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Earthlink Shifts Municipal Wi-Fi Strategy



July 30, 2007 By

Last week, Earthlink confirmed a change in business strategy for municipal wireless. Earthlink President and CEO Rolla P. Huff said the company was doing a detailed review of its business model. "We're also beginning a dialog with the municipalities that we've partnered with, and that we're considering partnering with," he said. "The Wi-Fi business as currently constituted will not provide an acceptable return ... We're going to look for municipal governments to step up and become a meaningful anchor tenant on completion of the build."

At issue are cities like San Francisco, that are hammering out municipal Wi-Fi agreements with Earthlink and other companies. In May, San Francisco Mayor Gavin Newsom said he was frustrated at hold-ups from the Board of Supervisors and said if Earthlink and Google pulled out of the Wi-Fi plan, the city had no backup strategy.

According to Craig Settles, a muni-wireless expert, at least one San Francisco supervisor says anchor tenancy is not an option for the city.

"With EarthLink's announcement," said Settles, "now maybe some sanity will prevail. Municipalities should have pulled this plug a year ago, but that free train was pretty hard to stop. It's going to be touch-and-go to see if elected officials catch on, but I sense department managers in local governments -- particularly CIOs -- understand the reality though they may not always be able to see the value in anchor tenancy.

"If there's hope for this industry, it's that more cities will start serious benefit analyses within governments of the impact of muni wireless on operations, as well as conduct similar analyses within business, medical and education constituencies that could all be anchor tenants.

"San Francisco, unfortunately," continued Settles, "may not be demonstrating good judgment if they dismiss anchor tenancy out of hand unless they still have their sights on owning the network. I'm surprised -- sort of -- by the smaller cities that stomp their feet and pout like petulant kids, refusing to even discuss buying services because they think their cities deserve a free ride."


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