The municipal WiFi business took a bruising this week after Internet service provider EarthLink backed away from plans to build city-wide wireless broadband networks in San Francisco and Houston.

Municipal governments in Chicago, St. Petersburg, Florida, and Alexandria and Arlington, Virginia have also cancelled plans to build WiFi networks.

Municipal WiFi was supposed to be one of the answers to the problem of unequal Internet access for the poor – the Digital Divide as it is called. What went wrong?

From its inception, muni WiFi has been an overreach by politicians who may have meant well, but have not considered all of the ramifications involved in cities getting into the telecom game, one analyst said.

“The wireless business is littered with failed enterprises so why are these cities, seduced by people promising them the world, using taxpayers’ dollars to wander into the wireless business,” asked Joe Nordgaard, director of wireless consulting firm Spectral Advantage.

The plan was to build municipal networks and offer Internet access to citizens, particularly the poor and disadvantaged, either free or at little cost.

But the complexity and high cost of constructing, maintaining, and upgrading the networks make the promise of low-cost service a difficult business proposition, according to Mr. Nordgaard.

Also the slow but inexorable emergence of WiMAX, a competing commercial service, and poor demand have dampened the enthusiasm of even the more committed proponents of muni WiFi.

EarthLink was expected to assume the costs of building each citywide network and recoup its investment by charging users. But the company concluded that business model was unprofitable and was understood to have demanded that city governments agree to share the burden.

EarthLink this week cut 900 employees, about one-half of its workforce. The Atlanta-based firm also reported a $16.3 million loss, and its revenues were flat or down for the third consecutive quarter.