Muni Wi-Fi's Terrible Tuesday

The apparent exit of EarthLink from the municipal Wi-Fi business is bad news for broadband consumers.

Earthlink laid off 900 employees Tuesday, including the head of its muni WiFi initiatives Don Berryman. EarthLink is/was the biggest and most well-monied technology partner for U.S. cities trying to roll out free or cheap citywide wireless Internet access. It now operates muni WiFi networks in Anaheim, California; Corpus Christi, Texas; Milpitas, California; New Orleans, and Philadelphia.

But, as it turns out, selling Wi-Fi service to consumers just isn't a very profitable business. Analysts are saying today that EarthLink and some of its city partners grossly underestimated the cost of building and maintaining Wi-Fi networks, and grossly overestimated the number of consumers who would use the service.

"EarthLinlk is abandoning the general consumer market;" says wireless consultant Craig Settles in an e-mail. "Consumers are a weak play for muni wireless--expensive to get, more expensive to keep." Settles believes EarthLink might focus on the more stable business of providing WiFi service to business and government workers.

Still, some of us had hoped that EarthLink would eventually offer a "third pipe," an alternative to the (slow and expensive) broadband service we buy from the cable-and-telephone company duopoly here in the US. That kind of competition would be good for consumers. It would push connection speeds up and force prices down. As it stands now, broadband connectivity in the US costs more per Kbps of connectivity than in any other developed country.

Is faster, cheaper and more ubiquitous broandband really important? You bet it is. For years analysts have noted a close link between the quality of a nation's communications systems and its gross national product (GNP). A study by Dataquest takes it a step further and establishes a connection between broadband speed and cost, and GNP. In short, better broadband leads to more productivity, more innovation and more jobs.

EarthLink's news yesterday wasn't the only bad news for muni Wi-Fi. The City of Chicago decided to shelve its plans for a city-wide muni Wi-Fi network. And AT&T announced it had dropped plans to build a muni Wi-Fi network in Springfield, Illinois.

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