MetroFi Throws in the Towel on Muni Wi-Fi

It looks like it’s the end of an era for the “build it, pay for it and they will come” model of municipal Wi-Fi. That approach to municipal wireless was dealt another blow today with the news that MetroFi Inc. is planning to sell off its nine city-wide Wi-Fi networks—or barring that, will shut them down completely in 30 to 60 days.

MetroFi’s highest-profile deployment, in Portland, OR, was supposed to cover 134 square miles and deliver free access with an advertising-supported business model. MetroFi found that plan to be unprofitable and difficult to execute. As is the case with fellow muni provider EarthLink Inc., the problem seems to be that it is not only paying for the network build, but operating the network too, with no guaranteed subscriber interest. And so, beginning last summer, it tried to shift to a model that required the city to shoulder some of the cost — and the risk — by becoming anchor tenants. The term means that the city would become the first — and likely biggest — customer for the network, ensuring the service provider some rate of return. The municipality would use the network for public safety applications, video surveillance, meter reading and the like, achieving an ROI through opex reduction and productivity enhancement.

Unfortunately, most cities were unwilling to become such tenants. And that has proved to be the kiss of death.

The news comes hard on the heels of a similar announcement from EarthLink last week. And it’s left many wondering if the muni model can survive. And digital divide bridging aside, in an era of faster and faster 3G cellular and with WiMAX on the horizon, is muni wireless anything other than a stop-gap measure?

In addition to the Portland network, MetroFi has contracts in: Aurora and Naperville, Ill.; and in Cupertino, Concord, Foster City, Santa Clara and Sunnyvale, Calif. MetroFi founder Chuck Haas mentioned that the idea is to sell the networks to third parties or to the cities themselves—the latter being a tack that EarthLink has been attempting too. He also said MetroFi itself is up for sale.

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