge crossing over Trunk Highway 7. The
TAB selected this project for funding and $5.885 million in regional Transportation
Improvement Program (TIP) funds will be available in 2010.
Three Rivers Park District requested $1,027,200 in TIP funds for 2010 to construct a
grade separated crossing on the Hopkins to Midtown Greenway Regional LRT Trail at
Beltline Boulevard.
Prepared by: Marcia Honold, Management Assistant
Approved by: Tom Harmening, City Manager
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 1
6. Wireless Pilot Update TSS
PURPOSE OF REPORT:
As indicated in a June 12 study session report, staff desires to update the City Council on the
pilot wireless project with some details on results-to-date, projections for a citywide wireless
project implementation, and related topics of interest, including updates on other local cities
implementing or considering implementation of wireless technologies.
Another goal of this report is to receive feedback from Council on any additional information
needs, questions, and direction on next steps with regard to the wireless pilot project in
preparation for appearing at Council’s July 17 study session.
The following section provides the summary findings thus far and next possible steps. The
subsequent Exhibits section provides many of the supporting details.
WHAT GOOD, FOR WHOM, AT WHAT COST?
Playing some role in provision of wireless Internet service is unusual for governments. In fact,
just over 200 cities nationwide are reported to be in serious planning, proposal, or
implementation stages. This begs the question of St. Louis Park’s purpose for investigating
whether the city and schools have some role to play in this infant technology and prompts us to
go back to the beginning. Before, during, and after Council’s initial deliberations in November
2004, several reasons emerged from local and worldwide observations for this investigation and
have been used throughout the process:
Evolving Perception of Internet – Some argue access to high-speed Internet service is
becoming as essential a utility as water, sewer, and roads.
If Essential, Can Everyone Afford It? – Some argue that not everyone can afford the
current market price point options of this evolving essential utility called high-speed
Internet service.
DSL (Digital Subscriber Line) Internet Service – Best estimates suggest this option for
high-speed Internet service is available in approximately 30% of St. Louis Park. This
coverage percentage was one of primary reasons Council became interested in
alternatives.
Cable Modem Internet Service – This alternative high-speed Internet service is available
to almost all residents, and to most businesses upon request and sometimes a line
extension charge. For about 70% of St. Louis Park, this is the only choice for high-speed
Internet service. Speeds are typically faster for cable modem service than DSL service.
Low Speed Dial-Up Internet Service – Virtually anyone with a phone line can obtain this
service, which rarely exceeds an effective speed of 40 Kpbs. Subscribers typically either
tie up their phone line when using dial-up service or pay for a second line. Speeds are
often inadequate to download and upload data with many of today’s web-enabled
applications.
Coverage / Pricing / Competition – The above factors combine to create the perception
that in St. Louis Park’s case, there is uneven coverage, pricing that is out of reach for
many, and a lack of effective competition for high-speed Internet service.
Small Business and Resident Interest – Anecdotally, several of the 2,000 small business
owners and 44,000 residents conveyed their interest in the City investigating this
offering. This interest was later confirmed by both informal and formal surveys in 2005.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 2
Municipal Operations – Wireless public safety and public services applications are
restricted by the bandwidth currently available with CDMA and EVDO technologies.
Text may be transmitted productively; however, larger files such as high resolution maps,
photos, videos, fingerprints, and other images are effectively unusable with these wireless
technologies. Wi-Fi speed technologies make these increasingly vital data sources
available on a mobile basis. In-building wireless Internet service creates locational
flexibility for everyone from constituents at City Hall to visitors to the Recreation Center.
Educational Support -- From an educational perspective, creating the opportunity for
parents, students, and teachers to communicate and collaborate in the learning process
has always been important. To enable more people to communicate and collaborate
through provision of an affordable high-speed Internet service is clearly one of the most
important long-term goals of this project and consistent with St. Louis Park’s Children
First initiative.
Increasing Demand for Wireless Technologies – Land lines are not going to disappear
anytime soon. Having said that, it is also the case that the number of wireless phone
numbers surpassed the number of land line phone numbers in 2005. Popularity of
wireless voice and data communications is also self-evident by observation. Emerging
generations are expected to become increasingly wireless in their lifestyles. Apartment
residents are a key user of wireless, and fully one-third of St. Louis Park housing units
are multiple dwelling units. The Apartment Guide has called City Hall to inquire on St.
Louis Park’s wireless network availability. Some believe wireless is going to be around
for awhile.
St. Louis Park Competes – St. Louis Park is in competition with over 800 cities in
Minnesota and 18,000 cities nationwide to attract and retain residents and businesses.
Over 40,000 people come to work in St. Louis Park every day. We have countless
visitors. From an economic development perspective, St. Louis Park has worked hard and
successfully to be on the forefront of being attractive and vital. Some consider technology
to be a major 21st century differentiator for communities. Some believe that a connected
community is enhanced with a variety of ways to connect, and that effectively-employed
technology can enrich daily face-to-face interactions. In addition, the City Council ranked
increasing effective use of technology in the community among the highest priorities for
the current City Manager when he was hired.
USA Ranks No. 12 / 16 Worldwide in High-Speed Internet Penetration Rates – The
specific ranking will vary somewhat. What is clear is that while many in the USA are
connected to high-speed Internet services, many are not. Some believe we can do better
and that it is essential to do better if our population will have the resources to be educated
and compete effectively in the flat world. Our economic system generally suggests
market forces will accommodate needs. There is no argument here against this
proposition. However, it is also the case that imperfect markets on rare occasions call for
temporary or on-going supplementation by government. To the degree that high speed
Internet service is becoming an essential utility, this may be one of those rare cases.
Indeed, most of what is left to government to provide is considered essential in its
availability for all or most of its stakeholders and imperfectly provided by market forces
alone.
Initiatives Elsewhere -- Many other communities, including some local ones, started
investigating or implementing wireless high-speed networks. These include Chaska,
Moorhead, Minneapolis, St. Paul, Philadelphia, San Francisco, and a 700 square mile
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 3
area of rural Oregon. The entire country of Macedonia is investigating wireless. In many
cases, reasons for these governments acting mirror all or some of those in St. Louis Park.
In looking back over the last 20 months of study, it is arguable that much has remained constant
in the industry. It is critical that the Council re-visit these original study purposes as relates to St.
Louis Park to determine whether they continue to be valid for the community.
What has changed is that we now have a pilot experience. Deciding to conduct a pilot will
perhaps become known as one of the City Council’s most sanguine decisions. We have learned
much as described in detail below. Our best information now suggests that there continues to be
strong interest in wireless high-speed Internet service. To be fair, this service is not for everyone,
nor does the business model call for everyone to subscribe. Those with need for up to 5 – 6 Mbps
download speeds will likely want cable modem service. Those uncomfortable with newer
wireless technologies may continue to find legacy Internet connection methods more attractive in
the short-term. And others will want options such as wireless at various price points.
The pilot information also suggests that the technology and support necessary to provide a
competitively priced service with solid subscriber support is greater than originally anticipated.
Those reasons are also articulated in the Exhibits section. Given this new information and
including all costs, this service will not pay for itself based on retail sales alone. Our best
estimate is that this service would most likely result in a cumulative 5-year loss of $273,000, or
just under $55,000 per year. This assumes meeting the subscriber goal of 36% of households and
15% of businesses at the end of year 1. Also described in the exhibits are a couple of worst case
subscriber take rate scenarios suggesting that the cumulative 5-year loss could be as great as $1.4
or $2.4 million. While we believe that a citywide project could result in better outcome than a
$273,000 loss, we also need to be as honest and forthright with Council as possible regarding
risks. And, at least three potential risk mitigating steps present themselves:
• Municipal and Educational Benefits: Out of pocket cost reductions from the current
$20,000 per year expenditures for public safety mobile computing. Other benefits of
municipal and educational use are noted below. Placing a specific price tag on enabling
technologies is challenging; yet staff continues work on this.
• Economic Development and Community Enabling Technology: Less clear is exactly how
communities and individuals will use technology to improve their quality of life. People
are creative and businesses grow with innovative uses of enabling technologies. For
many, especially newer generations, a technology-enabled community is attractive in
general.
• Issue a Request for Bids: One way to mitigate risks if the Council continues to be
interested in wireless service would be to issue a Request for Bids for the wireless
network to determine if currently anticipated costs are real. Significant cost factors
include wireless access points, wireless bridges, and support. If the cost projections are
not real, Council always has the right to reject bids. While acquiring 36% of households
and 15% of business subscribers will require significant effort, that effort is accounted for
in the business model and still seems achievable based on survey results, experience in
other cities, and pilot data. This would require an extension of the pilot by 1 – 2 months.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 4
At least two other options present themselves, and may be attractive to Council for consideration
from a cash flow and risk mitigation perspective. These are:
Wireless Service to Residential (including multi-family) Areas / Home Based Businesses /
Parks Only: This option would cover the major retail segment for the program – residential –
and also provide service to many home based businesses. In addition, access would be available
to park areas, and to some businesses and other non-profit institutions bordering residential
areas. This assumes 36% of households subscribe by the end of Year 1.
Advantages: This approach is projected to essentially generate revenues that match capital and
operational costs over 5 years – this service pays for itself. In addition, this serves the major
market segment that has expressed interest in wireless and likely to subscribe.
Disadvantages: The majority of businesses and non-profit organizations would not be served. In
addition, mobile wireless access for public safety and public services would be largely
unavailable in non-residential areas.
Phased Approach: Wireless Service to Residential (including multi-family) Areas / Parks
Only in Year 1 / Expand to Businesses Areas in Year 2: This option would cover the major
retail segment for the program – residential – and also provide service to many home based
businesses. In addition, access would be available to park areas, and to some businesses and
other institutions bordering residential areas. This assumes 36% of households subscribe by the
end of Year 1. If Phase 1 is successful, Council could consider expansion to remaining
businesses and non-profit institutions in Year 2.
Advantages: This can ultimately serve all major market segments that expressed interest in
wireless and are likely to subscribe. It helps manage risk – delay full citywide implementation
until Phase 1 results are available, and not commit funds to expand to business and non-profit
institution areas unless warranted based on Year 1 residential results and additional demand data.
Disadvantages: This approach is projected to generate a $345,000 cash flow shortfall over 5
years, primarily due to lost revenue from business subscribers in Year 1. Delays serving small
business and non-profit organizations until Year 2, or perhaps ever. In addition, mobile wireless
access for public safety and public services would be largely delayed or unavailable in non-
residential areas. Should Council ultimately decide to go citywide, it would appear to cost about
$72,000 to buy a year of time to decide.
There are other variations on these approaches that may also be worth considering. What is
interesting is that to go beyond residential areas and cover the entire city is turning out to be
about a $300,000 cost over 5 years. One way to view this is as the value of public safety and
other public and educational benefits that accrue from citywide wireless coverage.
What good, for whom, at what cost? These are challenging questions to answer; yet, they are
critical to ask if Council is to make wise and informed decisions.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 5
SO WHERE ARE WE TODAY?
What does the data from and during the pilot suggest about achieving the goals of a
competitively-priced service; availability citywide to all residents, businesses, and other
institutions; mobile Internet access to subscribers throughout St. Louis Park; subscriber service
and help desk support at least as good as incumbent providers; and achieving the above and
necessary subscriber levels within 12 months?
• Enabling technologies are early in the development cycle. Third generation products appear
poised to address issues encountered by early adopters.
• Offering a low-cost high-speed alternative is attractive to the dial-up and non-Internet user
segments.
• Obtaining the first 30% of households should come quickly; the last 5% to 10% will be the
most difficult. Obtaining 15% of businesses and other institutions appears reasonably
attainable.
o The combination of the pilot participants and those who indicate interest imply at
least a 30% take rate can be expected.
o Small businesses in particular have expressed interest.
o Chaska’s results have exceeded these projections.
• The pilot has taught us much about what it takes to address subscriber needs and the likely
costs of building an infrastructure to meet those needs. Those costs are somewhat higher than
suggested by the original study.
• Current cable modem subscribers may be the least likely to use wireless service if they need
greater speeds and mobility is not compelling.
• Wi-Fi based services offer a stepping stone in addressing the digital divide and helps close
technology gaps.
• A technology-enabled community is attractive to many as a place to live and do business, and
may help maintain or enhance economic development.
• Enabled and enhanced public safety and public service applications, although difficult to
quantify, will add value that could compensate for all or some of the gap between revenues
and expenses.
• There are no guarantees, only bounded risk.
By no means is St. Louis Park alone in asking and attempting to answer these questions. Neither
are the answers always clear. Without doubt, it will be a combination of quantitative and
qualitative factors that interplay to help the City Council decide about St. Louis Park’s wireless
future. And the mark of success from the pilot experience is not whether St. Louis Park decides
to implement wireless citywide or not. It is to make the best conscious policy decision possible
given significant yet limited information. Making the best decision possible through public
process (which includes pilot experiences) is the mark of success.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 6
DIRECTION NEEDED AND NEXT STEPS
The City Council is being asked to deliberate on these questions and findings to date.
Undoubtedly, Council will have additional questions and information requests. Staff will also
provide additional information. Results of the conversation of the July 17 study session will
likely drive what happens next from a scheduling perspective. Options include the Council
asking for more information before it feels comfortable making a decision, asking staff to stop
work on the pilot project, or directing staff to bring the matter back to the Council for formal
approval to proceed. With the information provided above, staff would like to discuss this
project and next steps with Council at its July 17 study session. If the Council chooses to move
forward with a decision on the citywide project, staff would place the item on the Council’s
August 7 agenda, and also publicize this to the community to continue the public process. If
Council decides to direct a citywide network at that time, staff anticipates service could be
available to most, if not all, of St. Louis Park during the first half of 2007.
Attachments: Detail Exhibits Section
Willingness to Switch Providers
Subscriber Projections and Preliminary Sign-ups
Financial Analysis Summary Scenarios
Phase 1 E-Mail Survey Results
Pilot Area Maps
Prepared By: Clint Pires, Director of Technology and Support Services
Approved By: Tom Harmening, City Manager
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 7
EXHIBITS
PILOT PROJECT:
The wireless pilot went live on April 20. Close to 350 (351) people within the pilot areas have
signed up. In addition, 36 people outside of the four pilot areas signed up to express their
interest. (see www.stlouispark.org/residents/wireless.htm for project and pilot area details).
Given the length of time the pilot has been in effect, Parkwifi staff is now focused almost
completely on serving the existing subscriber base and not on provisioning new subscribers. The
pilot is serving subscribers and there has been very little overall network downtime, even though
many network alterations and upgrades have been implemented. There are sometimes short
durations of network unavailability during these alterations and upgrades. Major challenges in
the pilot areas have included ensuring adequate help desk support, particularly at the initiation of
the pilot and for subscribers who use Macintosh computers. Much of the work throughout the
pilot has needed to focus on resolving issues that were not resolved at the help desk level. Also,
many users have required significant assistance with configuration of the wireless or e-mail
programs, not surprising as over half of pilot subscribers were previously dial-up Internet users
or not Internet users at all.
Interestingly, a number of the Dial-Up Buster subscribers (128 KB upload / download speed)
have reported very good results and are very happy their phone line has been freed. From a
feature perspective, feedback suggests more robust e-mail alternatives would be desirable in a
citywide build out. Additional alternatives have already been identified.
Another part of the learning has been the detailed impact of tree foliage on wireless signal
reception and speed. Still, many subscribers who live farther away from the wireless radios (Pilot
Phases 2 and 3) have been able to receive an adequate signal. Also, given the distance of some
subscribers from the limited number of wireless radios mounted on street lights, some external
antennas have been installed to ensure adequate signal strength (this was expected). From a
technical perspective, this is promising. Having said that, use of the subscriber bridges and
wireless radios in the pilot has presented several issues that have required more time and
attention than desirable. In some cases, they have also affected the subscriber experience.
Since the pilot began, 10 Phase 1 (design area) subscribers have dropped the service; 43 have
decided to join the pilot since April 20. While the pilot areas are predominantly single-family
residential due to location of fiber optic backbone, we have a couple of commercial subscribers
and apartment subscribers where adequate signal reception is available. While the pilot is
allowing us to test many of the assumptions of the 2005 study, in certain areas signal reception
and strength in certain parts of each pilot area are not representative of a city wide build-out.
There are fewer wireless radios in the pilot areas, as compared with over 300 overlapping radios
in a full citywide implementation and wireless mesh design.
Virtually all subscribers in Phase 1 of the pilot (subscribers living closest to the wireless radios)
have been provisioned with equipment and are using the system. Data have been compiled on
several dimensions to assist the staff and City Council on analyzing results from the pilot in
general and Phase 1 in particular. Fundamentally, the core question from the study is: “Can
anticipated revenues derived from retail subscribers cover both capital and operational costs of a
wireless network in St. Louis Park?” The answer to this question appears to be “no”. Based on
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 8
retail sales alone, our best estimate is it appears that at the end of 5 years, we can expect a
cumulative cash shortfall of $273,000 or about $55,000 per year. This equates to about 6% of all
capital costs, and a smaller percentage if operational costs are included. This computation
includes no value assigned for municipal, educational, and other public benefits. These are
addressed later in this report.
Having said that, staff has endeavored below to describe the experience thus far and, more
importantly, imagine what the future holds if the City Council decides to take the bold step of
authorizing a citywide effort.
THROUGH THE FOG OF MYTH AND FACT:
The world of wireless technologies spins very fast, and spin often seems the predominant result.
It is very easy to be seduced in such a world. It is counter-cultural to take a more deliberate look
at what problem is to be solved, opportunity to be seized, and an experience-based approach to
determining the best course of action for a community.
The City Council has already spent 20 months on problem and opportunity definition. The
purpose of the pilot is to gather and analyze data from the pilot experience, both quantitatively
and qualitatively, and deliberate what it shows and portends. And at the end of this deliberation,
it is to determine a course of action that is in the best long-term interest of the community. It is
the intent of this report to provide some information to assist Council in this process.
DIMENSIONS OF ANALYSIS:
An overarching objective for many of the over 200 communities involved in wireless studies and
implementations has been the growing perspective that affordable access for all members of the
community to the Internet in general, and high-speed access in particular, is or is quickly
becoming as essential a utility as water, sewer, electricity, and heating services. In parallel, the
world is quickly becoming unwired and mobile access to information services in general is
becoming a basic expectation of current and coming generations who hope to thrive in the flat
world. Some evidence of this is the fact that in 2005, the number of wireless phone numbers
actually surpassed the number of wired phone numbers in the United States.
Therefore, the multi-fold goal is to address a number of gaps in current Internet offerings:
affordability to all members of our community; general competition to lower prices and improve
services; provide subscriber choice; provide a mobile high-speed Internet service option; and to
enhance ways to attract and retain residents, businesses, and other institutions in an environment
in which St. Louis Park competes with over 800 cities in Minnesota and 18,000 cities in the
United States alone. And if the world really is flat, our competition may be even greater.
The heart of the original study and this updated analysis is the market, financial, and technical
feasibility of providing competitively-priced, high-speed wireless Internet service throughout the
community. The business model recommended is a private – public partnership to deliver retail
service to residents, businesses, and other institutions.
As part of St. Louis Park’s study, it is also important to include in the calculus the public safety
and public services benefits that could accrue and be leveraged only with the presence of high-
speed wireless Internet service throughout the community.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 9
This report attempts to address these dimensions based on the pilot experience itself, and
learning that has occurred since Council approved the pilot project in November 2005. It should
also be noted that much has evolved in municipal wireless in that same time period – vendor
offerings, much talk about “free” wireless services, and more cities entering wireless studies or
implementation. In all of it, the challenge continues to be the search for truth and filtering out of
the hype.
CONTEXT OF PILOT AREAS:
There are four pilot areas in the City, one in each ward. Selection of pilot areas was largely
driven and constrained by the pre-existence of City-owned fiber in order to reduce pilot budget
costs. The study contemplates the addition of 12 – 14 miles of fiber in a citywide program. This
fiber provides what is called “backhaul” (or high-speed access) to the Internet throughout the
array of wireless radios. This provides both the necessary Internet connection and load balancing
across the wireless radios. One comparison is the way local streets feed traffic onto collector or
arterial streets. Due to constraints of fiber optic cable availability, the pilot areas do not represent
a random sample of the City. However, the pilots still yield useful feedback.
With 5 – 8 wireless radios in each pilot area, another constraint in trying to emulate a citywide
implementation is that most subscribers had access to only one (on occasion two) wireless
radios. In a citywide implementation, they would often have access to four radios that may be
even closer to them than in a pilot. The result is better performance in speed and connectivity to
the Internet because each subscriber’s equipment could “find” the closest, least busy radio. In
addition, subscribers would have more options on where to locate their PC or laptop in their
residence or office. Citywide implementation also makes available mobile access to the Internet
from places such as parks, vehicles, and even other buildings than the subscriber’s residence or
office.
387 people signed up for the pilot. About 36 of those folks are not in the pilot area boundaries;
however, they felt a need to express their interest. There were about 1,400 potential subscribers.
When viewing the sign-ups, it is recommended that at least four contextual factors* be
considered:
1. For the reasons mentioned above, the pilot areas do not represent a random sample of the
City. This makes projections from the pilot both useful and imperfect. Of particular note
is the minimal number of businesses and multiple dwelling units represented in the pilot.
2. The pilot is not guaranteed to continue. This factor was cited by many folks in the pilot
areas for not signing up and, for some, for canceling their subscription. Understandably,
some people did not want to pay for two Internet subscriptions or risk reconnection fees
upon cancellation of the pilot wireless program.
3. The pilot is just that – a pilot, a trial, a test of the relatively recent outdoor application of
wireless technologies. Pilot subscribers have been sharing the growing pains of a new
service, in many ways akin to cellular phone service. In many ways, the wireless pilot
with all its experimentation and inevitable challenges is reminiscent of the early days of
predecessor technologies such as dial-up and DSL Internet access.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 10
4. Subscribers are paying a fee – between $20 and $35 per month to experience the growing
pains for a service that may not continue. The reward: they get to try this new service
first. And for some, for the first time, they now have Internet service they can afford that
frees up their phone line.
Given those limiting factors, sign-up rates are very encouraging. In addition to the 351 pilot area
residents that initially signed up, 36 people from outside the pilot area signed up. 200 of the pilot
area subscribers were within the best design area (Phase 1). The remainder were in Phases 2 and
3 – beyond the ideal distance from wireless radios, but still able to be serviced. In a citywide
design, they would have proximity to wireless radios similar to those in Phase 1. Some of the
original subscribers have continued to activate their accounts and some decided for a variety of
reasons to not participate -- including those not wanting or able to update older PCs or wanting
to wait to change e-mail addresses only if a citywide service was approved. Since the project
started 43 were added and 16 have dropped. 10 of these people were in the Phase 1 area. Reasons
for dropping included not wanting an external antenna placed on their house, particularly during
the pilot period. Several others dropped out due to slow upload speed and interruptions in
transmissions. Most of these technical issues have been subsequently resolved. One person
dropped due to difficulties working with the e-mail system. Many stated they would reconsider
using the service once the full rollout had been completed and the system was functioning well.
SUBSCRIBER EXPERIENCE:
A core question for the pilot project is: what has been the experience of subscribers in the pilot
areas, and what is their likelihood of continuing to use the wireless service if it goes from pilot to
an on-going phase? Staff asked this question of Phase 1 subscribers via e-mail 2 -3 weeks after
they began service. Highlights of the results include:
• Set-up of the service
o 85% found the service easy to set-up,
o 12% were neutral, and
o 3% found the set-up difficult
• Speed of service
o 80% of subscribers felt that the speed meets or exceeds expectations,
o 10% were neutral, and
o 10% felt speed did not meet expectations
• Likelihood to continue service
o 77% were likely to continue,
o 7% were neutral, and
o 16% were unlikely
The user group with the highest dissatisfaction previously had cable modem service. Subscribers
that previously had dial-up tended to be extremely pleased with support, speed, and other
attributes. Histograms of the survey responses are attached to this report.
In addition, staff has asked subscribers for their feedback again. This time, subscribers from all
three phases have been asked to provide feedback. Results of this effort will be provided to
Council in conjunction with a follow-up report.
Commented [CEP1]: In other words, we have 34 people who
signed up, but not using the service?
Commented [CEP2]: Are these accounted for in the 334 starting
number?
Commented [CEP3]: Paul, please break down all these numbers
by the 4 pilot areas.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 11
PRE-REGISTRATION EFFORTS:
Also interesting are opinions of non-subscribers in the pilot areas and citywide, and their
likelihood of starting use of the wireless service is if it goes from pilot to an on-going phase.
In order to help address this question, we can start with results from the 2005 survey.
As expected, willingness to switch Internet service providers drastically dropped as price points
rose. Specifically, 64% were willing to switch to a provider that offered 1Mbps downstream and
upstream if the price per month was below $20. If the price rose to between $21 to $25,
willingness to switch drops to 48%, and continues to drop as price rises.
When asked about their willingness to switch to a WIRELESS high-speed Internet service at the
same price points, willingness was somewhat lower. Only 60% were willing to switch at a price
below $20. However, respondents were more willing to switch to a wireless service at higher
price points ($31 and above) than when the type of Internet service was not specified.
Willingness to switch to a CITY-PROVIDED wireless service was greater than if the wireless
provider was not specified. Sixty-three percent of respondents were willing to switch if the price
was below $20, and more than half (51%) were willing to switch if the price was between $21
and $25 per month. Willingness to switch continued to drop as price points rose.
Figures 1 through 3 (attached) show the willingness to switch Internet service providers at
various price points if the ISP is not specified, if it is a wireless service, and if it is a city-
provided wireless service.
The majority (87%) of respondents believe that the City of St. Louis Park should play a role in
ensuring that its citizens have access to competitively-priced Internet connectivity. The most
common responses were that St. Louis Park should make rules to promote competition (38%)
and that St. Louis Park should become a provider of high-speed Internet service (37%). Figure 4
below displays the roles respondents believe the city should play:
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 12
13%
38%
9%
37%
3%
No role Make rules to promote
competition
Install Internet network
and lease excess
capacity
Become provider of
high-speed Internet
Other
Figure 4: Role of St. Louis Park to Ensure Internet Connectivity
In addition, several pre-registration efforts are underway to help address the question of user
acceptance. These include a pre-registration form in Park Perspective newsletter, on-line sign-up,
mailing to businesses, door hangers, articles in local and regional newspapers, and setting up
showcase sites where people can test drive the wireless network.
Anecdotal evidence during pilot suggests a strong interest in a citywide wireless project. In
addition, many people in the pilot areas have said they were interested in participating after the
full implementation. They were reluctant to sign up for the pilot because of the reasons stated
above including having to pay for two internet services, the hassle of changing e-mail accounts
for this limited period of time and concerns about not having service continue. The private
partner reported that many did state that they would gladly pay the city for Internet instead of
their current provider and felt that this was service that the City should provide.
BRIDGING THE DIGITAL DIVIDE:
One overarching objective of the City’s current effort is to determine whether there is a way to
help bridge the digital divide through the wireless program. One way to define “bridge the digital
divide” is to consider residents, businesses, and other institutions that lack access to either high-
speed Internet service or Internet service at all due to socio-economic factors. The 2005 survey
showed that 63% of residents and 27% of businesses and institutions lacked such access. In
addition, 52% of pilot subscribers previously had no Internet access or only low-speed dial-up
access.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 13
It is also recognized that access to an affordable wireless high-speed Internet service is necessary
but not sufficient when aiming to serve those in the digital divide. A PC or laptop to connect to
the service is also critical. To honestly address this challenge, efforts will be necessary to collect,
refurbish, and distribute PC’s and laptops with low or no-cost operating systems to those in need
at some affordable price. This is another area where school district officials have indicated some
interest in partnering in a citywide wireless deployment. The form of this partnership would need
to be defined; however, it could include joining virtually all community segments from seniors to
youth, from those on both sides of the digital divide building a digital bridge.
Although the pilot areas have the limits described above, they also deserve to be viewed from a
socio-economic perspective and compared to the City as a whole. Income data from the 2000
Census can shed some light on these profiles:
Total Households:303 332 224 282 20,777
Median Income 87,071 63,250 76,542 77,876 49,260
Less than $10,000 0 0.0%0 0.0%0 0.0%0 0.0%923 4.4%
$10,000 to $14,999 0 0.0%9 2.7%6 2.7%0 0.0%942 4.5%
$15,000 to $24,999 17 5.6%34 10.2%0 0.0%8 2.8%2,286 11.0%
$25,000 to $34,999 25 8.3%11 3.3%6 2.7%15 5.3%2,705 13.0%
$35,000 to $49,999 18 5.9%61 18.4%45 20.1%39 13.8%3,697 17.8%
$50,000 to $74,999 48 15.8%82 24.7%49 21.9%67 23.8%4,781 23.0%
$75,000 to $99,999 90 29.7%39 11.7%52 23.2%63 22.3%2,745 13.2%
$100,000 to $124,999 62 20.5%50 15.1%48 21.4%72 25.5%1,895 9.1%
$150,000 to $199,999 36 11.9%10 3.0%5 2.2%7 2.5%395 1.9%
$200,000 or more 7 2.3%36 10.8%13 5.8%11 3.9%408 2.0%
U.S. Census Bureau
P52. HOUSEHOLD INCOME IN 1999 [17] - Universe: Households
Data Set: Census 2000 Summary File 3 (SF 3) - Sample Data
Northwest Pilot Southwest Pilot Northeast Pilot CitywideSoutheast Pilot
Census and block data available do not correspond exactly to pilot area boundaries, so the total
number of households shown above is slightly smaller than those actually in the pilot. It would
have been helpful to have existence of facilities (primarily fiber optic backbone) available
uniformly throughout the City, so that pilots could have reflected a more representative sample
of the City as a whole. Having said that one could view results in the pilot areas as either
understating or overstating what would happen citywide. One interesting finding is that over half
of the pilot subscribers were previously dial-up Internet users or non-Internet users, even in areas
where income numbers suggest people would be more likely to be able to afford cable modem
service or DSL. In any event, staff recommends Council consider any of the Census numbers in
combination with formal survey findings from 2005.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 14
MARKET AND FINANCIAL FEASIBILITY:
The market feasibility and projected revenues of a citywide wireless implementation yield
certain estimates. Those need to be considered in comparison to anticipated levels of both capital
and operational costs over the life of an installation. Presented below are some key data points.
Potential Market Share: Study projections suggested that 36% of households and 15% of
businesses would need to subscribe within the first 12 months of citywide wireless project
completion in order for the service to cash flow from a capital and operational perspective.
Survey data from the study also suggested sufficient interest to meet these subscription levels.
This was assuming citywide project build out costs of approximately $4.445 million.
Pilot subscriber results above do not reflect 36% of the residential communities in the pilot areas.
In many ways, this is understandable in that the pilot marketing effort represents 10 weeks and
limited funds versus a full marketing program and the 12 months anticipated to build the initial
citywide subscriber base. In addition, the many factors noted above* would be expected to
underestimate citywide subscriber rates. There were not enough businesses in the pilot areas do
suggest reflect any meaningful numbers. Having said that, based on the scientific survey
completed in 2005, we would expect to be able to achieve the subscription rates from residents,
businesses, and other institutions originally projected within 12 months of citywide service. A
key segment of the residential community is multiple dwelling units. While some of these
buildings can be serviced with outdoor wireless radios, many would need to be served with
indoor radios. While such installations are included in the financial projections, cooperation from
MDU managers and owners will also be necessary. When staff has attended SPARC meetings,
much interest has been expressed by owners and managers as they view wireless Internet service
as an attractive amenity for their customers.
Other Potential Revenue Sources: Other sources of revenue include roamer or visitor traffic.
While not likely a huge revenue source, it is important to remember that 40,000 people come to
work in St. Louis Park businesses every day. And we need to add to that other people who visit
St. Louis Park regularly to conduct business. Cooperative arrangements present some other
opportunities. For example, if Minneapolis (or other community) were to implement a wireless
service, they may be interested in some sort of reciprocity. Providing wireless service to other
smaller communities may be another source of revenue, as could sponsorship.
What value added services could be offered over a wireless network? These include wireless and
Internet seminars, Voice over Internet Protocol (VoIP), web space, security applications, and e-
mail transfer. These are some services that are enabled with a core wireless network. Most of the
really important applications of this technology are likely unknown and will come from
subscribers.
Pilot Results and New Information: Results from the pilot thus far suggest that the following
updates be incorporated into the cost-benefit analysis.
1. Projected package take rates are:
a. Dial-Up Busters – 128 KB Upload / Download Speed (6%)
b. Basic – 1 MB Upload / Download Speed (83%)
c. Deluxe – 3 MB Upload / Download Speed (11%)
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 15
2. Suggest lowering expectations of Deluxe service.
a. 2.5 Mbps might be a more obtainable rate.
b. More wireless nodes might be required to obtain this rate.
i. 27 wireless nodes per square mile used in the plan based on experience-to-
date of other communities using wireless.
1. The wireless node to wireless node link is likely to drive the
spacing.
ii. In process of a wireless node layout based upon Xcel pole locations is in
process
1. New estimate from current vendor is as high as 50 per square mile.
3. Given the pilot experience, the projected capital cost for the wireless network has
increased. Given the street light spacing, size of city blocks, bends in the streets,
topography, and other factors, a wireless node on every other block may be required.
4. Review assumptions related to customer sign-up expense.
a. Deployment of retail Wi-Fi is high-touch since it is wireless and tends to attract
less experienced users. Higher maintenance means higher support costs.
b. Anticipate that 5% of customers will require a site visit each year.
5. Alternatives to the CPE (Customer Premises Equipment, or bridge that connects PC or
laptop to outside wireless node) are needed. Issues include:
a. EnGenius has performance concerns: hopping, reliability, and MAC address
issues.
b. PepLink appears to function well and is approved by Tropos, however, cost is
high.
i. Need a CPE in the $100 range.
6. The standard CPE configuration should include a 9 dbi antenna, rather than the 2 dbi.
a. An 802.11g (vs. 802.11b) client is preferred.
7. Anticipate up to 10% of non-deluxe customers will require a professional installation
(PI).
a. Assume that an external antenna will be required for 90% of PI’s for deluxe
customers and non-Deluxe customers.
b. Customers are required to cover a portion of the cost of the Professional
Installation (PI), similar to what is required by current providers.
i. This is understood by the deluxe customers in the pilot; however Basic
subscribers requiring a PI were not charged in the pilot so we could
maximize participation in outlying areas.
ii. The financial analysis charges $150 per PI, with an average cost of $220
(labor & equipment).
8. Operation and maintenance costs for the wireless network will be substantial. In addition
to the customer on-site visits, we estimate that:
a. Annual maintenance costs will be 3% of the total installed costs.
b. Starting in year 3, network replacements and upgrades will be required, and is
estimated at 5% of the installed cost. These replacements and upgrades include
evolving technologies to ensure on-going competitiveness and are built into
financial assumptions.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 16
Special Note on the Pilot Help Desk: Of all experiences during the pilot project, the help desk
has been the most disappointing. While some positive experiences have been reported, there
have been a number of complaints and negative feedback from subscribers. These complaints
and feedback were expressed by individual subscribers; however, most of it came from
subscribers’ response to a City-initiated feedback survey. Reported problems included
inadequate support for Macintosh computers, e-mail questions, to lack of follow-up calls, to
failure to escalate some calls to an engineer when a help desk staffer was unable to address a
problem. Help desks work with scripts, and scripts were provided by Unplugged Cities to their
help desk subcontractor.
Separate from the help desk was direct response from Unplugged Cities staff. Whether over the
phone or through site visits, feedback on their performance has been consistently good, even if
an individual’s problem was not solvable during the pilot.
Unplugged Cities has been working with the help desk subcontractor to improve service during
the pilot, and some improvements have been made. It is the implementation team’s perspective,
including that of City staff, that in a full citywide project the help desk would need to work
differently. Help desk subcontracting would be replaced by employees of Unplugged Cities, at
least for most hours of the day.
When considering a service such as this, City staff feels strongly that differentiation from other
subscriber alternatives matters a lot. Beyond price, availability, and mobility, a major
differentiator is service. Mirroring service expectations provided by incumbent providers will not
be good enough. Why? First, providing excellent subscriber service is the right thing to do.
Second, service provided by incumbents is the reason some have given for changing to the City’s
wireless service. Third, the City, by its very public nature, will be held to a higher service
standard and level of accountability. Finally, many subscribers will be incurring “switching
costs” – the inconvenience of switching Internet Service providers, e-mail addresses, and
invoicing (similar to what can happen when cable TV companies change ownership). We need to
make it easier for the subscriber to get service. In addition to more effective help desk support,
we will also be considering combining billing and customer service to provide wireless
subscribers a more seamless experience.
Revenue and Cost Projections:
We have made adjustments to financial model based upon the pilot findings. The key expense
adjustments include:
• The density of wireless Access Points (AP) has been increased by 25% (373 vs. 299).
o Driven by AP to AP and bridge to AP Signal to Noise Ratio (SNR).
o Rolling Hills and tree canopy generate greater signal degradation than expected.
o Signal reception conditions currently at their worst in spring and summer.
• All Deluxe customers will require a Professional Installation (PI) and 10% of Dial-Up Buster
and basic customers will require a PI.
o The cost of a PI is $220 (hardware and labor).
o Each customer is charged $150 for a PI. The ability amortize this over the first
year of service will be offered.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 17
• The Pilot participants have confirmed the projection that this service will attract a greater
percentage of dial-up and non-users.
o Matches the project objective of offering an affordable high-speed alternative to
bridge the digital divide.
o This, however, does mean we have a substantial percentage of users that are not
technologically savvy, which equates to higher customer service costs.
o We have added an expense, estimating that we will conduct site visits to 5% of
customers each year at a cost of $150 per visit.
The customer is not charged for this expense.
Although we have left this at 5% per year, it is likely that this percentage
will decline each year as the customer base becomes more comfortable
with wireless technology.
• The pole attachment fee costs declined from $20 per month per attachment to $16.
o One attachment is required for each AP.
o The cost decline helped offset the cost of the increased number of AP’s.
• Bid prices for the AP’s were slightly lower than used in the original forecast.
We added the potential for add-on products such as VPN’s, Static IP’s, advertising, and roaming.
We were conservative with the add-ons, netting an annual contribution margin (fees less variable
expenses) of approximately $15,000 per year. The upward potential of add-ons is great,
especially as subscribers become more comfortable with technology.
The most sensitive assumptions remain the customer take rates. To show this sensitivity, we
present three take rate scenarios:
1. The original business plan projected a take rate of 36% of households and 15% of
businesses by the end of the first year of operation. If we maintain these projected take
rates and incorporate the above changes in capital and annual expenses we estimate the
cumulative cash-flow shortage at the end of year 5 at $273,000.
• Shortages of $61,000 and $300,000 in years 1 and 2.
• Breakeven in year 3.
• Gains of $30,000 and $60,000 in years 4 and 5.
2. If the city-wide implementations take peaks at 25%, and we did not obtain any business
customers, we estimate a cumulative cash flow shortage at the end of year 5 of
$2,432,000.
• Shortages of $189,000; 728,000; 527,000; 505,000; and 482,000
We believe this is a worst case analysis. We saw 25.1%1 of eligible households signed up
for the pilot, even without a guarantee of the service continuing beyond the pilot. We did
see a high interest with households that did not sign-up for the service in the pilot. They
most often indicated they did not participate due to the uncertainty of an on-going city-
wide implementation. This scenario also assumes that we will not obtain any business
customers.
3. Another scenario is to use projected take rates of 30% of households and 10% of
business, similar to current results in Chaska. They are currently over 30% participation
in households. Moorhead remains at a participation rate of 16% of all households.
1 The pilot area had 1,400 eligible households, of which 351 (25.1%) signed up for the service. The remaining 36
sign ups were not in the pilot areas.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 18
However, they have not conducted any sales or marketing efforts since their initial
mailing nearly 12 months ago. Moorhead plans to re-launch its service later this
summer 2. Over 30% of their potential customers had expressed interest prior to
Moorhead being able to provide only limited service. Given these experiences, along with
insights from other municipalities, the first 30% of households is a very obtainable goal.
We estimate the cumulative cash flow shortage at the end of year 5 at $1,442,000.
• Shortages of $132,000; 533,000; 286,000; 259,000; and 232,000.
These financial projections (see attached summary) discussed above do not include public safety
and economic development benefits. The Wi-Fi network will enable new functionality and
enhancements for public safety, public service, health care and economic development.
Examples include:
• Ability of health care workers to perform house-calls while interacting with
physicians.
• Deploy remote monitoring on an ad-hoc basis for crime investigation / prevention,
special events, or on a more permanent situation at locations such as school yards
and areas of the City prone to graffiti.
• The Wi-Fi network can be leveraged to reduce existing costs and keep cost
increases to a minimum. For example, St. Louis Park spends approximately
$20,000 a year in mobile data services for public safety today. These costs will
rise over time, and demands for remote data access and interactive video increase.
Having a Wi-Fi network will enable the new applications and minimize the cost
to implement and operate mobile data communications. Moreover, public safety
and public service applications are limited by current mobile data services
capacity. This blocks productive real-time viewing of maps, photos, fingerprints,
and other large files. Looking at only the projected retail revenues understates the
total network value to St. Louis Park and its citizens. Some communities, such as
Corpus Christi TX have deployed Wi-Fi based only on these potential benefits.
Rate (subscription fees) increases may be required during the lifetime of the project. The
increase will be dependent upon a variety of factors such as package take rates and the success of
add-on products. Voice over Internet Protocol (VoIP), roamer traffic, advertising, data storage,
remote back-up of data, and virtual private networks (VPN) can be used to offset operating cost
increases. If the subscription penetration goals are maintained and add-on products are
successful, rate increases would be minimal or unnecessary. However, if add-on products have
limited success, we might see subscription fee increases of 5% or more every other year.
UPDATE ON OTHER LOCAL COMMUNITY WIRELESS EFFORTS:
While every community is different, what have been the experiences in other cities exploring and
using wireless, and what have they learned? How has St. Louis Park’s approach compared with
those approaches, and what are the implications?
2 Both Chaska and Moorhead had major technological hurdles in their city-wide deployments. Chaska experienced
performance issues resulting in a decline in customers. Moorhead was unable to provide service to all of the people
who signed up.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 19
Because of their prominence in our region and life span on a live basis, it is important to
comment on both Chaska and Moorhead. Both Chaska and Moorhead have experienced some
set-backs. It appears the issues that have initiated the set-backs can be pre-empted or minimized
in St. Louis Park. The pilot is providing additional insights and data for our business analysis
updates.
Chaska MN
Chaska is at 40 wireless nodes per square mile (Tropos equipment).
• Customer growth has slowed, but continues to increase; they serve 2,500 customers which
represents 32% of total potential customers, or an estimated 45% market share.
• Experienced a high acceptance rate, obtained 1,750 customers within first year, but
experienced a high customer loss after initial problems.
o Original customer roll-out did not require use of a high-power CPE.
o Original wireless network node deployment was approximately 20 per square
mile.
• With the above installation, a low Signal to Noise Ratio (SNR) was experienced. The rate of
customer acceptance was lowered and customer gains were experienced once a high-power
CPE was required and additional wireless nodes were added.
• Completed a wireless network replacement.
o Original wireless node deployment supported only 802.11b
Customer top data rate seen was around 800 Kbps
o Upgraded to 802.11b/g
Equivalent to Moorhead Public Services (MPS’s) deployment
Considering provision of a 2 Mbps to 3 Mbps service (decision pending
test results).
• Discussing expansion into other municipalities in the Twin Cities.
• Migrated from internally staffed help desk to outsourcing to Siemens.
• Business model suggests that operational expenses are supported from subscription revenues
while network capital principal and interest payments and system maintenance are supported
by other funds.
Moorhead Public Service (MPS), MN
MPS is at 30 wireless nodes per square mile (Tropos equipment).
• Customer sign-ups were ahead of projections from September to December 2005. However
they are now behind plan.
o Marketing efforts ceased in November due to technical and management issues
Customer sign-ups where outpacing projections for first 6 months.
• New sign-ups outpaced returns.
• Little or no follow-up given to customers discontinuing service.
CPE performance (CPE’s tend to hop from wireless node to wireless node
regardless of SNR).
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 20
• This hopping condition was experienced in the St. Louis Park pilot,
though is aggressively addressed and corrected when encountered.
Nevertheless, it is clear a different CPE will be required.
Network management tools not in place or need enhancement. For
example:
• Bandwidth limiting by customer not enabled.
o MPS is unable to offer tiered service at this time.
o Some customers experience less than 1 Mbps, while others
see in excess of 5 Mbps connection speeds.
o Some customers are transferring data in excess of 2 Mbps
24x7.
o Lack of bandwidth control will affect overall system
performance.
• Monitoring of marginal SNR’s and other statistics appear to be
limited
o Currently support 1,800 customers (16% of all residents or 22% market share)
plus 1,600 college students.
MPS had 2,500 sign-ups, 700 customers have discontinued service.
• MPS has sent a letter out to all residents advising them that they
are working on the issues.
o Customer base appears to be patient for now.
• The customer numbers continue to increase, but slowly.
• The number of returns has dropped off since MPS initiated a more
proactive approach with customers.
30% market share required for break even cash flow.
• Goal was to obtain greater than 40% market share
Service is intermittent for some customers.
o CPE’s (network equipment installed at customer premises) hop from access point
to access point eventually using a weak signal.
Similar condition experienced in SLP trial.
• We where able to lock a CPE to a given access point to minimize
effect to customer. For the trial this was effective, but different
CPE needed for system roll-out.
MPS appears to be understaffed, which limits ability to proactively
manage network.
Some hopping might be due to “multipath” (condition in which the radio
signal reaches the receiver by two or more paths. Often this condition
causes errors and degrades signal. May cause a bridge to move from one
access point to another in an attempt to improve signal quality).
• Use of an 802.11g bridge will reduce the effect of multipath.
Chaska has seen the issue, but not to the same extent.
• Chaska used the same bridge, with an older version of the Tropos
network.
• After Chaska’s upgrade, Chaska and MPS will have similar
configurations (wireless nodes and Customer Premises Equipment)
o Tropos has suggested a feature to minimize CPE hopping.
MPS has done limited testing, but has been reluctant to implement.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 21
Feature has been tested in St. Louis Park pilot, and appears to be working.
• Expenses have run approximately $200,000 over budget.
o Plan called for any professional installations to be paid for by customer.
MPS decided to offer installation and service calls for free during the first
year.
• MPS ran a Beta test the summer of 2005
o Appears the issues were seen, however, not reported to MPS.
o Appears that staffing levels and reporting tools where not adequate to proactively
conduct network monitoring.
o Appears limited network testing done.
o Appears limited interaction with Beta customers occurred.
• Integration and testing is critical.
o Customers that obtain a good signal appear to be are pleased.
Minneapolis MN
Minneapolis is projecting under 30 radio nodes per square mile (Tropos & BelAir equipment).
• Conducting 2 pilots this summer-fall
o EarthLink with a Tropos network
EarthLink hired technical leader from Chaska
o US Internet with a BelAir network
Originally planned to use Moto-Mesh from Motorola
• Business model is similar to a cable TV franchise agreement (without a franchise fee).
o Minneapolis allows access to right-of-way and other assets in exchange for
wireless capacity access.
o Appears that Minneapolis is paying for a portion of the required fiber assets.
o Requires provider to provide a low cost service in distressed areas. Information on
the required performance (i.e. is it a 128Kbps service vs. a 1 Mbps service) has
not been released.
• Minneapolis is an anchor tenant, agreeing to pay up to $4 million per year for fiber and
wireless access.
• Selection of vendor will be dependant upon results of pilot.
• Final terms of agreement not settled or released.
• Minneapolis has started talking with other metro area communities regarding the possibility
of expanding into their communities.
o Discussions do not outline anchor tenant requirements.
St. Paul, MN
St. Paul projected 20 radio nodes per square mile (generic).
• Commissioned a feasibility study early in 2006. Study is complete and recommends the City
of St. Paul to pursue a retail offering.
o Projects a positive cash flow with obtaining 15% of potential subscribers.
• Our concerns with the studies projections include:
o No CPE, professional installations, or other customer costs are included.
o Staffing levels appear inadequate.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 22
Projects the addition of 4 staff to manage the network, run the ISP, and
conduct help desk functions.
o Wireless node density is not adequate.
Study uses 20 nodes per square mile, whereas it appears at least 30 will be
required.
o Unit prices for wireless node and installation appear to be underestimated.
St. Anthony Village, MN
St. Anthony Village projected 35 radio nodes per square mile (generic).
• Commissioned a feasibility study early in 2006. Study is complete and recommended the
City to take a cautious approach.
o Projects that to obtain a positive cash flow they would need to capture over 50%
of potential subscribers.
• Spreading costs such as staffing and Internet access provisioning over a small customer base
make the model difficult.
• St. Anthony Village is interested in partnering with another community if it would help the
economics.
Alexandria, MN
• Alexandria Light & Power (ALP) offers dial-up services, is a DSL reseller, operates a point-
to-multipoint wireless network, and direct fiber connections.
o Interested in deploying a Wi-Fi network in the community.
o Decided use a public-private partnership to operate its current network
o Taking a cautious approach, and have been tire-kicking for about 18 months.
o Have not released any immediate plans to move forward.
Austin, MN
• Exploring the potential of a wireless network, using a similar business model as St. Louis
Park.
o The ISP partner under consideration is the largest dial-up provider in Austin
today.
• Commissioned a cost-analysis to be performed, which will begin in July.
• Referendum or a Charter change may be required (Offering being considered by the
municipal electric department).
Free Wireless
Discussions of “Free” wireless services continue to expand. As one may expect, “free” is not
always “free”. The most recent “free’ offering was announced by Aurora IL in association with
MetroFi, a silicon valley based ISP. In addition to Aurora IL, MetroFi has announced plans to
build out Portland OR and has installed a network covering Santa Clara, Cupertino and
Sunnyvale CA. The model proposed by MetroFi includes:
• Undisclosed commitment from municipality for use of network for public safety.
• Municipality provides access to city-owned light poles and other mounting assets.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 23
• MetroFi offers a “free” basic service (appears to be 128Kbps) and premium services for a
fee.
o Pop-up advertising used to supplement revenues.
Another “free” service example is St. Cloud Florida, in concept it’s quite similar to MetroFi, but
with the city fronting all the capital and operating costs.
In many cases, “free” to the city appears to include free access to city-owned light poles (most
usable light poles are owned by Xcel Energy in SLP), a minimum “anchor tenant” payment
commitment required on the part of the host city for municipal use, and it is not always clear that
high-speed offerings are mandatory in all parts of town or prioritized for public safety at
desirable speeds. Some have raised concern about long-term sustainability of free wireless
services through various advertising market cycles, and potential attendant subscriber disruption.
Only time will tell once several of these free services become real. Still, it is important to keep a
pulse on these offerings, which appear to be most popular to vendors in larger cities.
UPDATE ON WIRED AND WIRELESS TECHNOLOGIES:
EVDO and WIMAX are the two technologies that have been touted as the “next big thing” in
wireless. To be sure, they have or will have their place. In fact, we currently use EVDO
technology in our Police squad cars. It is faster than last generation CDMA wireless technology
and we are able to get sustained levels of service around 500 KB in our squads (somewhat
slower in buildings), yet significantly better than the 128 KB service. The current EVDO
technologies used by the City are approximately $60.00 per subscriber per month. Many large
companies have invested significantly in EVDO technology and we can expect it to be around
for some time. While it is significantly slower than WiFi systems we are currently using it in St.
Louis Park. It is a wonderful technology for those who travel often and need to connect to the
Internet wherever they are.
WIMAX technologies continue to evolve and products are now starting to be released. WIMAX
is especially useful for longer distance point to point connectivity where there is a line of sight
from antenna to antenna. As WIMAX technologies mature, they will certainly have a place on
the backbone supporting WiFi technologies, which connect subscribers at a more granular level
under or through the tree canopy. While no one can predict the future, it appears that WIMAX
and WiFi technologies will co-exist for some time. This is especially true as WiFi radios
continue to be built into millions of laptops each year. Some predict that some next generation
laptops may include multiple radios – WiFi, WIMAX, and others.
When the City Council approved the pilot project, QWEST indicated it had no plans to expand
DSL service in St. Louis Park. That said, it appears they are adding some facilities. When
contacted recently, Qwest indicated it is expanding and intends to continue expanding DSL in St.
Louis Park. Qwest was unwilling to share details on plans, scope, and timeline.
On the cable TV front, the latest information the City has is Comcast plans to assume operation
of the Time Warner Cable franchise in St. Louis Park in August. The City awaits further details
on this from the cable providers. What continues to be unknown is Comcast’s plans for pricing
and for providing customers a smooth transition, particularly for e-mail. Hopefully, details are
forthcoming. City staff has received calls from cable subscribers on this transition.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 24
TECHNICAL FEASIBILITY AND CURRENT STEPS:
The pilot has provided not only a better understanding of what it will take to obtain a positive
customer experience; we also better understand the development status of the technology and the
challenges of deploying a successful city-wide network.
The Wi-Fi network vendor did not meet expectations, and we have experienced intermittent
performance.
• Users can apparently initiate unauthorized PC-to-PC (peer-to-peer) communication which
can have significant impact on performance for all subscribers on the network. Although this
traffic can be detected it cannot be controlled with current network system tools. Tropos
(network vendor) has acknowledged these problems as has indicated it has potential
solutions. However, these solutions have not been demonstrated, and Tropos has not
provided a firm schedule of solution availability or a complete description of how it will
address this issue.
• The AP to AP communication uses the same frequency as the AP to CPE communication.
o The more AP to AP links reach a given customer, the poorer performance seen by
customer (speed, reliability).
o The AP to AP link is susceptible to interference, thus AP spacing needs to be
closer.
• We have experienced intermittent drops and Quality of Service (QOS) issues.
o Have been identified as a Tropos issue, waiting resolution.
• We have had to make multiple visits to the AP’s in the pilot. Several AP’s have required re-
booting, firmware upgrades, or other procedures.
In addition, as anticipated, we verified the hopping issue with the EnGenius CPE. The PepLink
CPE did prove to be more reliable; however, the PepLink price points are too high to justify their
use citywide.
This is not to say there are not wireless network alternatives. Given that Wi-Fi networks are
relatively new, many advances have been seen since the pilot began. We have seen an
introduction of third generation networks and CPE'. The third generation equipment appears to
address the performance issues seen and offer more future-proofing of the technology. A
separate report is under development regarding the network and CPE alternatives.
POTENTIAL FIBER OPPORTUNITIES / BENEFITS
Part of the plan for a citywide implementation includes the addition of 12 – 14 miles of fiber
optic plant. Fiber optic cable forms the skeletal backbone of a wireless network. Every few
blocks, a wireless radio is connected to the fiber, which then provides high speed
communications to the Internet. This would complement the existing 13 miles of fiber currently
used to interconnect school district and city buildings.
At least two other potential benefits of additional fiber optic plant present themselves. First, as
additional municipal and educational buildings or activities are established, providing high-speed
Internet access is easier. These could include school buildings and city buildings, including park
structures. Second is the potential to provide retail high-speed Internet service to subscribers
using the fiber optic plant. This could be a complement to the wireless service and be attractive
to both individuals and organizations needing higher speeds than provided by wireless. In effect,
wireless and fiber offerings could work in synergy with each other.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 25
MUNICIPAL BENEFITS:
While not part of the core private-public partnership model, are there any identifiable and
tangible public safety, public service, and education-related benefits available only through a
high-speed wireless Internet service? How do we (or do we?) identify and value any intangible
benefits? What revenues could be generated, costs reduced, or benefits accrued through
innovative municipal uses of a wireless infrastructure?
There are several benefits enabled by a high-speed wireless network. It should be noted that
public safety currently uses wireless (CDMA or faster EVDO) connections to their vehicles for
some basic computing and data retrieval. Effective speeds of current EVDO networks are 1/3 or
less the speed of what we see in the higher-speed networks such as that being used in the pilot
project. Under current conditions, it is anticipated that “on-demand” EVDO connections would
be retained in order to connect wirelessly outside of St. Louis Park, while faster wi-fi networks
would be utilized with City boundaries. Ultimately, the hope is some roaming service would be
available to connect in a high-speed fashion beyond City borders.
Some benefits of a shared wireless municipal network include:
Public Safety
Computer Aided Dispatch, Reporting, Mugshots, Fingerprints, Video, etc.
Public Utilities (Water, Sewer)
Automatic Meter Reading - Remote reading and monitoring of utility meters
Conservation Management
Leak Detection
Traffic Management
Video traffic monitoring
Citations
Administration
Mobile Internet connectivity for City employees
Video surveillance at key municipal buildings, sporting events, parks, high traffic areas
Voice over IP Telephony
Community Access Network
Wireless broadband to homes and offices offered by city as a public utility
Corpus Christi’s wireless project was justified primarily on municipal uses, the reverse of our
study. It is interesting to note that different communities have different goals in their wireless
projects. The point is that, while St. Louis Park’s project has been based financially on a retail-
based model, other benefits accrue. These benefits can sometimes be important to policy makers
as they consider decisions such as this.
Johnson Controls, Inc. has agreed to conduct a high-level review of potential cost savings,
revenue enhancements, and other benefits that could accrue to the City as a result of
implementing a citywide wireless project. Johnson Controls has historically been focused on
building efficiency and power solutions. For buildings, it offers products and services that
optimize energy use and improve comfort and security. More recently, Johnson Controls has
entered the public sector market, working with a number of cities in Minnesota and nationwide.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 26
They are currently engaged in a significant cost savings / revenue generation effort with the City
of Duluth. Wireless technologies are of interest to Johnson Controls as it relates to efficiency and
effectiveness gains for cities. It is anticipated that results of their high level review will be
available as part of the July 17 report.
While these savings, enhancements, and benefits may not form a compelling reason alone to
implement wireless technologies in St. Louis Park as was the case in Corpus Christi, they may
add to the policy calculus as Council considers overall costs and benefits. As Council considers
this report and citywide implementation in general, and the current cost – revenue model in
particular, staff felt it important to present information on these municipal / community benefits.
Again, while such benefits may not justify wireless in and of themselves, it is important to note
that such benefits are unlikely to be possible cost-effectively in the absence of a high-speed
wireless network.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 27
14%
23%
47%
60%
71%
88%
22%
29%
24%
23%
19%
8%
64%
48%
28%
17%
10%4%
Up to $20 per
month (N=279)
$21 to $25 per
month (N=280)
$26 to $30 per
month (N=280)
$31 to $35 per
month (N=280)
$36 to $40 per
month (N=281)
$41 or more per
month (N=282)
Willing
Neutral
Unwilling
Figure 1: Willingness to Switch Internet Service Providers (Unspecified)
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 28
22%28%
44%
56%
74%
86%
18%
30%
30%
27%
14%
7%
60%
43%
26%
17%12%6%
Up to $20 per
month (N=279)
$21 to $25 per
month (N=278)
$26 to $30 per
month (N=277)
$31 to $35 per
month (N=278)
$36 to $40 per
month (N=276)
$41 or more per
month (N=275)
Interested
Neutral
Not interested
Figure 2: Willingness to Switch to a Wireless Internet Service Provider
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 29
16%
23%
39%
53%
73%
84%
20%
26%
33%
33%
17%
10%
63%
51%
27%
14%11%6%
Up to $20 per
month (N=277)
$21 to $25 per
month (N=278)
$26 to $30 per
month (N=277)
$31 to $35 per
month (N=276)
$36 to $40 per
month (N=277)
$41 or more per
month (N=277)
Likely
Neutral
Not likely
Figure 3: Willingness to Switch to a Wireless Internet Service Provided by the City
of St. Louis Park
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 30
16%
23%
39%
53%
73%
84%
20%
26%
33%
33%
17%
10%
63%
51%
27%
14%11%6%
Up to $20 per
month (N=277)
$21 to $25 per
month (N=278)
$26 to $30 per
month (N=277)
$31 to $35 per
month (N=276)
$36 to $40 per
month (N=277)
$41 or more per
month (N=277)
Likely
Neutral
Not likely
Subscriber Projections and Preliminary Sign-ups
One of the pilot objectives is to test the expected subscriber makeup of a city-wide
implementation. In the surveys conducted during the summer of 2005, it was seen that the
expected number of wireless subscribers is highly dependant upon the price of the service. This
dependency is shown in Figure 4.
Figure 4: Willingness to Switch to a SLP Wireless Service
As seen in figure 4, for a service between $21 and $25 per month, 51% of households are likely
to sign-up for a SLP wireless service. Increasing the service to over $41 per month drops the
interest to 6%.
Not only does the willingness to switch change with price; it also changes based on the type of
service they are switching from. As seen in Table 1, the percentage of subscribers coming from
telephone based access drops drastically as the subscription fees are increased.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 31
For example, of the 51% of households that are likely to subscribe to a $21 to $25 per month
(Figure 4) service, 49.47% currently have dial-up service (Table 1). If the service is increased to
over $41 per month, 6% of households are likely to switch, of which 25.06% have dial-up
service.
Table 1: Residences likely subscribe to SLP service, what
type of service they currently have.
Price Range
Type of Service
Dial-Up DSL CM Wireless
Likelihood to
subscribe - up
to $20 per
month 56.29% 9.69% 33.44% 0.58%
Likelihood to
subscribe -
$21-$25 per
month 49.47% 11.70% 38.11% 0.72%
Likelihood to
subscribe -
$26-$30 per
month 37.75% 16.16% 44.74% 1.35%
Likelihood to
subscribe -
$31-$35 per
month 25.27% 24.37% 47.80% 2.55%
Likelihood to
subscribe -
$36-$40 per
month 29.43% 23.52% 43.63% 3.41%
Likelihood to
subscribe -
$41 or more
per month 25.06% 19.22% 52.63% 3.09%
Given the objective of offering a high-speed alternative to current dial-up users or non-Internet
users, the survey data and pilot results indicate that a service priced under $25 is required. Higher
priced services will not only attract a lower percentage of households, but a lower percentage of
dial-up users as well.
Pilot participation is quite similar to the projections derived from the surveys. These results are
shown in Table 2. Please note that the comparison between Table 1 and Table 2 is between
subscribers already having Internet access.
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 32
Table 2: Pilot Participants – Pre-pilot Internet Service
Calculation Bases Type of Internet Service
Dial-Up DSL Cable None
Percentage with
New Internet Users 40% 8% 40% 12%
Percentage w/o
New Internet Users 45% 9% 45% NA
The Pilot sign ups and the projections from the survey are showing similar results (please note
that the survey had +/- 5 % tolerance).
Moorhead Public Service (MPS) has seen similar results. The breakdown of MPS subscribers is
show in Figure 2.
Fiqure 2: Type of Internet Service Before Switching to GoMoorhead
Cable Modem
28%
DSL
7%
Dial Up
53%
Wireless
0%
Satellite
0%
None
12%
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 33
City of Saint Louis Park, Minnesota
Wireless Internet Service Feasibility Study
June 26, 2006
Cash Flow Statement Original Projected Take Rates
1 2 3 4 5
a. Net Income (679,135)$ 164,846$ 216,846$ 262,275$ 309,574$
b. Cash Outflows
Debt Service Reserve -$ -$ -$ -$ -$
Interest Reserve - - - - -
Funded Depreciation - - - - -
Financing (37,000) - - - -
Capital Expenditures (3,648,746) (367,605) (108,812) (109,127) (109,127)
Total (3,685,746)$ (367,605)$ (108,812)$ (109,127)$ (109,127)$
c. Cash Inflows
Interest Reserve -$ -$ -$ -$ -$
ST Bond Proceeds 2,300,000 - - - -
LT Bond Proceeds 1,400,000 - - - -
Internal Loan Proceeds 745,000 - - - -
Total 4,445,000$ -$ -$ -$ -$
d. Total Cash Outflows and Inflows 759,254$ (367,605)$ (108,812)$ (109,127)$ (109,127)$
e. Non-Cash Expenses - Depreciation 452,163$ 525,684$ 544,350$ 563,078$ 581,806$
f. Adjustments
Proceeds from Additional Cash Flows (ST Bond)(2,300,000)$ -$ -$ -$ -$
Proceeds from Additional Cash Flows (LT Bond)(1,400,000) - - - -
Proceeds from Additional Cash Flows (Loan)(745,000) - - - -
Total (4,445,000)$ -$ -$ -$ -$
g. Adjusted Available Net Revenue (3,912,718)$ 322,926$ 652,384$ 716,226$ 782,253$
h. Principal Payments on Debt
ST Bond Principal 416,242$ 437,054$ 458,907$ 481,852$ 505,945$
LT Bond Principal 42,340 44,457 46,679 49,013 51,464
Loan Principal 134,826 141,568 148,646 156,078 163,882
Total 593,408$ 623,078$ 654,232$ 686,944$ 721,291$
i. Net Cash (61,126)$ (300,153)$ (1,848)$ 29,282$ 60,962$
Cash Balance
Unrestricted Cash Balance (61,126)$ (361,279)$ (363,127)$ (333,845)$ (272,883)$
Debt Service Reserve -$ -$ -$ -$ -$
Total Cash Balance (61,126)$ (361,279)$ (363,127)$ (333,845)$ (272,883)$
Debt Service Balance (ST Bond)1,883,758$ 1,446,704$ 987,797$ 505,945$ -$
Debt Service Balance (LT Bond)1,357,660$ 1,313,203$ 1,266,524$ 1,217,511$ 1,166,047$
Debt Service Balance (Internal Loan)610,174$ 468,606$ 319,960$ 163,882$ -$
Debt Service (P&I)815,658$ 815,658$ 815,658$ 815,658$ 815,658$
Debt Coverage Ratio (ST & LT Bonds)(4.57)0.59 0.97 1.02 1.06
Debt Coverage Ratio (Internal Loan)(4.75)0.43 0.83 0.90 0.00
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 34
City of Saint Louis Park, Minnesota
Wireless Internet Service Feasibility Study
June 26, 2006
Cash Flow Statement 25% Residential Take Rate
1 2 3 4 5
a. Net Income (949,654)$ (298,718)$ (258,697)$ (220,951)$ (181,944)$
b. Cash Outflows
Debt Service Reserve -$ -$ -$ -$ -$
Interest Reserve - - - - -
Funded Depreciation - - - - -
Financing (37,000) - - - -
Capital Expenditures (3,470,774) (278,355) (104,612) (104,822) (104,822)
Total (3,507,774)$ (278,355)$ (104,612)$ (104,822)$ (104,822)$
c. Cash Inflows
Interest Reserve -$ -$ -$ -$ -$
ST Bond Proceeds 2,300,000 - - - -
LT Bond Proceeds 1,400,000 - - - -
Internal Loan Proceeds 745,000 - - - -
Total 4,445,000$ -$ -$ -$ -$
d. Total Cash Outflows and Inflows 937,226$ (278,355)$ (104,612)$ (104,822)$ (104,822)$
e. Non-Cash Expenses - Depreciation 416,569$ 472,240$ 490,065$ 507,932$ 525,800$
f. Adjustments
Proceeds from Additional Cash Flows (ST Bond)(2,300,000)$ -$ -$ -$ -$
Proceeds from Additional Cash Flows (LT Bond)(1,400,000) - - - -
Proceeds from Additional Cash Flows (Loan)(745,000) - - - -
Total (4,445,000)$ -$ -$ -$ -$
g. Adjusted Available Net Revenue (4,040,859)$ (104,833)$ 126,757$ 182,159$ 239,034$
h. Principal Payments on Debt
ST Bond Principal 416,242$ 437,054$ 458,907$ 481,852$ 505,945$
LT Bond Principal 42,340 44,457 46,679 49,013 51,464
Loan Principal 134,826 141,568 148,646 156,078 163,882
Total 593,408$ 623,078$ 654,232$ 686,944$ 721,291$
i. Net Cash (189,267)$ (727,911)$ (527,475)$ (504,784)$ (482,257)$
Cash Balance
Unrestricted Cash Balance (189,267)$ (917,178)$ (1,444,653)$ (1,949,438)$ (2,431,695)$
Debt Service Reserve -$ -$ -$ -$ -$
Total Cash Balance (189,267)$ (917,178)$ (1,444,653)$ (1,949,438)$ (2,431,695)$
Debt Service Balance (ST Bond)1,883,758$ 1,446,704$ 987,797$ 505,945$ -$
Debt Service Balance (LT Bond)1,357,660$ 1,313,203$ 1,266,524$ 1,217,511$ 1,166,047$
Debt Service Balance (Internal Loan)610,174$ 468,606$ 319,960$ 163,882$ -$
Debt Service (P&I)815,658$ 815,658$ 815,658$ 815,658$ 815,658$
Debt Coverage Ratio (ST & LT Bonds)(4.73)0.07 0.32 0.36 0.40
Debt Coverage Ratio (Internal Loan)(4.91)(0.09)0.18 0.24 0.00
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 35
City of Saint Louis Park, Minnesota
Wireless Internet Service Feasibility Study
June 26, 2006
Cash Flow Statement 30% Residential Take Rate
1 2 3 4 5
a. Net Income (827,016)$ (87,585)$ (39,889)$ 1,283$ 44,676$
b. Cash Outflows
Debt Service Reserve -$ -$ -$ -$ -$
Interest Reserve - - - - -
Funded Depreciation - - - - -
Financing (37,000) - - - -
Capital Expenditures (3,551,888) (318,150) (106,502) (106,712) (106,817)
Total (3,588,888)$ (318,150)$ (106,502)$ (106,712)$ (106,817)$
c. Cash Inflows
Interest Reserve -$ -$ -$ -$ -$
ST Bond Proceeds 2,300,000 - - - -
LT Bond Proceeds 1,400,000 - - - -
Internal Loan Proceeds 745,000 - - - -
Total 4,445,000$ -$ -$ -$ -$
d. Total Cash Outflows and Inflows 856,112$ (318,150)$ (106,502)$ (106,712)$ (106,817)$
e. Non-Cash Expenses - Depreciation 432,792$ 496,422$ 514,625$ 532,870$ 551,137$
f. Adjustments
Proceeds from Additional Cash Flows (ST Bond)(2,300,000)$ -$ -$ -$ -$
Proceeds from Additional Cash Flows (LT Bond)(1,400,000) - - - -
Proceeds from Additional Cash Flows (Loan)(745,000) - - - -
Total (4,445,000)$ -$ -$ -$ -$
g. Adjusted Available Net Revenue (3,983,113)$ 90,687$ 368,234$ 427,442$ 488,996$
h. Principal Payments on Debt
ST Bond Principal 416,242$ 437,054$ 458,907$ 481,852$ 505,945$
LT Bond Principal 42,340 44,457 46,679 49,013 51,464
Loan Principal 134,826 141,568 148,646 156,078 163,882
Total 593,408$ 623,078$ 654,232$ 686,944$ 721,291$
i. Net Cash (131,520)$ (532,392)$ (285,998)$ (259,502)$ (232,295)$
Cash Balance
Unrestricted Cash Balance (131,520)$ (663,912)$ (949,910)$ (1,209,412)$ (1,441,707)$
Debt Service Reserve -$ -$ -$ -$ -$
Total Cash Balance (131,520)$ (663,912)$ (949,910)$ (1,209,412)$ (1,441,707)$
Debt Service Balance (ST Bond)1,883,758$ 1,446,704$ 987,797$ 505,945$ -$
Debt Service Balance (LT Bond)1,357,660$ 1,313,203$ 1,266,524$ 1,217,511$ 1,166,047$
Debt Service Balance (Internal Loan)610,174$ 468,606$ 319,960$ 163,882$ -$
Debt Service (P&I)815,658$ 815,658$ 815,658$ 815,658$ 815,658$
Debt Coverage Ratio (ST & LT Bonds)(4.66)0.31 0.62 0.66 0.71
Debt Coverage Ratio (Internal Loan)(4.84)0.15 0.48 0.54 0.00
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 36
Phase 1 Survey Response
Sample Population
Response Selection Count %Lower Mean Upper
1 Very Easy 14 42.4 51 85 119
7 21.2 15 42 70
3 Somewhat Easy 5 15.2 6 30 55
2 6.1
5 Neutral 4 12.1
7 Somewhat Difficult 1 3.0303
9 Very Difficult
Totals 33 100.0
10 No Response 6
1 - How would you rate the setup of the equipment you picked up?
Comments:
0
10
20
30
40
50
Phase 1 Survey ResponsePercentage of respondentsVery Easy Somewhat Easy Neutral Somewhat Difficult Very Difficult
Phase 1 Survey Response
Sample Population
Response Selection Count %Lower Mean Upper
1 Very Well 4 36.4
3 27.3
3 Somewhat Well 2 18.2
5 Neutral
7 Somewhat poorly 1 9.1
1 9.1
9 Very Poorly
Totals 11 100.0
10 No Response 28
2 - If you are using Parkwifi's e-mail system, how is it working for you?
Comments:
0
5
10
15
20
25
30
35
40
Phase 1 Survey ResponsePercentage of respondentsVery Well Somewhat Well Neutral Somewhat poorly Very Poorly
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 37
Phase 1 Survey Response
Sample Population
Response Selection Count %Lower Mean Upper
1 Deluxe 5 14.7 6 29 53
2 Basic 28 82.4 139 165 190
3 Dial-Up Buster 1 2.9
Totals 34 100.0
10 No Response 5
3 - Which Parkwifi service are you using?
Comments:
0
10
20
30
40
50
60
70
80
90
Percentage of respondentsDeluxe Basic Dial-Up Buster
100
Phase 1 Survey Response
Sample PopulationResponse Selection Count %Lower Mean Upper
1 Exceeds Expectations 5 16.1 6 32 58
6 19.4 11 39 67
3 Somewhat Exceeds Expectations 9 29.0 26 58 90
2 6.5
5 Neutral 6 19.4 11 39 67
7 Somewhat Fails Expectations 1 3.2
9 Fails to Meet Expectations 2 6.5
Totals 31 100.0
10 No Response 8
4 - How would you rate the speed of the service?
Comments:
0
5
10
15
20
25
30
35
Phase 1 Survey ResponsePercentage of respondentsExceeds Expectations Somewhat Exceeds ExpectationsNeutralSomewhat Fails Expectations Fails to Meet Expectations
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 38
Phase 1 Survey Response
Sample PopulationResponse Selection Count %Lower Mean Upper
1 Very Poor 1 4.8
1 4.8
3 Somewhat Poor 2 9.5
2 9.5
5 Neutral -4 19.0
2 9.5
7 Somewhat Good 6 28.6 18.49919 57.143 95.787
9 Very Good 3 14.3
Totals 21 100.0
10 No Response 18
5 - If you have had experience with the Parkwifi help desk, how would you rate the service provided?
Comments:
0
5
10
15
20
25
30
Phase 1 Survey ResponsePercentage of respondentsVery Poor Somewhat Poor Neutral -Somewhat Good Very Good
Phase 1 Survey Response
Sample PopulationResponse Selection Count %Lower Mean Upper
1 Very Poor
3 Somewhat Poor
1 12.5
5 Neutral -
1 12.5
7 Somewhat Good 2 25.0
1 12.5
9 Very Good 3 37.5
Totals 8 100.0
10 No Response 31
6 - If you have had a site vist for a professional installation, how would you rate the service provided?
Comments:
0
5
10
15
20
25
30
35
40
Phase 1 Survey ResponsePercentage of respondentsVery Poor Somewhat Poor Neutral -Somewhat Good Very Good
City Council Study Session
Written Report: 071006 - 6 - Wireless Pilot Update
Page 39
Phase 1 Survey Response
Sample PopulationResponse Selection Count %Lower Mean Upper
1 Very Likely 22 64.7 97 129 162
4 11.8
3 Somewhat Likely
5 Neutral -2 5.9
1 2.9
7 Somewhat Unlikely
9 Very Unlikely 5 14.7 5.602187 29.412 53.221
Totals 34 100.0
10 No Response 5
Comments:
7 - How likely are you to continue using the service throughout the pilot?
0
10
20
30
40
50
60
70
Phase 1 Survey ResponsePercentage of respondentsVery Likely Somewhat Likely Neutral -Somewhat Unlikely Very Unlikely
Phase 1 Survey Response
Sample PopulationResponse Selection Count %Lower Mean Upper
1 Have email questions 2 5.9
2 Great service & speed 6 17.6 10 35 61
3 It's a success 7 20.6 14 41 68
4 I need further help to connect, system not working 9 26.5 23 53 83
5 Better MAC support needed 1 2.9
6 Include files for virus and spyware protection 2 5.9
7 Enhanced Instruction Manuals, Instructions for Lo 3 8.8
8 Speed is Slow 3 8.8
9 Needs Encryption 1 2.9
Totals 34 100.0
10 No Response 5
Comments:
8 - Please Provide any other comments
0
5
10
15
20
25
30
Phase 1 Survey ResponsePercentage of respondentsHave email questions Great service & speedIt's a success I need further help to connect, system not working 100%Better MAC support needed Include files for virus and spyware protectionEnhanced Instruction Manuals, Instructions for Logon, Etc Speed is SlowNeeds Encryption