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Friday, August 31, 2007

Blow as two ‘Muni WiFi’ schemes fail

Blow as two ‘Muni WiFi’ schemes fail
By Chris Nuttall in San Francisco
Copyright The Financial Times Limited 2007
Published: August 31 2007 02:07 | Last updated: August 31 2007 02:07

The “Muni WiFi” movement has been dealt a double blow with the collapse of its San Francisco and Chicago schemes to provide blanket wireless coverage.

The San Francisco scheme – which fell apart on Wednesday night after Earthlink, the internet service provider, said it was pulling out of a contract to build the city’s WiFi network – was one of the most high-profile in the country because of the involvement of Google. The internet company was planning to subsidise a free-access option for users in exchange for including advertising in the service.

Separately, Chicago shelved its plans to provide WiFi coverage over the city’s 228 square miles, saying it would require significant public financing, and that demand was declining.

Muni WiFi has become a victim of flawed business plans, slow user adoption, technology problems and political delays. Alternative technologies have also been emerging – Chicago will be one of the first US cities to benefit from a wireless WiMax service being launched by the carrier Sprint Nextel. WiMax offers broadband internet speeds over long distances.

Both San Francisco and Chicago rejected proposals by Earthlink that they become “anchor tenants” of a WiFi network – providing a guaranteed income for the provider by paying for city services such as wireless video surveillance.

In San Francisco’s case, the city said its departments did not have services that could take advantage of the network.

Earthlink, a pioneer of Muni WiFi in cities such as Philadelphia and Anaheim, has realised that its original business model – bearing the whole cost of building out the infrastructure and then charging users for access – is unprofitable.

The failure of Muni WiFi to live up to expectations contributed to the company’s announcement of 900 job losses this week, almost half its workforce.

Other cities, such as Corpus Christi in Texas and Lompoc in California, have taken on the responsibility of building the networks themselves. Lompoc suffered coverage problems – it found wireless signals struggled to penetrate the walls of homes – and discovered only a few hundred of its 40,000 inhabitants were willing to pay a subscription fee.

The sums have also not added up for “digital inclusion” – ambitious plans to provide free or low-cost access to those on low incomes.

Google seemed to suggest on Thursday that it was still interested in providing free access, but with a new partner. “We hope that the city will be able to reach an agreement that will enable all San Franciscans to enjoy a free WiFi network,” a spokesperson said.


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