MobilePro, which has been deploying Wi-Fi in several U.S. communities, said new demands by the California capital city led the firm to believe the project is no longer "financially sustainable."
The Bethesda, Maryland-based firm won a competitive bid last year to work on the Sacramento project, beating out competitors including Motorola and SBC Communications.
A pilot project offering outdoor public Wi-Fi Web access and realtime video was inaugurated in the city's Cesar Chavez Plaza Park with great fanfare in April. The initial phase had the support of city officials and MobilePro.
In the Friday announcement, MobilePro noted that it had been declared the winner of an RFP for the project. The firm complained that after it went through a lengthy permitting process, the city made a "counter proposal requiring that the company establish a free high-speed wireless network supported almost exclusively by advertising revenue without the benefit of the city serving as an anchor tenant."
"Based upon MobilePro's research and experience as one of the leading Wi-Fi broadband wireless network service providers to municipalities in North America, MobilePro does not believe that an advertising-supported business case is financially sustainable," said the firm's president and chief operating officer Jerry Sullivan in a statement.
Earlier press reports stated that MobilePro planned to spend about $8 million on the project. The plan was to provide public safety services as well as Internet access for disadvantage residents, eventually to cover a citywide area of about 60 square miles.
In announcing it was dropping out of the Sacramento project, MobilePro pointed to its successful Wi-Fi deployment in Tempe, Arizona, which provides for low-cost Wi-Fi deployment in a limited area with limited bandwidth, but subjects users of higher broadband bandwidth to pay a monthly fee.