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Published: Thursday, 2/21/2008

Cash woes stop Wi-Fi firm's work elsewhere

BY IGNAZIO MESSINA
BLADE STAFF WRITER

The California company that last year offered to blanket the city of Toledo with wireless Internet capability has run into financial troubles and halted plans to install free wireless networks in other cities.

Toledo Mayor Carty Finkbeiner's vision for free citywide wireless access crashed last year when MetroFi of Mountain View, Calif., said the cost to the city could have been $2.16 million over five years.

Logan Kleier, Wi-Fi project manager for the city of Portland, Ore., said the company stopped building Portland's free citywide wireless network and has asked for as much as $9 million in public money to finish.

"They came to talk to us in September and said they didn't have any more money to continue building any more of the network," he said. "They were slowing down for sometime."

Lou Pelosi, MetroFi's vice president of marketing, did not return phone calls from The Blade.

There are 590 functional access points in Portland. The company would need up to 2,500 to cover the city, Mr. Kleier said.

He said the company indicated work would not resume unless the city invested money or there was a positive change in the venture capital market.

Officials from MetroFi last month said they stopped plans to install free wireless networks in Aurora, Ill., and Naperville, Ill.

The original deal in those cities was similar to the original deal Toledo sought: It would provide free high-speed Internet access to residents with an advertiser-driven model that would cost nothing.

Mr. Kleier said MetroFi changed its business model last year and is asking cities to invest public money. "The mayor is not interested in that," Mr. Kleier said. "It raises the question if the city is investing in a company."

The free Wi-Fi model has been on shaky ground nationwide.

Houston, San Francisco, and Chicago all called off municipal wireless plans.

Steve Turner, deputy director of information technology for the city of San Jose, Calif., said that city's free, citywide wireless Internet network -under a different company - is stalled.

Wireless Silicon Valley tried for several years to find private and city investors but eventually turned to businesses, he said.

San Jose uses MetroFi to operate about 30 "hot spots" in its downtown area.

"The agreement is for the downtown area and they've delivered the product as we originally envisioned it," Mr. Turner said. "They are up and running and we haven't had any issues."

MetroFi's Toledo plan called for about 1,600 wireless access points to be installed on utility poles. Each access point would have transmitted between Wi-Fi-enabled computers within its range.

Dave Moebius, Mayor's Finkbeiner's assistant chief operating officer, said Toledo's intent for a wireless program was to secure private investment.

"At the time, there wasn't enough private investment to proceed with the program," Mr. Moebius said. "They wanted public investments, guarantees for five years, contracts, and we were unwilling to provide that."

It was revealed in March, 2007, that it could have cost Toledo taxpayers up to $2.16 million over five years if City Council approved a license agreement with the Wi-Fi company.

The legislation approving the contract never made it to the council floor for a vote.

The hope was that advertising on the city's Wi-Fi network would pay the bulk of that commitment, but the remainder would come from transferring funds within the city budget - as well as from payments of city Wi-Fi partners, such as the University of Toledo.

There were objections to the plan from councilmen Frank Szollosi and Joe McNamara because of the potential reliance of taxpayer dollars.

Council President Mark Sobczak was hesitant to talk about citywide Wi-Fi earlier this week, calling it a "dead issue."

"I think it was more exploratory than anything else," Mr. Sobczak said. "We knew there were two different systems we could have gone with and I'm glad it went the way it did - we are not going to put any public money into that in any way."

Mr. Moebius left the door open to revisit the idea. "I think we are always interested in doing something that enhances the city of Toledo, but it has to be the right proposal," he said.

The city's request for proposal attracted two responses - one from MetroFi and the other from Buckeye CableSystem, which is owned by Block Communications, also The Blade's parent company.

The Buckeye proposal included a three-phase plan that didn't necessarily end in the creation of a Wi-Fi network but suggested exploring options for Wi-Fi. The Buckeye proposal was rejected as "nonresponsive" to the city's request.

There are 61 Buckeye hot spots throughout the city, including 19 Burger King locations, which offer free wireless access, and in branches of the Toledo-Lucas County Public Library, which is free for Buckeye customers.

"If you have Buckeye Express or a bundle, or a la carte, you can walk into the library and not pay a fee," said Florence Buchanan, vice president of sales and marketing for Buckeye. "We didn't put those in for money-makers. It was more for customer retention and customer good will so we did this as an added value."

Burger King pays the company a monthly fee for the service.

"We get calls daily from businesses wanting to set up hot spots," Ms. Buchanan said.

Contact Ignazio Messina at: imessina@theblade.com or 419-724-6171.



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