NEWS: EarthLink scales back, focuses muni Wi-Fi effort

EarthLink Inc. is pulling in the reins on its municipal Wi-Fi business, focusing on existing deals and big cities for the rest of this year in a move that raises questions about the growing trend of citywide wireless networks.

The Internet service provider will keep working on projects it's already committed to and continue talking to other cities, but will focus on large cities such as Los Angeles and Chicago, Chief Financial Officer Kevin Dotts said in a conference call last week after the release of EarthLink's first-quarter earnings. The company lost $30 million in the quarter, or 24 cents a share, as more subscribers left its traditional dial-up business.

For the rest of the year, EarthLink plans to focus on driving up usage in large cities rather than launching new projects, Dotts said. The company plans to cut in half its capital expenditures on municipal Wi-Fi.


Reports of spotty service on some of the networks, along with political spats and doubts about advertising prospects, have taken some of the shine off the municipal Wi-Fi movement. EarthLink's scaling back is likely to raise further questions about the economic viability of the concept, though these projects are still in their infancy.

The Atlanta service provider has won contracts for networks in Houston, Corpus Christi, Texas, and other cities and has been chosen along with Google Inc. for a high-profile proposal in San Francisco that is embroiled in political controversy. But so far the company only has about 2,000 monthly consumer subscribers to its municipal Wi-Fi services, which executives estimated cost an average of $40 per household to deploy.


Comments: Reality is setting in. Early rosy projections now look increasingly over-optimistic. The San Francisco system faces serious technical obstacles and still hasn't been proven. It's becoming more and more clear that municipal Wi-Fi is a bad idea.

Reply to
John Navas
Loading thread data ...

"Municipal Broadband Subsidies Are"

Fifty-two municipal broadband systems have soaked up $840 million in taxpayer money over the past 20 years while providing little benefit, according to a study released in February.

Wi-Fi Waste: The Disaster of Municipal Communications Networks, by Sonia Arrison, Dr. Ronald Rizzuto, and Vince Vasquez, published by the Pacific Research Institute, represents the latest round-up of municipal broadband financial performance.

The report confirms again what past studies have shown: Municipal broadband systems invariably cost more and deliver less than promised. They rely heavily on loans and transfers from established municipal utilities such as electricity and water. Even with the power of the public purse, 77 percent of the time municipal networks can't pay their way, the report observes.

The survey examined 52 government-owned networks that compete in the cable, broadband, and telephone markets. It concludes the government-owned systems are "financial disasters."

Reply to
John Navas

Some of the things that make San Francisco muni Wi-Fi a bad idea:

  • Sweetheart deal of less than 0/year to lease space on 1200 muni utility poles, a taxpayer subsidy.

  • Still no deal with PG&E for the needed additional 1200 utility pole locations, cost could be much higher than sweetheart muni deal.

  • No assurance system will work well even with 2400 utility poles, likely to be many gaps in coverage.

  • Free service is slow at 300 KB/sec, and likely to be even worse with poor signal and/or network congestion.

  • Fee services will effectively subsidize free service.

  • Fee service prices higher than current market prices for DSL and cable.

  • Carriers will be motivated to sell fee service, or better equipment to free subscribers, instead of fixing problems with free service.

  • No assurance system will be upgraded to keep up with technology.

  • System will be "taxed" at a rate of 5 percent (franchise fee).

  • Won't even be tested before the end of 2007.

  • Won't be completed until the end of 2008, with further delays likely.
Reply to
John Navas

John Navas hath wroth:

You're being too nice. In my never humble opinion, municipal Wi-Fi is a really awful idea. Massive municipal Wi-Fi and mesh deployments of the size proposed by Earthlink have serious technical issues. The big problem is that such large Wi-Fi systems do not scale well. What works just fine for a small deployment, doesn't necessarily work the same way with a massive deployment. There are also problems with latency through too many hops, geographic routeing, cold spots[1], lack of indoor coverage, interference, hacking, security, abuse, maintenance, vandalism, reliability, general lack of support, ad nasium.

For the cities, there's also no compelling revenue generating or savings incentives. It's like when credit cards first appeared. Nobody wanted to pay for a credit card because no merchants were accepting them. So, the credit card companies had to run at a huge loss for quite a while and literally give away cards and merchant accounts. They were eventually saved from bankruptcy by the banks. It's the same with muni-wireless. Very few are going to pay for a wireless subscription without adequate coverage, decent performance, and reliable service.

I figured (i.e. guessed) that Earthlink would get in over their heads after some major deployment demonstrates what can be easily calculated on the back of an envelope. I hadn't expected them to throw in the towel quite this early. Scaling back really means "trying to wiggle out of the contracts" and avoiding getting sued by the contracting municipalities for breach-o-contract.

Anyone wanna take a (small) bet that Earthlink magically discovers WiMax as a replacement for municipal wi-fi? Their partnership with Digipath didn't exactly work as expected, but it's the only real alternative for Earthlink as Wi-Fi has problems, dialup is dying, and broadband cable and DSL are already monopolized. The catch with WiMax is that it really only solves the technical problems. It does nothing for the administrative, political, and financial problems.

[1] A wireless cold spot is the opposite of a wireless hot spot.
Reply to
Jeff Liebermann

I tend to agree that we are a long way from free internet wifi access. TV and movies tend to show scenes where the good and bad guys can freely access other systems from their laptops at super high speed anywhere they happen to be, when in reality there is nothing like that available. I've been to several US metro area with my laptop, and free available internet connectivity is just non-existent in most places. I've been tempted to fork over my $50 a month fee so I can get internet access through the cellphone providers, but.. that's just to frivolous spending for me at this point in my life. :-)

Reply to

"SF Wi-Fi plan with Google and Earthlink shelved until July"

Concerns over quality and privacy not going away

San Francisco's plan to tap the resources of Google and EarthLink to blanket the city with free, sluggish Wi-Fi has faced another delay, as members of the Budget and Finance Committee voted to postpone proceedings until July 11.

Since it was finalized in January, the plan has sharply divided San Francisco's elected officials. It calls for EarthLink to pay the city $2m over four years for the right to build, own and maintain a Wi-Fi network that would be ubiquitous throughout the hilly, seven-mile by seven-mile city. EarthLink would be permitted to sell a 1 MBPS service for $22 per month, but would also be required to offer a free service that offers 300 KBPS speed.


Several supervisors, however, have convincingly made the argument that Newsom's plan to provide free service at painfully slow speeds amounts to little more than sweeping the city's poorest into a new sort of ghetto. Those of us who can afford it will continue using services with bandwidth of anywhere from 1 MB to 10 MB to consume video, chat with Skype or use 3-D, immersive services such as Second Life (which we're told is the wave of the future). Meanwhile, the mostly black and Asian people who showed at yesterday's rally will be forced to ride at the back of Newsom's digital bus. Or so opponents' argument goes.

Besides the sluggishness, there are other quality concerns. According in Business Week, wireless consultant Novarum found it was able to get connections only 72 per cent of the time when trying to access 20 sites in Anaheim, California, where EarthLink is currently setting up a network that would be similar to San Francisco's. Critics note that, in the absence of special gear, the EarthLink network won't deliver a signal to people who live higher then two stories high or whose living spaces are too far from the street.

Critics, including the American Civil Liberties Union, also point to privacy concerns. To subsidize the free service, those using it agree to allow Google to track information about their surfing habits. There currently are no mechanisms in place to allow users to surf anonymously or pseudonymously. "The contract, as written, is akin to someone following you in the library to monitor and record what books you are browsing," the ACLU warns.

Reply to
John Navas Forums website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.