By Sacramento Business Journal

THE ISSUE: Poor communication killed a deal to bring citywide wi-fi to Sacramento

OUR POSITION: To forge a new deal, the city must be clear at the start about what it wants

A business plan overtaken by changes in the market and an ever-changing agreement killed an ambitious effort to create citywide wireless Internet service in Sacramento.

And both parties — the city and a telecommunications company — bear blame for turning a once-promising idea into an embarrassing and painful lesson.

MobilePro Corp. executives this month canceled an agreement with the city to establish wireless Internet access, also called wi-fi, in much of Sacramento. The Maryland-based company said the advertising-only model for revenue was a money-losing proposition.

Under the evolving agreement, MobilePro would use city buildings and power poles to hold the wi-fi receivers and transmitters, reducing its cost for the service.

But the city apparently demanded free high-speed Internet access with only online advertising as the source of revenue for MobilePro, company executives said.

City officials believed the advertising could offset the cost, expected to reach at least $8 million. MobilePro executives asked the city to become an anchor customer — providing a reliable stream of revenue — and balked at the city’s demand for higher-speed connections. The company also wanted to offer a higher-speed service for a price to raise revenue.

The basics of the deal — revenue and speed — should have been inked in early negotiations, not after several months.

Obviously, communication between the city and company was a critical problem. Perhaps the e-mail to discuss the issues or schedule a face-to-face meeting was sent via a dial-up modem.

Sacramento residents should be looking forward to no- or low-cost wireless service, as the city attempts to keep pace with many other wireless or soon-to-be-wireless cities — including Atlanta, Philadelphia, San Francisco, Seattle, Portland, Ore., and Austin, Texas.

Instead, it will likely take at least several more months before another company comes forward and a new deal is reached with the city. Meanwhile, Sacramento will fall behind even smaller cities, such as Anaheim, Cupertino and Santa Clara, in the wireless race.

Certainly, citywide wi-fi is far from a necessity. Many computer users can tap the Internet at area bookstores, coffee houses, the airport or many other places. The hard-core connected can use their cell-phone provider for about $50 a month for wireless Internet service.

But free or low-cost citywide wireless service would make an excellent marketing tool to lure businesses, especially high-tech companies that often consider Sacramento a second-tier city.

Now, after almost a year-and-a-half of working on developing local wi-fi service, the city is basically back to square one.

Other companies will step into the fray and submit proposals, but after MobilePro bailed, some wireless service providers, such as industry leaders Earthlink and MetroFi, may think twice before entering Sacramento.

More companies will enter the burgeoning market as cities consider wireless service, and some will likely submit proposals to Sacramento.

But the city cannot afford to hire another player with a different idea about how to create the system and risk delaying the launch of wireless service. It also cannot afford to mix signals about what it wants.

City officials must look at the history and quality of the company, choosing a wireless-service provider with a good track record — and at the right price. The MobilePro debacle smacks of minor-league negotiations, on all levels.