Whither Google now that S.F. Wi-Fi deal is dead?
Verne Kopytoff, Chronicle Staff Writer
Thursday, August 30, 2007
<http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/30/BUT6RSDTU.DTL>
(08-30) 14:32 PDT SAN FRANCISCO — The collapse of Mayor Gavin Newsom’s ambitious plan to bring free wireless Internet access to San Francisco dealt a blow to Google Inc., which had hoped to use the system as a test-bed for an array of new products.
Google, the Internet giant, had championed the initiative, and the company’s celebrity had helped spark a nationwide frenzy of similar projects. But now the future of municipal wireless Internet access is in doubt, not only in San Francisco, but across the country.
Google’s downfall in San Francisco was the result of financial troubles by its partner Earthlink, the company chosen by the city to build the network. On Wednesday, while awaiting final approval from the Board of Supervisors, Earthlink notified the mayor that it was pulling out after deciding that the system wasn’t financially viable.
That Google was interested in municipal wireless Internet access, known as Wi-Fi, shocked many when the company submitted its initial bid two years ago to offer free connections to San Franciscans. Ultimately, Google joined hands with Earthlink, which was to have built the network and offer a faster tier of service to residents for $21.95 per month.
Did Google want to create a national Wi-Fi Internet network? Did the company have aspirations to become an Internet service provider, taking on industry giants AT&T and Comcast?
Google denied the speculation and said it merely wanted to use the San Francisco network as a testing ground for new products for mobile phones, including online advertising that would be targeted based on where users were located. Other than setting up a wireless Internet network for its home town, Mountain View, Google hasn’t bid on other municipal Wi-Fi projects.
Eric Schmidt, Google’s chief executive, has frequently extolled the virtues of showing a person searching for a pizza place using a mobile phone an ad for a restaurant located just around the corner. Chris Silva, an analyst for Forrester Research, said that Google would have learned more from testing its ads in San Francisco than it would have in a small town like Mountain View.
Capitalizing on mobile advertising could be even more important if Google wins an upcoming auction in January of wireless spectrum by the federal government against potential bidders such as AT&T and Verizon. Google, or its partners, would then be able to offer wireless access across the country, no doubt accompanied by Google’s targeted advertising.
“The spectrum will be far more lucrative than rolling out Wi-Fi networks across the country,” Silva said.
San Francisco’s scuttled plan comes as a number of cities reconsider deploying citywide wireless Internet access. Adoption by residents in several cities where networks have already been built is lower than expected, raising the questions about whether the systems are financially feasible.
Chicago and Anchorage, Ala. recently pulled out of citywide projects. Houston, Alexandria and Arlington, Va. and St. Petersburg, Fla. have projects on hold that were to have been built by Earthlink.
Craig Settles, a consultant who is focused on the wireless industry, blamed Google for some of the troubles cities are now having with Wi-Fi. He said that Google’s proposal to offer free access in San Francisco, at least partially offset by online advertising revenues, unrealistically raised expectations that cities could cash in on the deals.
[snip]