City cancels Wi-Fi vision

Chicago is curtailing its digital dreams, deciding to back away from municipal Wi-Fi service after failing to reach agreement with either of two companies that sought to build a wireless Internet network in the city.

The move comes as municipal broadband wireless projects around the country face difficulties, and EarthLink Inc., a major player in the field, is re-evaluating its future in municipal Wi-Fi.

As envisioned in early 2006, Chicago was expected to become one of the first big cities in the country to blanket its streets and neighborhoods with a wireless Internet signal that would allow residents access to the Web in their homes and wherever they traveled in the city.

But technology is advancing and the cost of online access for consumers is declining so dramatically that Chicago has other avenues to promote more use of the Internet. As a result, the Wi-Fi deal lost luster when negotiations bogged down, according to sources close to the matter.

Chicago officials had intended that the city would offer infrastructure, but no cash, to a carrier that would use its own funds to build the network here. EarthLink and AT&T Inc. submitted proposals to the city, but after months of negotiations the parties were unable to reach agreement. The companies sought a commitment from Chicago to be an "anchor tenant," agreeing to pay to use the Wi-Fi network to support city services, but the city declined.

Taking its proposal request off the table for re-evaluation "is entirely appropriate for the city," said Tom Hulsebosch, vice president of municipal sales for EarthLink. "We're seeing this evolve as we learn more about these networks, and the city needs to think about this again from its own business perspective."

It might be possible for the city to spend money on Wi-Fi services that it now spends on other communications, he said, but that would require rethinking the budget.

A few years ago when San Francisco, Philadelphia, Houston and other cities jumped into Wi-Fi, officials thought paying less than $20 a month to get a high-speed Internet connection anywhere in the city would find a lot of takers. They also thought advertising could support citywide free connections.

Results on both scores have been generally disappointing. In Lompoc, Calif., which activated its $2 million Wi-Fi network almost a year ago, the city signed up fewer than 500 users out of a population of more than 40,000.

"There's a serious dose of reality, much needed, that has come into play after all the hype last year about free, ad-driven Wi-Fi," said Craig Settles, a wireless business strategist and consultant based in Oakland.

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