San Francisco, Chicago Muni Wi-Fi Scuttled; EarthLink on the Rocks

By Tara Seals

Municipal Wi-Fi has been dealt two more blows this week, with Chicago and San Francisco both cancelling their planned networks.

In San Francisco, the city-wide Internet access plan has been the subject of ongoing and heated debate, but was awaiting final approval when EarthLink Inc. reportedly notified Mayor Gavin Newsom that it was pulling out the deal, saying it wasn’t financially viable.

EarthLink was partnered with Google Inc. to run the network. Google was to provide a free, advertising-supported service, while EarthLink would build and operate the network, while charging $21.95 per month for a premium, faster tier of service. EarthLink has now determined that it cannot hold up its end of the bargain, said CEO Rolla Huff.

Meanwhile, in Chicago, officials announced its plans for citywide broadband has been scrapped, after failing to reach an agreement with EarthLink or AT&T Inc. as to a mutually beneficial business model and fiscal responsibilities. The two had been competing for the bid.

It has not been a good week for EarthLink; the ISP has also announced it would cut 900 jobs about half its work force and close offices in four cities. This follows a Q2 dismal report of its muni Wi-Fi efforts that left many wondering how long EarthLink would stay in the mesh business.

The news comes amid a flurry of scrutiny about the muni Wi-Fi model; a Forrester Research report characterizes the market as a bumpy, unpaved road with low consumer-demand. This has led to EarthLink, MetroFi Inc. and other service providers eschewing the free service model, now demanding the municipality shoulder some of the financial responsibility for the networks by becoming anchor tenants, or primary users, of the network, for public safety applications and the like. In turn, this has warned off many larger cities from pressing forward with their plans.

Earlier this week Google announced that its own municipal Wi-Fi network in Mountain View, Calif., is growing in traffic by around 10 percent each month; one bright spot, at least, in what has become a landscape littered with failed initiatives.

AT&T Inc. www.att.com
EarthLink www.earthlink.net
Google Inc. www.google.com