I've written about muni wi-fi problems many times before. (Here, here, here, and here). [Tom and I also wrote separate papers about the Philly plan.]

Here's another one to add to the list. The Chicago Tribune reports today that:

Chicago is curtailing its digital dreams, deciding to back away from municipal Wi-Fi service after failing to reach agreement with either of two companies that sought to build a wireless Internet network in the city. The move comes as municipal broadband wireless projects around the country face difficulties, and EarthLink Inc., a major player in the field, is re-evaluating its future in municipal Wi-Fi.

And here's the key line from the piece:

[T]echnology is advancing and the cost of online access for consumers is declining so dramatically that Chicago has other avenues to promote more use of the Internet. As a result, the Wi-Fi deal lost luster when negotiations bogged down, according to sources close to the matter.

In other words, markets are working.