U.S. cities are jumping off the municipal wireless bandwagon

When the municipal Wi-Fi craze started a couple years ago, I was skeptical about both the technology and the economics of what was being planned, even though I liked the idea of ubiquitous wireless Internet access and making it free at reduced speeds. At Interop Las Vegas this spring, I was surprised to see how many niche products and companies had popped up around municipal Wi-Fi, especially since the concept was still unproven. However, over the past month, plans for municipal wireless networks in a variety of prominent U.S. cities have either experienced major setbacks or fallen through altogether.

Big questions

Here are the two big questions I've had about municipal Wi-Fi since the first plans were announced:

1.) Considering the customer service experience of most government utilities, would I ever really want a municipality to be my primary Internet provider, even if there was a partnership with a private company?

2.) In big cities such as Philadelphia and San Francisco, it was going to take more than a year to pull off huge deployments of WLAN access points, mounted to street lights in most cases. By the time those deployments were completed, WiMAX would be ready for prime time and would be able to cover 30 miles with a single tower. Would WiMAX make these huge WLAN mesh networks obsolete by the time they were completed?

Things fall apart

Philadelphia was one of the first big cities to jump on the municipal Wi-Fi bandwagon. The first stage of the Philadelphia Wi-Fi deployment was rolled out earlier this year, but covers only 15 square miles, so it's still a long way from having all 135 square miles of the city covered. San Francisco's plans for municipal Wi-Fi deployment fell apart last week, and no alternatives are on the horizon.

Earthlink, which is also running the Philadelphia Wi-Fi project, backed out on the San Francisco deployment because it admitted that it is having a difficult time making the economics work for municipal Wi-Fi. Earthlink was betting on muni Wi-Fi as its big ticket out of the withering dial-up business, but the strategy is quickly falling apart.

The same week that the news broke about San Francisco, Earthlink also had to pay a $5 million dollar penalty to Houston for missing the deadline to begin its Wi-Fi rollout, and the company announced that it was laying off 900 workers (half its staff), closing down multiple offices, and no longer looking to launch any new muni Wi-Fi deployments. Don Berryman, who was running Earthlink's municipal Wi-Fi business unit, had already left the company in early August.

On August 28, Chicago announced that it was also abandoning its city-wide Wi-Fi project. Throughout the Windy City, AT&T is now offering 1.5 Mbps DSL for $20, and a 700K connection costs just $10 for new sign-ups. Plus, before the end of 2007, Chicago is going to be one of the first cities in the U.S. to get a comprehensive WiMAX network, powered by Sprint's Xohm WiMAX service.

The future of widespread wireless Internet

Lots of vendors are lining up behind WiMAX. In addition to Sprint-Nextel, there's Intel, Samsung, Motorola, ClearWire, and many others. For more on WiMAX and its arrival in 2007 and 2008, stay tuned over the next three weeks because I am going to have several reports on the progress of WiMAX and the plans for immediate future.

As for the state of municipal Wi-Fi, we should keep in mind that Earthlink was a major player but not the only player. Successful muni Wi-Fi deployments have already taken place in London and Toronto, as well as a variety of smaller U.S. cities. While it may too early to sound the death knell for muni Wi-Fi, it is increasingly looking like an impractical option for most big cities. New ideas and solutions will need to be explored for widespread Internet access and bridging the digital divide.

What do you think about the viability of municipal wireless? What do you view as the best ways to achieve widespread Internet access and/or to help bridge the digital divide? Join the discussion.