MetroFi Plans Market Exit: Sale or Shutter

MetroFi will sell its networks, but plans to shutter if there are no buyers: Ah, folks, the trifecta has arrived, and I’m nothing but sad about it. MetroFi’s chief Chuck Haas emailed me this evening with the news that his firm has decided that they will sell their networks in nine cities, including their first cities in the Bay Area (Cupertino, Santa Clara, and Sunnyvale), and their largest muni deployment in Portland, Ore. If no buyers emerge—including the cities in question—Haas said that MetroFi would have a shutdown plan for gradually unlighting the networks. Update: Portland has been offered its network for $894,000; the city is “considering it.”

MetroFi was one of the three most prominent pure play metro-scale Wi-Fi firms, if you count EarthLink’s municipal wireless division as a separate operation, and Kite Networks, which was a subsidiary of a larger telecom firm. Each company had made a unique network hardware choice—MetroFi, SkyPilot; Kite, Strix; and EarthLink Tropos plus Motorola—and each had a sort of specialty. Interestingly, a fifth firm, BelAir powers Toronto (a small but super-fast Wi-Fi network) and Minneapolis (the only putatively completed large-city Wi-Fi network), and will be behind Cablevision’s nearly $350m New York Wi-Fi plan.

MetroFi was the only major firm to back ad-supported no-fee access, coupled with paid, no-ads service, and higher tiered commercial offerings. They built mostly smaller cities, with Portland being their only real big city win. The firm began with the notion of building Wi-Fi out gradually as a way to provide broadband in communities that lacked service, with no municipal involvement. That plan required sparser networks and typically a home signal booster designed by SkyPilot. (Kite mostly focused on the Southwest; EarthLink on big cities.)

EarthLink was in many ways largely responsible for the mess that all Wi-Fi providers found themselves in last year by offering to build Philadelphia’s network back in 2005 at no cost to the city—in fact, paying the city and the local utility fees. That set the stage for nearly all the RFPs that followed where, if EarthLink were a bidder or the city was aware of the alternatives, the notion was that no city dollars would be spent, even if taxpayer money wasn’t “at risk”—that is, even if a city could save money by switching current line items in their telecom and data budget to a wireless network.

Haas noted via email that MetroFi has been working towards anchor commitments by cities for nearly two years, but the inertia of those early networks led municipalities to reject those options. In Toledo, where MetroFi had negotiated an anchor commitment, a change in administration led a new mayor to retreat from the plan.

Is there a future for metro-scale Wi-Fi? Yes. With thoughtfully constructed, outdoor-focused deployments centered on municipal purposes, with public access a secondary issue, it seems like these networks could still provide an inexpensive way for relatively high bandwidth compared to the alternative of cell data networks.

However, that advantage is likely short lived in larger markets. The near-future certainty now that there will be multiple provides offering wired broadband speed service starting later this year with Sprint/Clearwire’s WiMax, and continuing through into 2012 with significant network buildout by Verizon and AT&T in several bands (including their new 700 MHz holdings).

While Sprint/Clearwire is talking about 120m to 140m homes passed by 2010 with their network, obviously focusing only on major markets, many of the 700 MHz licenses purchased by AT&T and Verizon carry buildout requirements with penalties. So cities outside the top 100 population markets and rural areas will still see some benefit. In those mid-tier markets, there’s also the 3.65 GHz band for shared licensed use, which is a model that Azulstar is pursuing with new WiMax deployments, as I wrote about recently.

Competition will likely push the cost of mobile broadband far below its $60 per month 2-year contract rate of today, which then would beg the question why a city or county with good commercial coverage would need to build its own Wi-Fi network. There are still plenty of reasons to build dedicated, first-responder 4.9 GHz public safety networks, of course.

I’ve always described Wi-Fi on a metropolitan scale as the best, worst technology. The best, because everyone has Wi-Fi in their laptops and increasingly in handhelds and gadgets. The worst, because the technology is absolutely not designed for the purpose, unlike CDMA and GSM evolved cell standards and mobile WiMax.

It’s possible that in the long term, looking five years out, that Wi-Fi on a metro-scale will only be needed in small towns, odd markets, and for highly particular purposes. Or, perhaps in a bit of irony, where companies like Cablevision feel Wi-Fi is necessary to retain the loyalty of their highly wired customer base.

EarthLink Will Shutter Philadelphia Network, Company Says
Buh-Bye, Philly