Efforts to establish a municipal wi-fi system in Aurora, Illinois have stalled as prospective Internet service provider MetroFi has sought financial commitments from the municipality.
According to published reports, MetroFi had already started to build the network in Aurora and neighboring Naperville but has declined to complete the development without commitment of additional taxpayer funds.
According to its press releases, Mountain View, California-based MetroFi, Inc. “designs, builds, owns and operates municipal wireless broadband networks for local government employees, residents, businesses, and visitors in the communities it serves.” Founded in 2002, the company has agreements to deliver municipal wireless in some small communities in California, in addition to its commitment in Illinois. MetroFi did not return phone calls or e-mails for this story.
Part of a Pattern
The financial troubles for municipal wi-fi plans in larger cities are nothing new. In late 2007 Internet service provider EarthLink announced it would no longer make significant further investments in its municipal wi-fi division, laid off 900 employees, and sought to sell the operation.
The situation in Aurora is similar to events last year in Chicago, Illinois, where would-be municipal wi-fi providers sought taxpayer funding–demands that led the city to abandon the project altogether. The city refused to become an “anchor tenant” providing taxpayer money for the venture, on which EarthLink and AT&T were expected to bid.
EarthLink was also a provider behind the city of San Francisco’s failed municipal wi-fi efforts. More recently, EarthLink sold the network it developed in Corpus Christi, Texas back to the municipality, which is using it for meter reading and other city services.
According to Esme Vos, founder of Muniwireless.com, an Amsterdam-based portal for news and information about municipal wi-fi, “MetroFi has the same business model as EarthLink. Initially, they come in and the city doesn’t have to pay anything. But when they don’t sell enough advertising, then they look for the city to pay an annual fee for its own use. This guarantees a return on their investment.”
One of the problems with the plans in Aurora, Chicago, and similar cities is the choice of wireless technology, says Derek Kerton, principal analyst at the Kerton Group, a telecommunications consulting firm based in Pleasanton, California.
“Municipal wi-fi isn’t the panacea many people thought it was,” Kerton said. “The technology is designed as a short-range technology.”
Because of its short range, more hardware is needed to support the technology than WiMax or other wireless technologies, Kerton explains. As a result, costs are higher, meaning providers need a better return in order to make a venture profitable.
Limited projects, such as serving a central business district or some similar small area with a high number of users, can be successful, according to both Vos and Kerton.
Phil Britt ([email protected]) writes from South Holland, Illinois.