Earthlink Cuts Funding for Municipal Wi-Fi

Internet provider Earthlink is ruling out any "significant further investments" in municipal Wi-Fi efforts until someone comes up with an alternative revenue model.

It wasn’t very long ago that Internet provider Earthlink was hot-to-trot for municipal Wi-Fi efforts, famously putting its money where its mouth was an bidding to build-out wireless Internet capabilities in a variety of city centers, pledging to make Wi-Fi Internet access affordable, and perhaps make up the cost of operating and maintaining the network in advertising, high-end services, and premium access plans.

But when the nirvana of municipal Wi-Fi dreams failed to materialize, the company hired Rolla Huff to take a hard look at their business plans, and now the verdict is starting to come in: the company will not be making any further significant investments in municipal Wi-Fi plans unless someone comes up with a better revenue model.

“After thorough review and analysis of our municipal wireless business we have decided that making significant further investments in this business could be inconsistent with our objective of maximizing shareholder value,” said Earthlink president and CEO Rolla P. Huff, in a statement. “Accordingly, at this time, we are considering our strategic alternatives with respect to this business.”

The move doesn’t come as a huge surprise: although Earthlink values its municipal wireless business at about $40 million, late last summer Earthlink announced significant staff layoffs and axed the head of its municipal networking group. The status of Earthlink’s existing Wi-Fi buildouts remains somewhat up in the air: the company’s network in Philadelphia is well over halfway done, and Earthlink apparently plans to complete the network, although there’s no clear indication how it will be operated. Cities like New Orleans, Anaheim, and Corpus Christi also have networks underway.