Custom Search

Saturday, March 22, 2008

Internet Providers Pull Out of Deal For Wireless Cities

Plans to erect large municipal Wi-Fi grids around the country to provide citiwide Wi-Fi access, have suffered a serious setback as Internet providers pull out of the deal, due largely to a lack of profitability.
Cities like Chicago, Houston, San Francisco and other major cities and smaller towns, which were to follow the lead of Philadelphia after they announced in 2005, that they were going to provide wireless access to over 135 square miles, with free or low cost services to all residents.

Those plans have suffered a serious setback as Internet providers such as Earthlink, who cornered the market on the plans by larger cities, suddenly withdrew.

EarthLink announced on Feb. 7 that “the operations of the municipal Wi-Fi assets were no longer consistent with the company’s strategic direction.” Philadelphia officials say they are not sure when or if the promised network will now be completed.

In January 2007, Garry Betty, Earthklink's chief executive and most vocal advocate of municipal Wi-Fi, died of cancer and since then his successor, Rolla P. Huff, announced plans to change the direction of the company.

In doing so, Huff laid off half the company's workforce, approximately 900 people and withdrew from the municipal wireless projects.

Other cities have also run into trouble with their wireless efforts. One example given was Tempe, Arizona, which was one of the first cities to go live with the citywide wireless project in 2006, when they contracted with with Gobility, a Texas-based provider to provide residential service for about $20 a month.

In December, due to a lack of subscribers, the company pulled their service.

Smaller cities, such as St. Cloud, Florida, already have about 70 percent of their households using their free wireless system, without difficulty.

Larger cities are not able to financially sustain the same type of system providing wireless to the masses.

Other places such as Athens, Leipzig and Vienna, already have the capability and are offering free or inexpensive Wi-Fi in many areas.

The report states that now all eyes are turning to Minneapolis, who is in the midst of rolling out a new business model that analysts believe will overcome problems such as those suffered by Earthlink in Philadelphia and other areas.

Philadelphia, in the meantime is hoping not to be disconnected midstream and the city’s chief information officer, Terry Phillis, says, "We expect EarthLink to live up to its contract."

The problem there and one that doesn't bode well, is that when the city council held a meeting in December to speak to Earthlink and get assurances about how they intended to fulfill the contract, Earthlink never showed up.