EarthLink Pulls Out of Muni WiFi in New Orleans, Philly; What's Next?

I got a note the other day from Craig Settles, an expert in the area of municipal WiFi networks, who wanted to make sure I’d seen the news about EarthLink pulling out of the muni WiFI network in Philadelphia. (Incidentally, last month EarthLink also made known its plans to pull out of the muni WiFi project in New Orleans, effective May 18.)
In a press announcement dated May 13, EarthLink made clear its plans to terminate WiFi service in Philadelphia, following months of unsuccessful negotiations with the city government to transfer management of the entire network — worth $17 million — to the municipality or to Wireless Philadelphia, a non-profit.
“EarthLink has worked diligently for many months to transfer our WiFi network to a new owner -- at no cost," said Rolla Huff, EarthLink's chairman and chief executive officer, in a statement. “Unfortunately, our hope that we could transfer our network to a non-profit organization that had planned to offer free WiFi throughout Philadelphia will not be realized. Since we have exhausted our efforts to find a new owner of the network, our only responsible alternative now is to remove our network at our cost and assist
our WiFi customers with alternative ways to access the Internet.”
EarthLink will continue serving existing customers during a 30-day transition period, ending June 12.
Settles, who takes a very strong view that most unsuccessful muni WiFi projects were a mistake from the beginning, called the latest developments “the merciful euthanasia of a flawed business model that never should have seen the light of day.”
Never one to mince words, Settles’ opposition to this and similar projects centers around  the way in which the business model supporting each network was set up. Instead of incumbent carriers like EarthLink being in charge, he’s said many times, control of and funding for the networks should be handled at a local level by city governments, and that more planning should be done for the networks prior to deployment.

Settled noted that, as these projects go, Philadelphia did a good job of assessment and business planning. EarthLink built the network for free as a loss-leader to generate interest from other municipalities. Despite the planning, though, this network wasn't successful. Settles chalked that up to problems at EarthLink. 

"Even though the city was achieving one of its main objectives with the network, all the turmoil at EarthLink is dragging Philly down with them," he said. 

Philadelphia aside, cities have tended to be over-eager, in Settles’ view, to sign on the dotted line when big providers come knocking with offers to build and maintain a municipal WiFi network — for free. Problems tend to crop up once the network is built and the provider finds it can’t  generate enough revenue — from low-cost subscriptions, or from ads — to keep the whole thing running.
In an e-mail correspondence today, Settles said municipal WiFi in and of itself isn’t a bad thing — what’s bad is simply the business model used.
“Expect to see this crop of stalled projects be replaced by a steady stream of success stories coming out of small cities such as Santa Monica, CA and Providence, RI, and also cities as big as New York,” he said.
What will make these projects successful, where WiFi networks elsewhere have failed? Three things, Settles said. First, a focus on local governments as the primary customer using these networks. Second, other customers — such as medical and academic institutions — will be brought on board as well. Third, successful WiFi deployments will be preceded by a thorough needs analysis of the main customers.
Settles offered a fourth item in the recipe for muni WiFi success as well: how creative stakeholders are willing to be when it comes time to tackling questions about financing. The goal is to make sure financing the network is sustainable without requiring taxpayer subsidies.
I was curious if Settles thinks the rise of WiMAX (for example, the recently announced Clearwire/Sprint deal) is having any noticeable effect on muni WiFi. He answered by first cautioning against getting too hyped up about any particular technology, be it WiMAX or WiFi.
“This technology-as-rock-star mindset is part of the problems cities are having today,” Settles told me. “So many politicians proclaimed WiFi as the magic bullet to meet all of their needs, from digital inclusion to economic development, and they built expectations that the technology couldn't meet.”
Good point. Nice to find out what a particular technology can actually do before making big promises about it.
Settles predicts that WiMAX, when it’s ready for “prime time,” will have a role to play in muni broadband, but won’t be the only star. Perhaps it will be the solution for connected people in rural, sparsely populated regions. Maybe it will be the “backhaul vehicle” for muni networks.
Settles added that companies like NetNearU see WiMAX as complementing muni broadband initiatives, but that it’s unlikely to replace WiFi anytime soon. More likely, WiMAX will address limitations inherent with WiFi.
“I'm taking a wait-and-see approach until WiMAX, and devices that can support them, become more real and show some decent signs of end user adoption,” Settles concluded.
Sounds like good advice to me.

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