The vision of free Wi-Fi Internet service throughout Portland, Ore., turned dark just days ago when MetroFi shut down its partially deployed metro wireless network.

Now a local ISP has expanded its deployment of Proxim WiMAX and Wi-Fi gear to deliver wireless services to about seven square miles of the city. The service, from Stephouse Networks, is free to users for one hour per day, up to 10 hours per month. But beyond that, users have to pay. Stephouse offers several service plans for hourly, daily, weekly or monthly coverage. The monthly service costs $20.

The city contracted with MetroFi to build a wireless network to offer free Internet access to residents spread over some 138 square miles. Only a fraction of that was covered when the company halted deployment in 2007, saying it needed $9 million in contracted services from the city to pay for the network. The city declined, and MetroFi apparently switched off the network at the end of June.

A community-based free Wi-Fi network, called Personal Telco Project, also remains operational. The volunteer effort deploys Linksys wireless routers, reflashed with the WiFiDog open source software, to let Portland users share available DSL connections. In fact, Stephouse explicitly allows customers of its DSL and other broadband services to share those links, says the ISP’s founder and president, Tyler Booth.

Stephouse was founded in 2002, initially focused on Web hosting, but quickly shifting to DSL services and dialup. Today, the company offers a range of residential and business access services, mainly over copper and fiber. It first started offering wireless service to Portland two and a half years ago. “But it wasn’t free, so it wasn’t as attractive as a white knight riding in on a horse and offering free wireless access,” says Booth.

From a business viewpoint, Booth sees wireless, at least currently for Portland, as typically a supplementary service that can meet specific user requirements. In some cases, the Stephouse wireless service brings broadband to areas of the city that are too far from a central office to make extending wired broadband attractive to incumbent providers, for example. “There’s no sense to the ‘build it and they will come’ model,” Booth says. “We identify a business case and a need for the [wireless] service and go to those areas.”