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City officials have scrapped plans to blanket the city of Chicago with an ambitious Wi-Fi network, citing costs and that too few residents would use it, as the principal reasons.

It was early last year when Chicago announced plans to blanket a 228 square mile area with a Wi-Fi network. At the time Chicago hoped to become one of the largest U.S. cities to offer blanket access to the internet.

However it seems that its negotiations with private-sector partners, including EarthLink, have stalled because any citywide Wi-Fi would require massive public financing. The city had hoped to provide only infrastructure for the network.

"We realized - after much consideration - that we needed to re-evaluate our approach to provide universal and affordable access to high speed Internet as part of the city's broader digital inclusion efforts," said Chicago's chief information officer, Hardik Bhatt, in a statement.

"But given the rapid pace of changing technology, in just two short years, the marketplace has altered significantly," he added.

The announcement makes Chicago the latest in a number of municipalities in the U.S. to encounter troubles with their Wi-Fi initiatives mostly because of technical glitches and rising budgets, as well as dwindling usage as the cost of consumer access in the U.S. steadily falls.

Indeed, the U.S. ISP EarthLink, which has heavily invested in Wi-Fi in recent years, has been struggling financially and has just announced it will slash about half its workforce, with some 900 staff being let go as part of a sweeping cost-cutting exercise.

Currently about 175 U.S. cities or regions have citywide or partial systems. In the U.K., cities such as Brighton and Norwich have free Wi-Fi networks, although question marks have been raised about the health implications of wireless networks, especially when located in schools.

But despite the cancellation of the Wi-Fi network, it seems that Chicago residents will still able to enjoy internet access on the move, as the city will be among the first three cities in the U.S. to gain access to a new WiMax network being built by Sprint Nextel.

The service will differ from the municipal Wi-Fi approach, which uses thousands of overlapping Wi-Fi service zones to provide blanket coverage over a municipal area. A WiMax signal on the other hand can blanket a much wider area than a traditional Wi-Fi signal which is limited to a couple of hundred yards. In the UK, Pipex Wireless has already been rolled out trial WiMax networks in Milton Keynes, Warwick and Leamington Spa.