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Ouch.

Wifi Network News is reporting that Earthlink is withdrawing from its bid to build out San Francisco’s municipal wireless initiative.

More from the San Francisco Chronicle:

Ballard said Wednesday that although the joint deal with Google and Earthlink is now history, the city would regroup and issue a second round of proposals from interested vendors. Officials hope Google, which “has been a valuable partner throughout all this,” will want to participate, he said.

This is not the end of the initiative, but it is a step back for now.

Holly Ross of NTEN wrote some good thoughts a week ago on this issue.

This is why we are supporters of both municipal and community wireless initiatives, of course.

(Hat tip to Michael McCarthy.)