Citywide Wi-Fi goes bust
Posted
May 14 2008, 02:06 PM
by
Kim Peterson
Citywide Wi-Fi networks sound like a fantastic idea. Take your laptop with you to the park or the grocery store. Drop your home Internet connection. Look up directions in your car (parked, of course). More than 150 U.S. cities planned to roll out municipal Wi-Fi at one point, but the reality is setting in: these networks don't work.
Latest case in point: EarthLink, which is shutting down its Philadelphia Wi-Fi network in 30 days. Earthlink even tried to give away the network, but couldn't reach a deal with anyone. Too bad for EarthLink, which plunged deep into the municipal Wi-Fi business when its dial-up revenue fizzled. Shares dropped after the announcement, but have climbed nearly 3% today to $9.36.
Why do these networks fail? The business model is unworkable, suffering a triple whammy of costly equipment, a lack of interest and better technology on the horizon. Networks in cities like Houston can cost $50 million to build.
People simply haven't signed up, either, choosing instead to stick with
cable or DSL for Internet access. And a new technology called WiMax promises fast wireless access over a range of several miles -- access that's more reliable than the spotty service many city Wi-Fi networks offered.
Was there a realistic investment bet in there? Yes, but perhaps unforeseen was the unproductive pairing of big business and municipal governments. Bureaucracy, politics and cost overruns dragged these projects down.
One of the most noble goals of municipal wireless networks was conquering the digital divide. Bringing free, or at least cheap, Internet access to low-income families. Opening the Web to all. But a check around the country shows that citywide Wi-Fi is slowly dying. San Francisco's plans collapsed. EarthLink is shutting down its New Orleans network, and will hand over others to their respective cities in Corpus Christi, Tex., and Milpitas, Calif. Anaheim may be the next to go.
That's not to say that every muni network is a failure. Minneapolis' network is successful, albeit slow, and was crucial during last year's bridge disaster. These networks may be a solution for some cities, but they don't hold the same promise anymore.