Chicago and San Francisco Wi-Fi plans crumble

Plans for municipal Wi-Fi systems in Chicago and San Francisco have collapsed in the wake of an announcement by Atlanta-based Earthlink, a major provider of municipal Wi-Fi technology, that it was scaling back its investment in the area as part of the company’s restructuring plan. Earthlink President and CEO Rolla Huff says the current model for building municipal Wi-Fi networks is “unworkable.”

Chicago’s Department of Business and Information Services is reevaluating its approach to offering wireless service after failing to create a workable plan with two partners in the project, one of which was Earthlink. “In Chicago and in many other cities, a municipal Wi-Fi network was initially envisioned as a way to provide cheaper, high-speed access to consumers,” said Hardik Bhatt, Chicago’s chief information officer, in a statement. “But, given the rapid pace of changing technology, in just two short years, the marketplace has altered significantly.”

On Tuesday, Earthlink announced a restructuring plan that would eliminate 900 jobs and included a new approach to how the company would provide municipal Wi-Fi service. In a teleconference Wednesday morning, Huff said the company was incurring too many costs on its municipal Wi-Fi business. “We will not devote any new capital to the old municipal Wi-Fi model that has us taking all of the risks by fronting all of the capital and then paying to buy our customers one by one,” Huff said. “In my judgment, that model is simply unworkable.”

That same day, Huff told San Francisco Mayor Gavin Newsom that the company would not cover $14 million of the $17 million cost of building a Wi-Fi network in that city, according to an Associated Press report. Newsom has not yet released on official statement on the situation, but an employee in the mayor’s press office says Newsom is trying to decide what the city will do now.