The ambitious plan to blanket 1,500 square miles of California’s Silicon Valley with a wireless network may be on the edge of stalling, still unable to raise funds for even two one-square-mile.test sites, according to a recent column in the San Jose Mercury News.

The two test sites would need $500,000, which so far the region, which covers most of the peninsula south of San Francisco and is one of the wealthiest regions in the United States, has been unwilling to cough up, according to Mercury News columnist Vindu Goel.

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In one sense, Goel’s interviews show little has changed since the glacial pace of the project was reported five months ago, except for one critical thing: the reasons for the delay.

The contract for the high-profile project, spawned by a nonprofit called Joint Venture: Silicon Valley Network was awarded last year to Silicon Valley Metro Connect, a cooperative venture that has Cisco as equipment supplier, IBM as systems integrator, Azulstar Networks as the network owner and operator, and nonprofit SeaKay to address digital-inclusion issues on behalf of the poor and other underserved groups.

The Silicon Valley network, estimated to cost about $200 million, was planned as covering nearly all of the peninsula -- 40 communities with some 2.4 million residents -- using an array of different wireless technologies including Wi-Fi mesh, WiMAX, a dedicated 4.9GHz public-safety network and wireless sensor networks.

Five months ago, the project's slow development pace was ascribed to its unprecedented scale and complexity. But during that time, the tidal wave of enthusiasm for metroscale wireless networks, especially for Internet access, may have crested in the United States. San Francisco’s plan dissolved in suspicion and political in-fighting. Other projects were put on hold or cancelled because cities weren’t satisfied with vendor assurances, or vendors weren’t satisfied with municipal assurances.

Even Cisco, one of the Silicon Valley partners, took note, revamping part of its outdoor Wi-Fi mesh business to focus on wireless as an extension of a municipality’s existing enterprise network, with applications that deliver measureable improvements for public-safety staff and mobile municipal workers. In addition, EarthLink, an early advocate of and investor in large-scale municipal Wi-Fi networks, announced earlier this year it would not take on new projects pending a review of its business prospects in this market.