Everyone wants wireless access to the Internet wherever they go. Cities want to be able to provide it. But there’s a considerable obstacle. The capital and operating costs of installing the necessary infrastructure is very high. At the same time, citizens are expecting better quality, higher bandwidth internet services, such as streaming video, driving those costs still higher and making even 3G mobile services incapable of delivering the goods. But those same consumers are also expecting to pay less not more for those services.

The subscription fees that have historically been needed to create wireless cities have thus led to their failure, and bankruptcy in several cases. It appears to be proven that the expectation of consumers is that such services ought to be free.

In an exclusive interview with NMK, LastMile’s Antony Abell explained an alternative model for creating such a network, one that borrows a lot from internet publishing. The idea is to connect intelligent, caching wireless hotspots to outdoor advertising screens.

Its WDirect nodes combine a wireless router with 8-16GB of memory that is intelligently linked to all the other nodes in the area. An urban area would typically contain 25 nodes per square mile - more if there were high-rise buildings, so each of those spots would have almost instant access to terabytes of data cached locally. Those nodes are designed to choose which data to cache dynamically - the front page of YouTube or the top downloads on iPlayer, for example, and intelligently share that across the local network. Many public and private institutions already use caching servers to try to make more of their bandwidth, while ISPs all employ traffic shaping of some form in order to overcome the extreme demands placed on them by the likes of YouTube and BBC iPlayer, not to mention P2P applications like bitTorrent.

Anybody could buy and install one of these nodes, be that a city council, a traditional telecoms provider or a private business. And they’d be attracted to do that because of the advertising revenue that comes with each of them. A node might be attached to the side of an office building, for example, and the office’s owner would take a share of the advertising revenue created by the digital billboard attached to it, the same way traditional outdoor billboards work today. A local advertising provider, such as a newspaper, might invest in a small network of these nodes to create new ways of delivering their editorial content and value to their advertisers. Digital agencies could start to become their own distribution network for outdoor locations.

Abell suggested that the system allows a way back in to digital advertising for local advertisers who have been "disenfranchised" by online ad networks. A freehold pub landlord was his example. They can’t afford to bid on ‘good London pub’ on Google AdWords to obtain any degree of purchase, but could get a good share of coverage on digital billboards within a mile of their premises.

Since these advertisements are digital, they can also be interactive. Every enabled mobile device becomes capable of interacting with the visual adverts to deliver more information to that device - the node knows what you’re looking at and what device you’re using to do so - and can send that information in the most appropriate form. Under LastMile’s cityspot brand every device is then designed to have its own equivalent to Sky’s red button.

For national and international advertisers, the possibilities of profiling who sees which adverts at what point become as sophisticated as those offered by the major internet networks. You might want to advertise at cinemas, golf clubs, shopping centres that contain a particular chain of stores. You might want only to advertise your leisure location on roadside locations in particular postcodes between five and seven PM. It’s also feasible to profile advertising depending on the type of device connected to it. Technology advertisers might be especially interested in slots connected to a Nokia N96 or an iPhone, for example.

Abell believes that the ‘payback time’ for installing a network of nodes will lie between three and fifteen months, depending on the density of the population and their desirability to advertisers. "The business case pays for the technology." LastMile is sweetening the deal for advertising agencies by offering a 25 per cent commission, as opposed to the normal 15 per cent, not to mention lower CPM rates - $4.30 - than any existing model. The company currently manufactures the nodes, or commissions their manufacture, but views that as less important than being a content delivery network, and is open to the nodes becoming white-labelled.

Municipalities, Abell believes, won’t just welcome LastMile because it’s cheaper and more likely to work as a business than subscription models. It also gives them another route to communicating with their citizens. As traditional media becomes increasingly fragmented, these opportunities are increasingly valued. In addition, the ability to control every screen in the event of a civil or military emergency is increasingly of concern to councils and government.

What do you think? If LastMile are correct in their expectations, their model is extremely disruptive to the advertising business as a whole. But is this the right route to wireless nirvana or are LastMile pinning their hopes on an advertising model people already find overwhelming?