Direct and Indirect

MazeWi-Fi Planet, part of the Jupiter Media keiretsu, reports on a Jupiter Research study that claims municipal Wi-Fi (wireless) costs about US$150,000 per square mile over 5 years, and wouldn’t break even even if it charged users $25/month.

But .. not everything gets built to make money. Freeways are an example. They are considered enabling infrastructure. A municipality’s self-interest is improving the “way of life” for its citizens, and having access to services such as wi-fi certainly do that – first as a unique offering, later (as more cities offer it) as a defensive or “me too” offering. But they also build wi-fi to attract people with laptops, on the assumption that they have money to spend in the area. Maybe not every time they open their laptop. But eventually they learn about local restaurants, notice there’s a playhouse or theater, etc. Maybe with the character of the area changes subtly, attracting people to live there. Tax revenues increase.

If everything was always cut along profit & loss lines, there’d be no instant messenger services as we know them today. But Yahoo!, MSN and AOL consider IM a draw, a gateway if you will, into other services that do make money. Producing and maintaining an accurate multi-channel contribution model is tough .. it’s one of the things that SDS does today, and as you can imagine, plenty of business units have strong opinions on how much they should be credited for their contribution. So yeah, there’s a cost involved to build out infrastructure, and it’s worthwhile knowing what the cost is. But there’s more to infrastructure than just the direct cost.

Direct and Indirect