• Ars Technica, Thursday, August 30, 2007 10:45 AM

Chicago's municipal Wi-Fi project is the latest to hit the skids, yet another worrying sign that citywide WI-Fi as a business may not work. ISPs EarthLink and AT&T, which operate muni Wi-Fi networks for several cities, both opted out of the Chicago project after the city told them it was unwilling to pay to install the network. In trade, the city had offered to provide the infrastructure, but that wasn't enough; Chicago has since pulled the plug.

The bad news from Chicago was compounded by the revelation that network operator EarthLink may be pulling out of the city Wi-Fi business altogether, which suddenly isn't looking like such a good investment. There are similar problems in Philadelphia.

EarthLink estimated that it would be able to blanket the Philadelphia area with between 20 and 25 nodes per square mile (nodes transmit the network signal). However, coverage was poor and had to be raised to an average of 42 nodes per square mile--almost twice as many. Nodes cost money, of course, which means that EarthLink's financial output was suddenly much bigger than expected. No wonder EarthLink bailed on the Chicago project. It will now have to either charge more per month for service in Philadelphia or make less money. Meanwhile, city Wi-Fi looks like less of a bargain in the face of alternatives like $10 DSL.

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