August 30, 2007
EarthLink pays for delay in citywide wi-fi

The future of the city's ambitious wi-fi plan is questionable right now. From a Chron story by Carrie Feibel:

Following months of delay, an ambitious plan to blanket Houston with wireless Internet signals now is in serious jeopardy.

The city's partner in the project, EarthLink, will pay a $5 million penalty to the city for not meeting its deadlines, Mayor Bill White said Wednesday.

"They're either going to do a graceful exit," White said, "or they're really going to figure out whether they can get other industry participants."

The payment will give EarthLink an additional nine months to find investment partners for the Houston project, White said. The company also could decline to do the project altogether without paying additional penalties, he said.

EarthLink announced Tuesday it was laying off 900 employees, nearly half its work force in a company restructuring. A spokesman declined to comment on its agreement with Houston.

I think the "in serious jeopardy" bit might be a little dramatic on Feibel's part. We're already looking at a delay, but I think that either EarthLink will exorcise their internal demons and take care of this, or the city will find someone else to do it. Dwight Silverman had a nice blog post in which he says he expects EarthLink to follow through in Houston. If they want to stay in the city wi-fi business, I don't think they really have another option. I'd just really like to see more commitment from the company though. Like Dwight has pointed out before, citywide wi-fi networks are notoriously spotty, and this isn't going to be successful unless it's done well. So reading this is a little frustrating:

City officials expected installation of the wireless equipment to begin this summer, but EarthLink never completed the first step: signing an agreement with CenterPoint to place equipment on its utility poles.

EarthLink is reconsidering its business model for building municipal wireless networks. Rolla P. Huff, EarthLink's President and CEO, spoke to investors during a Wednesday morning conference call on the company's restructuring.

''We will not devote any new capital to the old municipal Wi-Fi model that has us taking all of the risk by fronting all the capital, then paying to buy our customers one by one," Huff said.

EarthLink already has the kind of deal they're looking for with the city, one in which the municipal government is the primary customer: the city's going to be paying $2.5 million over 5 years to use the network. This is an exciting project and I really want to see it work out, but I guess for now we just have a nine-month waiting game to see if they can get it off the ground.

Posted by Alexandria Ragsdale on August 30, 2007 to Technology, science, and math