EarthLink paid Houston a $5 million penalty, this summer, for not meeting its obligations to the city. At the time, Houston Mayor Bill White said the company had a contract which obligated Earthlink to pay the city if it failed to meet its deadline for the Wi-Fi project.
Today the Houston Chronicle reports city officials are making plans to use part of the $5 million penalty fee to finance a “digital inclusion” program intended to help students and the elderly in low-income neighborhoods access the Internet.
“One of the goals of the WiFi plan was to bridge the digital divide, and because of the city’s good contract, we have substantial money to invest in that,” Mayor Bill White said Tuesday.
Under plans being drawn up by the city, $3.5 million of that penalty fee would go toward creating free, WiFi hotspots in 10 neighborhoods and helping residents there acquire equipment and training to use the Internet, said Richard Lewis, the city’s director of information technology. The remaining $1.5 million will go toward other city wireless projects, including public safety, Lewis said.
Because the company does not face any further penalties, there is wide speculation that it will drop or alter the $50 million Houston project.
EarthLink’s CEO said last month it was considering “strategic alternatives” for its municipal wireless unit. It remains unclear what those strategic alternatives might be, but some have suggested the company may sell its municipal business.
“I think that’s a little bit of an overreaction,” said Phil Belanger, founder of consulting group Novarum, Inc. “I think they’re trying to do it more rationally.”
Houston can still consider offers from other vendors to build wireless for the 640-square-mile city, White said, but the city gets to keep the $5 million, free and clear.
Related Municipal Wireless stories on DailyWireless include; Portland Chooses MetroFi for 134 Mile Cloud, MetroFi Quits Installing Portland Nodes, Meraki Rocks, SF Officially Backs Out of MuniFi, Wireless Silicon Valley: Pipe Dream?, SoCal Wireless: Toast?, MuniFi: What Now?, Houston Gets it’s Money Back from Earthlink, Earthlink Restructures, MuniFi Holds Breath, Bridging the Digital Divide and Statewide/Nationwide Wireless Broadband.
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