Microsoft announced on Wednesday that the company will sponsor and provide content for the municipal Wi-Fi network being built in the city of Portland, Ore. The deal states that Microsoft will bring MSN content and services to the network that MetroFi is building.

MetroFi is expected to test-launch coverage for two miles of the city by next month. Once that puzzle piece is perfected, the company will have 18 months to cover 95 percent of the city with the free Wi-Fi network.

This is Microsoft's (MSFT) first foray into the world of free municipal wireless networks. Google (GOOG) has been at it sporadically in Mountain View and San Francisco this year but neither company has committed to making municipal wireless a real business effort.

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"Search and monetizing their advertising network is what their biggest focus has been in what has been known as MSN and now the Live market," said Charles Golvin, a principal analyst with Forrester. "They're trying to compete with Google on the same front."

"Microsoft's role in municipal Wi-Fi is that they signed a deal to create a local portal," said a Microsoft spokesperson in a call to PC Magazine on Tuesday. "They're always looking for interesting opportunities and MetroFi reached out to Microsoft at the same time that Microsoft reached out to MetroFi. They're not creating the network a la Google/EarthLink. They're an anchor content advertising site on MetroFi's Portland network."

MetroFi currently has ad-supported Wi-Fi networks in seven U.S. cities and is in contracts to deploy six more.

"Microsoft's support of the Portland network further reinforces the validity of advertising-supported municipal Wi-Fi. We're confident that consumers will appreciate the added value of Microsoft's locally relevant MSN content and services," said Chuck Haas, chief executive officer and co-founder of MetroFi, in a statement on Wednesday.

"MetroFi has been pretty clear in their belief that the ad-supported free networks are a good business model," Golvin said. "I think it's a viable model. I don't think that every company will go this way but I do think this will be an avenue that a number of municipal wireless networks go down."

The Portland MetroFi network will transmit data via access points mounted on streetlight poles throughout the city. Users with a Wi-Fi enabled PC will be able to access the broadband network that will deliver broadband-like speeds of up to 1 Mbps downloads and 256 Kbps uploads.

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