“EarthLink says it cannot afford to foot the bill to build citywide Wi-Fi networks, jeopardizing cities’ plans to provide low-income residents with affordable broadband…”
EarthLink has backed out of a deal to blanket San Francisco with free WiFi, after a financial shakeup — one that prompted cutting 900 jobs at the firm — but now the fate of once-ambitious municipal wireless plans all over look bleak, the latest in a string of disappointments for municipalities pioneering the movement.
EarthLink became a leader among providers of high-speed wireless networks–usually at its own cost, with little prospect for near-term profitability–in cities such as Anaheim, Calif.; Houston; and Philadelphia.
But there were signs that the Muni WiFi plan, which also involves Google, was in jeopardy even before the extent of EarthLink’s financial problems became clear.
But building the networks proved to be more costly than expected, and San Francisco, one of the earliest cities to announce a Wi-Fi project, became a political hotbed for EarthLink and its partner, Google.
Internet service provider Earthlink notified San Francisco Mayor Gavin Newsom this week that it would not pursue a proposal to build out a publicly accessible Wi-Fi network in the city.
Last week, EarthLink took more drastic measures, disclosing plans to cut its workforce in half, laying off the executive in charge of its municipal networks division, and saying it will no longer directly pursue short-term customers for its dial-up and broadband access services.
“Shortly after Rolla Huff took over as CEO in June, EarthLink said it would stop investing in municipal projects unless cities committed to paying part of the tab.”
Whether blame rests with the company or with a flawed business model is the question. “Every city wants to offer free WiFi,” says independent wireless consultant Craig Settles, and “somebody eventually will have to pay for it.”
“Glimpses of behind-the-scenes struggle over who would bear the costs and responsibilities for the estimated US$14 million to $17 million network increasingly became public.”
The general plan was to provide two tiers of service: free WiFi subsidized by Google ads; and a premium, faster subscription service available through EarthLink for $21.95 per month.
“Across the country, cities that had proposed to provide their citizens with free or cheap access to the wireless Internet are deciding otherwise.”
Over the past few years, blanketing cities with unlicensed Wi-Fi signals has been viewed as a cheap solution to bringing affordable or even free broadband access to cities.
That leaves cities like Houston, where EarthLink had already signed a contract, and Chicago, which had been in negotiations with EarthLink, out of luck for the time being.
Chicago said it was shelving its plans for a citywide wireless network after EarthLink’s announcement, while a chagrined Gavin Newsom, the mayor of San Francisco who had pinned high hopes on the Google-EarthLink project, said that deal was finally and mercifully dead.
Besides San Francisco, cities no longer going for Muni Wi-Fi include Chicago, which says the effort is too expensive and wouldn’t be very popular; Anchorage, Alaska, and Corona, Calif., which both bristled at terms put forward by network provider MetroFi; and Houston, Alexandria and Arlington, Va., and St. Petersburg, Fla., all of which were affected by Earthlink’s financial troubles.
“Politicians and community leaders have rallied around the technology as an economic development tool that could help bring low-income individuals into the bustling economy of the 21st century.”
“It is easy to talk about digital inclusion when you are not paying the bill to build the network,” said Settles. “So I’m sure some cities that likely were not really serious about it in the first place would not pursue it. But for cities that are serious, they will push forward and either bear the costs themselves or find other alternatives for funding the project.”
But as the economic reality of building a network primarily to serve up low-cost broadband access settles in at EarthLink, the company’s top brass says the strategy is not viable. And as a leader in this industry, cities are now scrambling to find alternative ways to finance their Wi-Fi dreams.
It is unclear whether San Francisco will take its own city-wide WiFi project, now that EarthLink has pulled out.
Newsom says he plans to find other vendors to provide Wi-Fi access to San Francisco. But technology may already have passed him by — with the 700 MHz band partially freed up from telecom interference, and with innovative private companies like Meraki building shared, peer-to-peer citywide Wi-Fi systems in cities, municipal Wi-Fi does not look long for this world.