All municipal Wi-Fi systems are not in as bad a shape as the one in Tempe, Ariz. However, it clearly is a difficult time for this industry segment.

The problem, it seems, is that municipal Wi-Fi wasted valuable first-to-market advantages with a flawed strategy and, later, was victimized by the inexpensive commercial wireless broadband offered in public places such as airports and coffee shops.

And, with commercial WiMax close to general availability and 3G networks proliferating, it's hard to see how it can mount a sustained comeback.

In Tempe, the municipal system featuring 900 access points is "basically dead," acording to ComputerWorld. Kite Networks, a division of Gobility, stopped answering the phone and abandoned its Website at the end of last year. In late March, the city will be able to take control of the system's physical assets and try to find another operator for the system, which never had more than 800 customers.

This is not a typical failed municipal Wi-Fi story, but nonetheless it aptly characterizes the heady expectations and disappointing realities of municipal Wi-Fi. This is a CrunchGear post that links to an original story in the Minneapolis Star Tribune. Both say that the Minneapolis suburb of St. Louis Park contracted with Maryland contractor Arinc to deploy the first nation's first citywide broadband system driven by solar power.

While the system partially worked, it faltered because the poles were located in the wrong places and made of the wrong materials, according to the city's CIO. The price tag already was more than $800,000 and salvaging the project could run another $3 million. The city council is considering its options, which include ditching municipal Wi-Fi entirely. It will begin negotiating with Arinc for removal of the poles and panels.

San Marcos, Texas, is another small city that is rethinking its municipal wireless priorities. Previously, the city had been eager to get a system up and running -- as long as it was free. Now, the San Marcos City Council is considering two options, neither of which is as attractive, according to the The Austin American-Statesman. One offer is from Solutrea, which would build the network and charge the city to use it. Conversely, Blue Moon Solutions will build a network that the city would own. At the end of the day, the price tag will be $2.5 million to $5 million. The story offers a look at potential cost savings and earnings as seen by a MetroNetIQ consultant working with the city.

All of these failures have an impact. EarthLink, which had become synonymous with disappointing Wi-Fi projects, announced earlier this month that it will seek to sell its municipal Wi-Fi unit. Though he clearly has a motive to spin the decision in a positive a light, CEO Rolla Huff's comments are interesting. He said that a review of the Wi-Fi operation suggests it would be difficult to convince municipalities to invest in networks instead of expecting them to be free. The story says that it may be difficult for EarthLink to find a buyer in the context of bad news during 2007 from high profile projects in San Francisco, Philadelphia, Chicago and elsewhere.

This Wi-Fi Planet piece looks at an emerging model, which is offering wireless broadband in exchange for the presence of advertising. The piece provides a lot of details, but starts by splashing a bit of cold water on the idea. The first quote is from Stan Schatt, a vice president at ABI Research. Why, he asks, would people put up with advertising if wireless broadband cost only about $3 per day? Shatt adds that the great number of companies in the nascent sector are a testament to how young and unproven it is.

A representative from one of these companies, MetroFi, says that the only viable model for municipal Wi-Fi is one that includes advertising and in which the community is the anchor tenant.