Plan for citywide wireless Internet dropped after negotiations bog down; Firms didn't want costs solely on them

Rising costs, declining demand and increased competition fromprivate Internet providers have prompted Chicago to shelve itsambitious plan to build an $18.5 million wireless Internet accesssystem with a reach that extends into the city's poorestcommunities.

EarthLink and AT&T responded to the city's "request forproposals," but both companies reportedly demanded that Chicagobecome an "anchor tenant," paying an annual fee to use the Wi-Finetwork to support city services.

When the city refused -- and insisted that the system attached tocity streetlights and lamp poles be built, maintained and operatedat the contractor's "sole expense" -- negotiations bogged down.

Further complicating the issue was the rising cost of buildingthe network and the declining cost of private Internet access. Thatmade Wi-Fi even less attractive -- and less likely to attract largenumbers of subscribers. Demand has been disappointing in othercities that have tried municipal Wi-Fi.

"A municipal Wi-Fi network was initially envisioned as a way toprovide cheaper, high-speed access to consumers. But given the rapidpace of changing technology in just two short years, the marketplacehas altered significantly," Chicago Chief Information Officer HardikBhatt said in a press release.

STILL PUSHING COMPUTERS

Mayor Daley said he remains committed to having "the mostadvanced broadband network in the nation, especially in our schoolsand underserved neighborhoods" to bridge the digital divide.

The city will continue to pursue private partnerships tosubsidize the purchase of computers, software and education for low-income families, schools, libraries and community centers, the mayorsaid.

"We must give everyone in our city -- regardless of where theylive or who they are -- the same access to the Internet if we're tokeep our progress going and give everyone the same chance to succeedin life," he said.

The city's initial goal was to create an alternative broadbandservice that competes with cable, DSL and cell phone-based wirelessservice and drives down costs.

In exchange for paying Chicago a sizeable monthly fee andpossibly a share of revenues, a technology company or group wouldhave installed, maintained and upgraded roughly 7,500 small antennason streetlight poles every one and a half to two blocks, at a costof roughly $18.5 million.

The new system would have given Chicago a sorely needed revenuestream -- and carried benefits far beyond the tens of millions itwould have raised.

Instead of racing over to Starbucks to get wireless access fromyour laptop or paying a monthly fee to the phone company to get itat home, the Internet would have been available almost anywhere inthe city.

fspielman@suntimes.com