Skip to main content

City-owned Toronto Hydro says its downtown wireless Internet network, launched last year, is going strong and already making money - bucking a trend in several U.S. cities that have recently scrapped ambitious plans to offer similar access to citizens.

In recent weeks, both Chicago and San Francisco have been forced to pull the plug on plans to work with private firms and build citywide WiFi networks, saying the projects were simply too expensive.

David Dobbin, president of Toronto Hydro Telecom Inc., a subsidiary of Toronto Hydro, said earlier this week the Toronto project, the country's largest WiFi network, is growing steadily and bears little resemblance to the U.S. schemes now appearing to falter.

"Our business model, from the beginning, has been very different from those business models that are being deployed in the United States, the ones they are talking about failing," Mr. Dobbin said.

For instance, Toronto Hydro does not offer a free WiFi service, a component built into other cities' plans, as part of an effort to bring Internet access to the inner city poor.

Instead, all users must pay what Mr. Dobbin says are fair market prices. The monthly rate is $29 plus tax, while users can also pay by the hour ($4.99) or the day ($9.99).

Toronto Hydro's project has also been limited so far to the downtown core and the city's financial district, instead of trying to blanket the entire municipality.

Another key difference is that many U.S. cities were looking to set up systems from scratch. Toronto Hydro Telecom owns its own fibre optic network, counts four of the big six banks as clients and already has the technicians and repair trucks it needs, he said.

The service was made possible by the city's $60-million sale of its lampposts to Toronto Hydro Telecom's parent, Toronto Hydro, to balance the city's 2005 budget. Wireless antennas have been fixed to many of the poles.

The project has attracted thousands of subscribers, Mr. Dobbin said, "well beyond" early estimates of just over 4,000 paying users, although he could not say how many. And it is more than covering its costs.

"It's got positive earnings today ..." he said. "We're ahead of where our subscriber projections said we would be."

However, he said the company would not release how much money it was making on the wireless service, or how much it had invested, citing securities regulations.

He did say that, at this rate, Toronto Hydro Telecom could recoup its initial investment in the project in just two years: "Every month, the thing just keeps cranking."

Later this year, Mr. Dobbin said, he will submit an expansion plan for the WiFi network to the Toronto Hydro board.

He suggested it would include modest expansion into areas where high concentrations of new users might be found.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe