May 20, 2008

Free wireless moving out of range

MetroFi plans to pull plug on Foster City service this summer

By Mark Abramson / Daily News Staff Writer

Wireless Internet service provider MetroFi is logging out of the business of providing free Web surfing in Foster City and beyond.

Officials of the Mountain View-based company said they're discontinuing their free Wi-Fi service because an online advertising business model has not penciled out financially. The service also has been provided to Sunnyvale, downtown San Jose, Santa Clara, Cupertino, Concord, Portland, Ore., and Naperville, Ill.

MetroFi sent the cities letters last week offering to sell its equipment so they could assume control of the systems, look for someone to buy each system or dismantle all of the equipment - including streetlight-mounted antennas that transmit a wireless signal as well as other components.

"We are hoping to hear back from these cities no later than the end of this month," said Lucie Poulicakos, MetroFi's vice president of operations.

The bulk of MetroFi's business is free Wi-Fi and the company is considering bankruptcy and other options because of its financial situation, she added.

Once cities make their decisions, MetroFi would give the users 30 days' notice that it's getting out of the free Wi-Fi business by the end of July, Poulicakos said.

Foster City officials said they were blindsided by the letter and expect the decision of what to do next to be made at the staff level. The $200,000 price tag for the system would be something the city council would review when it votes on the 2008-09 budget.

"I'm a little taken aback myself and concerned why we weren't given more advance notice," Vice Mayor John Kiramis said Monday. "This is a service we pursued because it was free.

"If staff came to us and said we would like to keep Wi-Fi ... I'm in favor of having public discussions."

Mayor Pam Frisella said she would support trying to find a buyer for MetroFi's Foster City network. Buying the system and charging residents $20 a month to cover operating costs would not be worth it, she said.

Foster City officials said it's unclear whether the city could afford to take over MetroFi's system during these financially lean times.

"I'm not exactly sure what we are going to end up doing," said Steve Toler, the city's administrative services director. "I think that probably the service is just going to shut down."

MetroFi has indicated that if Foster City decides to have the system dismantled, the city would cover the costs. The city received a $6,000 security deposit from the company when the system was installed in 2006 and receives about $3,600 annually to let MetroFi mount its antennas on city streetlight posts.

Toler said it would not make financial sense for Foster City to contest its contract, which requires MetroFi to give a year's notice if it decides to cancel service.

Officials with Wireless Silicon Valley, which wants to blanket the Peninsula with one "seamless" Internet network, said although they are "saddened" by MetroFi's decision, they don't expect it to derail their plans. Metro Connect and other companies are working on Wireless Silicon Valley.

Unlike MetroFi's business model, Wireless Silicon Valley could be profitable because it wouldn't rely on online advertising, said Seth Fearey, vice president and chief operating officer of the nonprofit Joint Venture: Silicon Valley, which is spearheading the effort.

"Metro Connect has to figure out how to make money, but our vision is they will make money by offering a wide variety of services," Fearey said.



E-mail Mark Abramson at mabramson@dailynewsgroup.com.