Free municipal wireless networks may be going the way of the dot-com boom as Foster City recently joined a slew of other municipalities left disconnected by Wi-Fi providers.
Last week, Foster City officials were told by MetroFi, which has been operating a free network in the city since late 2006, that it would cut off wireless services June 20.
The company offered to sell the network — used by about 1,500 people each month — for $200,000, but Foster City administrative services director Steve Toler told The Examiner on Friday that the city had rejected the proposal. Buying the system would also cost the city approximately $125,000 annually for operation, he said.
MetroFi also announced it was canceling service in Sunnyvale, Santa Clara and San Jose; company officials said the ad-revenue model was not enough to keep it afloat.
"This was a first-generation model — we offered to build the networks ourselves with our own capital and thought that ad revenue would be the key, but cities need to be a part of this process," said Lucie Poulicakos, MetroFi’s vice president of operations.
Foster City did not invest in the wireless service and received about $10,000 per year from the company for the rental of its properties.
"We don’t think the city should be in the business of providing telecommunications services, especially not in this economy," Toler said. "We are sad to see them go —it was a great amenity to the community, but we’re happy that we didn’t lose any of our skin in the game."
The free model was a misguided illusion from the start, according to Oakland-based industry analyst Craig Settles.
"It was a pipe dream — the model never had validity because the costs are too great," he said. "You need to have the city’s involvement and other major stakeholders that will provide the main revenue stream to fund these networks."
Conversely, cities shouldn’t try to set up their own wireless system, said Settles, who called it a ridiculous proposition."
The Mountain View-based company’s cancellation comes in the wake of an announcement last week by EarthLink Inc. that it will shut down its free Wi-Fi network in Philadelphia in June. Last summer, EarthLink pulled out of plans to provide free wireless services in San Francisco.
Joe Arellano, a spokesman for Mayor Gavin Newsom, said San Francisco has not given up hope on offering residents free wireless service. The City has been working to support several free and low-cost networks, he said, and will announce a major initiative in the coming weeks.
Poulicakos said MetroFi doesn’t believe that its move "is indicative of the future" for municipal wireless networks.
"Someone will figure this out," she said.