Competition for Cablevision? NYC launches ambitious public Wi-Fi project

In a move that could signal major competition for cable companies, New York City has pledged to launch an ambitious public Wi-Fi project in 2015.

Dubbed "LinkNYC," the service will provide free Internet service across the New York's five boroughs, as well as no-cost domestic calling and video chatting. New York City Major Bill de Blasio's office, which announced the service during a Monday press conference attended by the Wall Street Journal and other media, said the service will operate on ad revenue and not dig into tax-fueled coffers.

"This is going to help us close the digital divide," said Maya Wiley, counsel to Mr. de Blasio.

Construction of the network, which will involve 10,000 hotspots built over existing pay-phone structures, will begin in 2015, with the mayor's office partnering with CityBridge, a New York-based consortium of technology, manufacturing and advertising companies.

City officials expect the network to generate more than $500 million over the next 12 years, which will cover the construction and ongoing maintenance of the devices. The network is expected to cost around $200 million to build. Six companies, including Titan and Qualcomm, will provide services and share revenue with the city.

The kiosks will take the place of the city's languishing collection of pay phones--New York's franchise contracts for pay phones expired in mid-October.

The building of a public Wi-Fi network in the nation's biggest market could have significant impact on cable operators including Time Warner Cable (NYSE: TWC) and Cablevision (NYSE: CVC), which are both aggressively building carrier-grade Wi-Fi services in the region.

In October, 42 New York City Council members wrote the city's Department of Information Technology and Telecommunications, advising the organization against working with Cablevision on the Wi-Fi project, based on the MSO's dealings with a labor union. Cablevision did not bid on this project.

UPDATE: A Cablevision spokesperson noted to FierceCable that the company has actively partnered with the City of New York on a number of initiatives, and the launch of a public Wi-Fi project by the city doesn't necessarily constitute a competitive threat.

For more:
- read this Wall Street Journal story
- read this story from The Verge

Related links:
Cable sees big future in Wi-Fi as video gives way to OTT, high programming costs
Apple, HotSpot 2.0 and massive hotspot deployments mean Wi-Fi has left the building
NYC council moves to block Cablevision from hot spot project … it didn't even bid on