Remember that WiFi cloud that was supposed to blanket Portland by the end of 2008?

Most residents of Portland are familiar with the story. In the summer of 2006, the city partnered with Silicon Valley start-up MetroFi and launched a free wireless internet service. The WiFi network was supposed to cover 95 percent of the city (over 500,000 people) by August of 2008. No city money went toward the project; MetroFi would pay for the system by collecting ad revenue and providing an optional "premium" subscription for just under $20 a month.

The problem is, the project is all but dead. There has been no significant increase in coverage in the last six months—with no more than 30 percent of Portland currently covered by the network's cone-shaped antennas. And there are absolutely no plans for further expansion.

Chuck Haas, the CEO of MetroFi, and Logan Kleier, the WiFi project manager for the city, have been in a crippling dispute since September over "anchor tenancy." Haas has wanted various Portland city agencies to subscribe to his network and become a stable source of revenue for the company (what MetroFi calls their anchor tenants). In late 2006, Portland Public Schools and TriMet were originally signed on as anchor tenants, but soon dropped out because of the network's dismal performance (users throughout Portland have reported difficulty finding a signal indoors). Since then, the city has been unwilling to make any financial commitment to the fledgling company.

"Nowhere in the original contract did it say we had to sign on as anchor tenants. Our contract didn't have commitments," said Kleier.

By the summer of 2007, MetroFi needed "several million" to continue work on the system, according to Kleier. Around 15,000 Portlanders were using the network every month, but ad revenue and optional subscriptions apparently weren't covering costs: MetroFi repeatedly approached the city seeking additional funds.

Publicly, MetroFi denied that things weren't going as planned. In early October, a spokesperson for MetroFi is on record stating, "We never said that we weren't going to expand the network... We remain fully committed to honoring our commitment with the city of Portland."

This was clearly not the case. Both Kleier and Haas say MetroFi stopped expanding sometime in September. That same month, MetroFi informed the mayor's office that they were halting expansion of the network.

Recently, Kleier has stated that MetroFi has a contractual obligation to make a "best reasonable effort" to complete the expansion, even though "there is no mistaking [Haas] won't finish." Kleier is "disappointed," but is looking for a way to salvage whatever he can. "We've been trying to contact Haas, in order to redefine the relationship, but he's been difficult to get a hold of."

It appears that without anchor tenant agreements, or a sudden infusion of outside private investment, MetroFi will continue to sit on the existing network and coast to August. In the meantime, MetroFi has incorporated a new ad system, MSN side guide, which automatically places ads on the sides of your internet browser.

City Commissioner Dan Saltzman, one of the original architects of the WiFi project, has said that MetroFi's conduct has been "regrettable," though he will allow the project "a quiet path to termination"—meaning there will be no action until August 2008, when the two sides will likely part ways, potentially clearing the path for a WiFi system that works.