- The Washington Times - Sunday, June 11, 2006

SACRAMENTO, Calif. (AP) — Internet provider MobilePro Inc. is pulling out of a deal to set up a wireless network in Sacramento, saying the city’s request for a network funded entirely through advertising is not financially feasible.

The Bethesda, Md., company had worked with Sacramento officials for more than a year on the proposal to blanket the city with Wi-Fi, as a few other cities across the nation have done and dozens more hope to do.

MobilePro President and Chief Operating Officer Jerry Sullivan said the city has asked the company to offer free high-speed access to all residents, supported through advertising revenue and without the city as a so-called anchor tenant, or financial backer.

“The changes that were being requested were very, very significant to the potential return for our shareholders and the success of the overall venture in our minds. … We could not make that work,” Mr. Sullivan said.

He said the company had planned to spend more than $8 million to set up a network of thousands of access points. Its most recent proposal included a free, slower-speed service featuring streaming ads and a faster-speed premium subscription service.

Two-tiered systems are a common approach elsewhere. Google Inc. and EarthLink Inc. have teamed up on a deal to bring a $15 million two-tiered system to San Francisco, with a slower service supported by Google searches and ads.

But as Sacramento city leaders watched other cities ink deals for wireless access, they wanted more than MobilePro was offering, said Steve Ferguson, the city’s chief information officer, who oversees telecommunications.

He said MobilePro’s free service would have been at 56,000 kilobits per second, a rate council members likened to outdated dial-up service.

“The council wanted to see a higher-speed service than they were willing to offer,” Mr. Ferguson said.

Wi-Fi is the same technology behind wireless Internet access in coffee shops, airports and college campuses. The 15-square-mile network that began operating this spring in St. Cloud, Fla., is thought to be the first to offer free citywide access, but it has run into glitches such as dead spots and weak signals.

Sacramento would need about 100 square miles of coverage to include the entire city, Mr. Ferguson said.

In Portland, Ore., officials are negotiating with MetroFi of Mountain View, Calif., to set up free Wi-Fi coverage at 1 megabit per second, in exchange for ads streamed to users’ computer screens. Those who didn’t want ads would pay about $20 a month for Wi-Fi connections.

Mr. Ferguson said city leaders think Portland’s model is feasible in Sacramento, too, without the city’s financial backing. “We believe that the advertising model is enough to support city service.”

But Don Berryman, president of the municipal Wi-Fi branch of EarthLink, which is heading up the San Francisco bid, questioned whether Sacramento could get a high-speed network for nothing.

“We’re just not convinced that the overall free model can work. … You need at least $7 per month per subscriber just to pay for the network, and that’s not including upgrades or anything,” he said. “I think it’s going to be very difficult to get anyone to provide free wireless service throughout the city just supported by advertising.”

MobilePro won a competitive Sacramento bid based on its model in Tempe, Ariz., and had established a free Wi-Fi pilot in a downtown park. That service is expected to be dismantled soon.

In the past year, other cities have put out Wi-Fi projects for proposals, including Anaheim, Pasadena and Long Beach, Calif.; Denver and Aurora, Colo.; Minneapolis; Milwaukee; Pittsburgh; and Arlington, Va.

In Sacramento, the Wi-Fi plan is expected to go before a city committee Thursday, and the city could issue a new request for proposals. EarthLink is among the companies that might be interested, Mr. Berryman said.

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