Mark Long, newsfactor
EarthLink incoming CEO Rolla Huff decided last November that there was no money to be made from metropolitan Wi-Fi. "After thorough review and analysis of our municipal wireless business," he said, "we have decided that making significant further investments in this business could be inconsistent with our objective of maximizing shareholder value."
Houston subsequently elected to allow EarthLink to back out of its deal with the city, and the broadband provider is currently in negotiations to ease out of its contract with Anaheim, Calif. However, finding a graceful way of out its agreement with Philadelphia has been problematic.
Finding an Alternative
EarthLink says it has been trying to reach an agreement for months on a free transfer of its entire $17 million Wi-Fi network in Philadelphia. Moreover, the company said it had even offered to sweeten the deal with cash payments and the donation of new equipment.
"Unfortunately, our hope that we could transfer our network to a nonprofit organization that had planned to offer free Wi-Fi throughout Philadelphia will not be realized," Huff said. "Since we have exhausted our efforts to find a new owner of the network, our only responsible alternative now is to remove our network at our cost, and assist our Wi-Fi customers with alternative ways to access the Internet."
EarthLink has filed a proceeding in federal court seeking a declaration that EarthLink may remove its equipment from the city's streetlights. The lawsuit also attempts to limit EarthLink's potential liability in Philadelphia to $1 million or less.
Houston, We've Got a Problem
Wireless Philadelphia CEO Greg Goldman said that transfer of the EarthLink network is by definition a complex, time-intensive, multiparty transaction, and there is nothing in his organization's 10-year network agreement with the operator to provide access "that would permit EarthLink to unilaterally impose deadlines for the network's transfer, turn off the network, or remove network equipment."
"Wireless Philadelphia and the city are still working actively together to identify alternatives for preserving this network and applying it to numerous civic, commercial and social purposes," Goldman said. "We remain optimistic for an orderly resolution of this matter."
Metropolitan Wi-Fi may be down on the mat in Philly, but don't count the city out of the fight just yet, if Houston's experience is anything to go by. After EarthLink missed its deadline for starting work on Houston's network, the network provider paid $5 million to get out of its agreement with the city, according to media reports.
Houston currently plans to spend $3.5 million to start work on one of 10 "Wi-Fi bubbles" targeting low-income housing areas representing a population of nearly 480,000 residents and more than 160,500 households. Houston is also pondering several other ways to bring free Wi-Fi to city residents.
For example, the city is currently considering possible mixed-use approaches for extending free Wi-Fi access to Houston residents and visitors alike. Moreover, Houston said in a recent request for information document that it might also attempt "to simultaneously monetize excess network capacity through the use of ad-based hot-spot business models."
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