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« Wee-Fi: Short Items for April 26 | Main | Wee-Fi: Short Items for April 27 »
The AP ran a short story this morning that made it sound like EarthLink was about to pull back from the metro-scale Wi-Fi market: This was tied in with EarthLink’s latest earnings, which show a net loss of customers, and additional losses on their books from Helio, a joint venture with SK Telecom to gain mobile phone and data customers in the US. I read the story as if EarthLink wouldn’t respond to new requests for proposals (RFPs) from cities while it analyzed its existing network performance, but EarthLink spokesperson Jerry Grasso says that’s not the case.
In email, Grasso noted that EarthLink is turning inwards to look at the current network buildouts to “to ensure we are delivering what we’ve promised to the cities, residents and users of the networks.” At the same time, they’ll keep analyzing RFPs to see if they meet their parameters.
This strikes me as in line with MetroFi’s recent move to require anchor tenancy on networks that they build in cities with free, ad-supported access for residents and visitors. EarthLink might be tightening the requirements they have, which have been among the highest in the industry already. Recall that EarthLink didn’t bid on Wireless Silicon Valley, but submitted a note that the number of houses passed didn’t meet their threshold.
Update: InfoWorld offers a little more detail, in which it seems EarthLink is talking about not replying to small cities’ RFPs, more than anything else. I suppose Anaheim would be out of the running today if EarthLink weren’t already building it out. InfoWorld also reports EarthLink has just 2,000 monthly subscribers nationally, but none of its networks are yet mature.
And they’re cutting their capital expenditures on Wi-Fi in half—which is a little tricky, because many of their largest projects are still in the buildout phase, so I’d expect a much larger capital commitment this year than last year. We’ll see how that plays out.
Posted by Glennf at April 26, 2007 4:40 PM
Categories: Metro-Scale Networks, Municipal
TrackBack URL for this entry:
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Remember the dot com craziness, when so many stary-eyed folks tried to defy the basic rules of business? So it has been with muni wireless. Luckily, EarthLink and MetroFi are putting the breaks on the madness since a lot of muncipalities sure weren't. And this is a good thing.
These muni wireless projects are business arrangements, and as such they are governed by basic business rules. One of those is, you can't continue to financially front-load a bunch of multi-million dollar projects as a vendor when you're the sole or primary source of funding every time.
I think EarthLink, and probably MetroFi, in the long run will be the beneficiaries of the muni wireless trend because their previous marketing and sales efforts has generated a demand that isn't going to stop. But governments will now hopefuly start making better business decisions, which benefts everyone involved in this industry.
Posted by: Craig Settles at April 27, 2007 12:40 PM
I predict that you will see them back away from their Tropos Mesh products, which is really what is causing them problems in performance and cost over runs, and line up a 4-6 Radio Mesh vendor like STrix or BelAir.
If not someone will buy them to get access to their contracts (markets) and fix their desing and technology.
Jim
Posted by: Jacomo at April 27, 2007 12:01 PM
You might have also noticed that in their fillings they entered into $75 million lease with GE for muni projects. I suspect they no longer have the cash to finance networks that are more expense than projected with slower subscriber growth than expected.
Posted by: SEC Reader at April 27, 2007 7:07 AM