Telecom companies are rethinking municipal Wi-Fi plans as costs rise and usage remains stagnant, reports BusinessWeek.

Companies such as EarthLink and AT&T are either canceling or drastically scaling back their muni Wi-Fi projects.

The development of city-wide Wi-Fi is more costly than was previously thought. Adding to that are initially-optimistic agreements in which providers end up covering all costs and paying cities for the right to lease property.

Those that aren't just dropping the project are currently trying to renegotiate contracts.
Usage, which was hoped would provide a sizable revenue stream via both subscription purchasing and ad revenue, also remains low. Providers can't charge more for advertising because the audience remains small. But because municipal Wi-Fi is weaker in homes than direct broadband connections, providers can't compete on price points with service quality either.

The rate of building of Wi-Fi networks has slowed and its fate remains uncertain as both government bodies and providers look for a solution that benefits everyone.