Researchers from ABI seem to believe that municipal Wi-Fi may still have a future, and that by 2012, if all current issues are resolved, its global service area will extend to around 30,000 square miles, a 60x increase.

"Rumors of municipal networks' death is premature," ABI Research director Stan Schatt told BetaNews this afternoon.

Most of the planned deployments of municipal Wi-Fi networks in the US have been scrapped, due in large part to fundamental disagreements between government authorities, service providers, and often customers over what the service should contain.

San Francisco's network, like that of eleven other US cities, was planned by struggling ISP Earthlink. But that city recently concluded that Earthlink wasn't in any position to handle such an undertaking, and ceased negotiations.

Perhaps this decision was expedited by the fact that Earthlink was asking for assistance from the city in funding the project. This shattered the illusion of "free Wi-Fi" for everyone, turning it instead into a tax-subsidized public service like sewers, water, roads, public transit, and trash pickup. San Francisco wanted a "public/private" type of partnership, which would have essentially given Earthlink access to whatever areas it needed to put up Wi-Fi receivers, but the company would have to fund the project itself.

Chicago dropped its plans in August 2007 for the same reason. Neither Earthlink nor AT&T reached an agreeable end in talks with Chicago's municipal authorities.

The solution that local governments have foreseen thus far appear to be in conflict with the objectives of the companies building the networks.

When municipal Wi-Fi is private, it has to compete against existing private services which undoubtedly have a better infrastructure and established base of customers. And although setting up a wireless network costs less than actually laying cable (the major stumbling block for FTTP services) the total expense is still prohibitive. In Philadelphia, for example, the first major city with a municipal Wi-Fi trial, the 6 square mile area which was covered required around 250 access points.

Furthermore, the typical speeds provided by these wireless connections are slower and less reliable --and would not even be dramatically cheaper-- than existing services in the area.

Despite all that, ABI's Schatt told BetaNews this afternoon, "A new business model is emerging where the city becomes the anchor tenet and [gives] the provider enough of a guaranteed revenue flow to establish additional consumer business."

"We see public safety driving a lot of these deployments," Schatt continued. "Despite the well publicized problems, if you talk to Tropos, Strix, Firetide, or any of the other infrastructure companies providing mesh networking for outdoor muni deployments, they have found an increasing amount of business in the US, particularly because we're way behind Europe when it comes to video surveillance, which happens to be the topic of a new report that should be out in a week or two. When I researched video surveillance, I discovered what a robust market that is and how it is driving muni networks."

Among the well-publicized problems, however, are factors other than just economics.

St. Louis' plan with AT&T involved providing all citizens with 20 free hours a month, while charging for higher speeds and additional access. But that plan was scrapped due to a slight logistical oversight: There was no way to power the access points. Expecting 50 hubs per square mile, the plan was originally to mount them on streetlights and "leech" their power. The problem was that the streetlights received no electricity during daylight hours. After numerous alternatives were proposed, AT&T found no effective way to power the access points and ultimately backed out of the project.

When offered as a "free" public service, municipal wireless doesn't seem like such a bad idea. Smaller towns across the US have seen successful deployments with quite high adoption rates: St. Cloud, Florida, for example claimed 77% of its residents use the free service; private companies usually experience 15-20% uptake per market.

It is in the creation of these smaller-scale deployments that Schatt found the profits. The companies he mentions, Tropos, Strix, and Firetide deal largely in public safety, surveillance, private enterprise and mass transit networks.

Houston, Texas was reported to still be interested in the "free" muni Wi-Fi idea, despite initially waffling after Earthlink's retreat. The city this week issued an RFI (a process of collecting written information about the capabilities of various suppliers for comparison. a.k.a., "shopping around") for companies to provide competitive services to business, and free access to local residents and visitors using ad-supported models.

According to Houston's RFI, its Wi-Fi coverage for supporting its electronic parking meter payment system has enough surplus bandwidth to support public Internet and safety services on the side.

Schatt believes that the real benefit of a municipal Wi-Fi network, and ultimately the one which will help boost its adoption, is in safety. "[They] will provide financial returns by helping prevent possible terrorist attacks, decreasing overall crime, improving traffic flow, and even boosting tourism by creating stable communities," reads a statement from Schatt earlier today.

If the debate over muni-Wi-Fi transforms into a matter of public safety, perhaps cities will begin to look at these networks differently.