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.