It’s money that matters — Randy Newman (video)
EarthLink will pay Houston a $5 million penalty, says the Houston Chronicle, an acknowledgment that the municipal wireless provider will not meet its first deadline for building a wireless network throughout the city, Mayor Bill White announced this morning.
White’s announcement during city council came a day after EarthLink announced it was laying off 900 people — nearly half its workforce nationwide. The troubled company has been reconsidering its business model for building wireless network in cities.
EarthLink now has a nine-month window to start building the network in Houston, White said.
The company failed to meet its first deadline by not signing an agreement with CenterPoint Energy to lease its utility poles for the Wi-Fi project.
In the meantime, Houston can consider offers from other vendors to build wireless for the 640-square-mile city, White said. Whatever happens, the city will keep the $5 million, and the city should use it to bridge the digital divide, perhaps by building smaller “Wi-Fi bubbles” over public spaces, the mayor said.
If built, the municipal Wi-FI project here would be the largest in North America and require a $50 million investment.
EarthLink has scheduled a conference call for Wednesday to further discuss the restructuring, reports the Washington Post.
Earthlink has not (yet) said what it plans to do with the Wi-Fi networks it has already built. It operates networks in Anaheim, Corpus Christi, Milpitas, New Orleans, and Philadelphia.
It could continue to operate them or consider selling them to Clearwire or Sprint, companies that are just beginning to build WiMax networks, opines the Washington Post. Access to city infrastructure for hanging network equipment could be valuable to them, said Ron Sege, CEO of Tropos Networks, the vendor that supplies EarthLink with Wi-Fi network equipment.
Cable operators like Time/Warner and Comcast may also be candidates. Or T-Mobile. Perhaps MetroFi is the best positioned — they’re really a marketing company. What’s to prevent them from creating a “free” virtual network — over Sprint’s WiMAX network. It’s the back end that makes the money.
“Our core business has been diluted by new-business initiatives that were begun with good intentions but morphed into larger commitments,” said Huff, in a conference call with analysts. “We are not exiting these growth initiatives: we’re scaling back their cost structures to fit the startups that they in fact are.”
But San Francisco’s WiFi deal with Earthlink looks to be dead, dead, dead, according to the SF Chronicle:
The financially struggling Earthlink Inc. on Wednesday bowed out of a deal to join Google Inc. in providing free wireless Internet access throughout San Francisco, according to the mayor’s office. Earthlink Chief Executive Rolla Huff told Mayor Gavin Newsom during a telephone call “they were not going to be able to fulfill their end of the bargain,” said Nathan Ballard, Newsom’s spokesman. “Mr. Huff made it clear it wasn’t going to happen with Earthlink; they are getting out of the Wi-Fi business.”
Related DailyWireless articles include Earthlink Restructures, MuniFi Holds Breath.
