EarthLink pulls back on muni Wi-Fi

After first quarter losses of about $30 million, Earthlink has decided to pull back from municipal Wi-Fi contracts and focus on more lucrative contracts in large cities. Earthlink plans to cut in half its capital expenditures on municipal Wi-Fi.

Governments were banking on the development of municipal Wi-Fi projects to create more small business opportunities and bolster economic revitalization

Municipal Wi-Fi is mostly offered for free and sometimes it contains advertising. EarthLink intended to turn a profit from paid subscriptions and "anchor tenant" deals with city governments, but that proved not to be very lucrative.

Municipal Wi-Fi projects had growing pains. There were complaints of intermittent service on some networks, as well as political squabbles and problems finding enough advertisers.

Earthlink is focusing projects in large cities such as Los Angeles and Corpus Christi, Texas. The company also is working with Google for a large project in San Francisco, but it is currently surrounded by political controversy.

Some point to muni Wi-Fi's decline squarely on cities who are not taking enough responsibility for making the market attractive. Craig Settles, an independent municipal network consultant, say cities can attract vendors by pooling education grants, contributions from interested local businesses, and other funds to get networks off the ground, he said.

"Too many cities have taken the lazy default of letting the vendor pay for it," and vendors don't want to play that game anymore, Settles said.