Part of the problem was in the business model established in Philadelphia and mimicked in so many other cities, Mr. Settles said.

In Philadelphia, the agreement was that the city would provide free access to city utility poles for the mounting of routers; in return the Internet service provider would agree to build the infrastructure for 23 free hotspots and to provide inexpensive citywide residential service, including 25,000 special accounts that were even cheaper for lower-income households.

But soon it became clear that dependable reception required more routers than initially predicted, which drastically raised the cost of building the networks. Marketing was also slow to begin, so paid subscribers did not sign up in the numbers that providers initially hoped, Mr. Phillis said.

Prices for Internet service on the broader market also began dropping to a level that, while above what many poor people could afford, was below what municipal Wi-Fi providers were offering, so the companies had to lower their rates even further, making investment in infrastructure even more risky, he said.

Powered by ScribeFire.

Municipal Wi-Fi | Reality bites | Economist.com

IT WAS supposed to democratise the internet and turn America’s city-dwellers into citizen-surfers. In 2004 the mayors of Philadelphia and San Francisco unveiled ambitious plans to provide free wireless-internet access to all residents using Wi-Fi, a technology commonly used to link computers to the internet in homes, offices, schools and coffee-shops. Across America, hundreds of cities followed suit. Yet many municipal Wi-Fi projects have since been hit by mounting costs, poor coverage and weak demand. This week Chicago became the first big city to abandon its plans for a city-wide network. “Everyone would like something for free,” says Chuck Haas of MetroFi, a supplier of municipal Wi-Fi systems. But the numbers do not add up.Most city governments did not want to build or run the Wi-Fi systems themselves, so they farmed the job out to specialist firms such as EarthLink and MetroFi. These companies initially agreed to bear all expenses, expecting to sign up 10-25% of each city’s population for a fee-based wireless service. In some places this was to have been supplemented by a free service at lower speed, or supported by advertising. Some cities also planned to subsidise access for poor residents.

Powered by ScribeFire.

“Despite WiFly’s ubiquity — with 4,100 hot spot access points reaching 90 percent of the population — just 40,000 of Taipei’s 2.6 million residents have agreed to pay for the service since January. Q-Ware, the local Internet provider that built and runs the network, once expected to have 250,000 subscribers by the end of the year, but it has lowered that target to 200,000.

That such a vast and reasonably priced wireless network has attracted so few users in an otherwise tech-hungry metropolis should give pause to civic leaders in Chicago, Philadelphia and dozens of other American cities that are building wireless networks of their own.

Like Taipei, these cities hope to use their new networks to help less affluent people get online and to make their cities more business-friendly. Yet as Taipei has found out, just building a citywide network does not guarantee that people will use it. Most people already have plenty of access to the Internet in their offices and at home, while wireless data services let them get online anywhere using phones, laptops and P.D.A.’s.”