ST. LOUIS (AP) — AT&T Inc. has scaled back its plan to blanket the city's 62 square miles with Wi-Fi signals, the wireless Internet service now found in airports and coffee shops.

Instead, AT&T said Friday it will build a Wi-Fi pilot project in the downtown core and expects to have it in service early next year.

"It's a setback," said John Sondag, vice president of external affairs for AT&T Missouri. "We're disappointed. But we will still learn something."

AT&T had planned to build out the wireless network across the city over two years, under the plan announced in February. It would then provide free Internet service to everyone for 20 hours a month and charge for more time or higher download speeds.

The main problem was that AT&T engineers couldn't find a cheap way to power the network's transmitters, which carry the network signal and send it to people's computers. One estimate required 50 transmitters per square mile.

They initially planned to mount the transmitters on city streetlights, but some of those don't have power during the day. Utility poles didn't always provide the straight line of sight necessary to beam the Internet to a computer. Other unsuccessful options were mounting the transmitters on stoplights and buildings and even attaching a battery.

The other problem is how to make money from a municipal Wi-Fi network, which can cost up to $200,000 per square mile to build. Such networks face growing competition from home broadband access, cellular phone companies boosting their own wireless Internet services and the development of new technologies, such as Wi-Max, a more powerful version of Wi-Fi.