Muni Wi-Fi in trouble unless cities cough up some (big) bucks

Not that long ago, municipal Wi-Fi was the talk of the town, so to speak. These days the latest rendition of the information superhighway is getting a bumpy ride, or plenty of static (choose your metaphor), as ISPs and telecoms are walking away from the business of partnering with local government to build free or cheap public networks, Business Week says.

Not that long ago, municipal Wi-Fi was the talk of the town, so to speak. These days the latest rendition of the information superhighway is getting a bumpy ride, or plenty of static (choose your metaphor), as ISPs and telecoms are walking away from the business of partnering with local government to build free or cheap public networks, Business Week says.

As we've reported, EarthLink, once the most enthusiastic of partners for muni Wi-Fi, is running away as fast as it can. Even without EarthLink trying to extract itself, San Francisco's Wi-Fi project has been stuck in limbo as the Board of Supervisors has succeeding in stopping the project, which was intended to built with EarthLink and Google.

EarthLink's new CEO pronounced during a quarterly conference call: "The Wi-Fi business as currently constructed will not provide a return."

Meanwhile, AT&T, is "evaluating" whether to pursue any new deployments or even whether to continue working on its four existing projects, says Ebrahim "Eb" Keshavarz, vice-president for business development at AT&T.

The problem is that companies like EarthLink and MetroFi have agreed to foot the bill for infrastructure and equipment, lease city property for equipment and even kick back revenues to local governments. The companies justified these concessions on models projected up to 30% uptake of the networks. But the reality is far different: 1% to 2% of populations have signed up.

Complicating the drive to boost subscription is competition: Wherever muni Wi-Fi networks are announced, phone and cable companies tend to lower their prices for broadband Internet access, says Glenn Fleishman.

To make the business more profitable, Wi-Fi service providers are trying to pass more of the cost to the cities. "There's no one that I am aware of right now who'd build a network without the city as a paying customer," says Lou Pelosi, vice-president for marketing at MetroFi, which six months ago stopped bidding for projects unless the city agreed to become the network's anchor tenant.

ISPs want cities to pay -- and not just a modest amount. Corpus Christi, Tex., not only pays EarthLink about $200,000 a year to operate its Wi-Fi network, it also sold the infrastructure, which it paid for, back to EarthLink at somewhere around a $1 million loss, says City Manager George "Skip" Noe.

But with that network, the city can automate gas and water meter-reading and other data collection, have an emergency communications network and use the network for surveillance cameras.

"We did an analysis, and over 20 years, there are multimillions in savings to the city," says Noe.