"Don't count us out yet, though," said Clark Dong, co-founder and chief executive of hereUare Communications, whose subsidiary, Wi-Fi Metro, outfitted outdoor areas of two Silicon Valley cities with "hot spots" for wireless access.
He said hereUare Communications is in talks with three major companies for the necessary investments to keep the 100-location network going. The company is on the market after failing to get additional funding it expected in July, he said. It's also exploring other fundraising options, which he wouldn't discuss.
Shutting down is "certainly a possibility, but I don't want to jinx it," Dong said.
The financial troubles at hereUare Communications is a rare black mark against Wi-Fi, a wireless network standard used to create a 300-foot zone where any device outfitted with a special kind of modem can access the Internet or send files to another computer without using wires. Wi-Fi has been one of the few bright spots in the gloomy wireless telecommunications industry, which is set to suffer its unprecedented second year of declining cell phone sales. But the number of Wi-Fi networks, now about 18 million, is expected to at least double by 2005.
Wi-Fi networks have also begun showing up in a small but growing number of coffee shops, hotels, bars and other public areas hoping the wireless access will draw in more customers. Most offered the service for free.
Companies such as hereUare, Boingo Wireless and Sputnik turned themselves into wireless Internet providers (WISP) by partnering with as many of these so called "public hot spots" as possible. It was a way to grow a nationwide network without doing much heavy lifting. The WISPs would pay to outfit a location with a Wi-Fi network or the appropriate software to do things like bill a person for access. In exchange the WISPs would get a share of any revenue.
But the cash outlays for hereUare proved burdensome, so much so that the investors are now refusing to pay out more cash, Dong said.
Alan Nogee, a wireless analyst with research firm Cahner In-Stat, said the economic haze is precisely the reason why it's tough to tell if hereUare is a victim of the economy, or if the sale is a larger sign that Wi-Fi's nearly two-year long run of growth is about to end. After all, the economy is taking huge chunks out of everyone, so why not Wi-Fi as well?
"Now's not a good time for anybody," he said.
Draggin Bytes Internet Caf? in Livermore, Calif., had been a hereUare Communications site for a few months, said Draggin Bytes volunteer Chris Reguilon. But after about six months, the caf? ripped out the equipment and has been truly wireless since then.
"No one used it," he said. "I think the entire time we had it set-up no one came in to use it. We changed Internet providers, and it became just too much of a hassle to keep."