Earthlink Restructures, MuniFi Holds Breath

Posted by Sam Churchill on

EarthLink unveiled a restructuring today that will shutter a handful of locations and eliminate 900 jobs. The restructuring will close its Orlando, FL; Knoxville, TN; Harrisburg, PA and San Francisco, CA offices and substantially reduce its presence in Pasadena, CA, and Atlanta, GA.

EarthLink expects restructuring costs of $60 – $70 million associated with the plan. Rolla P. Huff, EarthLink President and CEO, said: “These changes get our cost structure in line, but there is much more to do. We expect to announce additional steps as we continue our work over the coming weeks and months.”

According to Earthlink’s announcement:

EarthLink expects that as it reduces its marketing efforts aimed at acquiring new customers who have high early life churn characteristics, our overall churn will come down over time as our longer tenured existing customers become the predominant part of our base. As a result of this change in strategy, EarthLink preliminarily estimates that it will generate cash flow from operations in the low to mid $200 million range in 2008.

No word (yet) about their big bet on municipal wireless; especially the San Francisco and Houston franchises, as well as Chicago, which now appears to be backing away from the municipal wireless concept.

Earthlink’s SEC filing today paints a bleak picture. The filing stated “the position of Executive Vice President and President-Municipal Networks, held by Donald B. Berryman, is being eliminated and Mr. Berryman’s employment with the Company is terminating.”

EarthLink has scheduled a conference call for Wednesday to further discuss the restructuring, but has not yet said what it plans to do with the Wi-Fi networks it has already built in Anaheim, Corpus Christi, Milpitas, New Orleans, and Philadelphia.

If Earthlink backs out of the municipal wireless business, it seems likely that other large-scale, city-wide WiFi plans will be re-assessed. Is it curtains for municipal wireless? Was city-wide WiFi a house of cards, ready to collapse from weak infrastructure and too much overhead? Opinions differ.

Recent municipal wireless news is not encouraging:

Meanwhile, Portland’s “free” MetroFi service is continuing to build out its 134 sq mile cloud. MetroFi says an estimated 11.5% of the population is within the current coverage area, with some 56% of the 19,900 individuals who have registered for the network since its December 2006 inception still using the system. According to a critical piece in the Willamette Week today, MetroFi claims its network is now 20 percent complete. The city accepts the company’s word that it’s on track to be 95 percent complete by the end of next year.

Wireless Philadelphia (above), which kicked off the whole municipal wireless movement back in 2004 (through Mayor Street and CTO Diane Neff), also claims to be going strong. To date, more than half of the city’s 135 square mile area is covered, with free or discounted access available in low income areas. The City of Brotherly Love was supposed to be a showcase for Earthlink, says NPR, but WiFi is off to a rocky start (audio).

Park City’s solar powered WiFi plans an initial launch this week. About 400 solar powered access points are planned, most of them on newly installed poles throughout the city. It’s a private/public partnership between the City of St. Louis Park, Unplugged Cities (which operates and maintains the network), and ARINC (which is building the network).

The Minneapolis Bridge Collapse & Emergency Communications have proven the worth of a public service municipal network (video). The Minneapolis WiFi network, using Belair gear with a public service component was up and running when the bridge collapsed and has facilitated 24/7 communications including many live cameras from the accident scene ever since.

Google’s Mountain View WiFi network just celebrated its first anniversary and claims success. The network’s 400+ mesh routers cover about 12 square miles and 25,000 homes to serve approximately 15,000 unique users each week month. The network now handles over 300 gigabytes of data each day, sent to over 100 distinct types of WiFi devices, with 95 percent of the mesh routers being used on any given day, says Google’s blog. Chris Sacca, the Head of Special Initiatives at Google, explains some of the trials and tribulations that Google faced while installing its free Wi-Fi network in Google’s hometown of Mountain View, California. Here’s his stock “Dinosaur” speech (MP-3).

The Business Standard reported that Google’s anticipated G-phone global launch will come with a financial commitment of $7 billion to $8 billion. Google, a $13.5 billion search engine company, is also expected to bid a minimum of $4.6 billion for the 700MHz spectrum auction in January.

Independent consultant Novarum has been testing municipal broadband networks in North America for their Novarum Wireless Broadband Review.

Their top ten Metro Wi-Fi deployments was produced from performance testing in Q3 and Q4 2006.

Cities will continue to deploy municipal mesh networks, but the rate of new deployments after 2008 will slow, due to concerns over the business model,” predicts Daryl Schoolar, In-Stat analyst. Their recent research report, 2007 Worldwide Wi-Fi Mesh Equipment Market, covers the worldwide market for Wi-Fi mesh networking and equipment.

Meanwhile as more cities discover Wi-Fi’s limitations, they are looking into solutions like WiMAX. In Grand Rapids, Clearwire is working with the city to build a WiMAX network that covers all 45 square miles of the city with 10 to 15 towers, versus about 20 to 40 WiFi access points per square mile. The infrastructure is cheaper. Of course, nobody has WiMAX cards. Yet.

Related DailyWireless stories include; San Francisco WiFi Dead?, Earthlink Tweeks WiFi Business, Sprint WiMAXing NYC, Connecting the Nation, WiFi Vs WiMAX in Windy City, New York’s 750 sq mile Cloud, Will “N” Rescue MuniFi?, Aeris + PacifiCorp: CDMA Meter Reading, M2Z: Free Internet Now!, Sprint’s WiMAX Cities, San Francisco: Now it’s the Antennas!, WiFi War in San Francisco, Houston + Earthlink to Build Huge MuniFi Network, El Paso Unwired + Most of California, Green Light for Philly WiFi Expansion, City Clouds Turn On, Minneapolis Goes Local, Digital City Winners, Anaheim Turns On, New Orleans Gets Earthlink Cloud, Portland Chooses MetroFi for 134 Mile Cloud, Milwaukee’s $20M Cloud, Dvorak: Muni WiFi Will Die, The World Largest WiFi Cloud, Rain on SF Cloud, Google WiFi SitRep, San Mateo: 1st Silicon Valley Cloud, Sacramento Approves WiFi, Cloud for Silicon Valley, Wireless Silicon Valley Proposals, Park City: Solar WiFi, Solar Powered Solstice, GoogleFi: Ads or Not?, Google WiFi Interview, Portland Chooses MetroFi for 134 Mile Cloud, SF WiFi: Bad Deal for Poor?, SF Cloud: It’s Google/Earthlink, Minneapolis Bridge Collapse & Emergency Communications and Philly Chooses Earthlink.

Posted by Sam Churchill on Tuesday, August 28th, 2007 at 11:03 am .

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