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Internet EarthLink Ready to Bail on Municipal WiFi
Brandon Hill (Blog) - November 20, 2007 1:21 PM
Print E-mail del.icio.us 27 comment(s) - last by Ringold.. on Nov 21 at 6:47 PM
EarthLink decides that municipal WiFi isn't adding value to its shareholders and throws a $40 million USD price tag on its operations.

Municipal WiFi continues to struggle in the United States. EarthLink, one of the biggest proponents of municipal WiFi services, announced plans to eliminate nearly half of its workforce in late August. The company stands to lose 900 employees and four offices before the close of 2007 as a result of the cuts.

EarthLink's downward spiral has lead to the implosion of several citywide WiFi initiatives. EarthLink’s WiFi plans in San Francisco have failed as have its efforts in Houston. EarthLink's failure to develop a wireless network for that city cost the company $5 million USD.

EarthLink's other endeavors in Chicago, Cincinnati, Lompoc, Sacramento, St. Louis and Silicon Valley have also fizzled.

Any further investment in citywide WiFi appears to be out of the question for EarthLink if a statement released by the company on Friday is any indication. EarthLink announced that the municipal WiFi business is no longer a feasible, profitable direction for the company to pursue.

"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. "Accordingly, at this time, we are considering our strategic alternatives with respect to this business."

EarthLink even went so far as to put a price tag on its municipal WiFi business: $40 million USD. This is likely a thinly veiled attempt to court buyers for its doomed operations.

Despite EarthLink's decision to bail on new investments in municipal WiFi, the company is at least committed to finish what it started in Philadelphia. The company has a 10-year contract with the city to develop and maintain the WiFi network which covers 135 square miles.

At present, the EarthLink Philadelphia network is 75 percent complete.

It was pretty clear that it was going to be a long road," stated Institute for the Future's Anthony Townsend. "It's a fragmented market. You're dealing with clients and governments that move slowly and are very risk averse. They really didn't have a lot of options, and it turned out to be a lot harder than they expected."

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WiFi
By Master Kenobi (blog) on 11/20/2007 1:44:37 PM , Rating: 2
WiFi is a great idea, however in practice it's not quite as good as it sounds. Welcome to PR versus Engineering. PR sets the goals, Engineering hits them with the reality of cost, then quietly back out later.




RE: WiFi
By FITCamaro on 11/20/2007 2:12:00 PM , Rating: 2
You mean we can't deliver on our over-hyped promises for an amount less than we originally quoted? Engineers expect to be able to sleep and want to get paid? What kind of world do we live in?


RE: WiFi
By porkpie on 11/20/2007 2:20:49 PM , Rating: 4
WiFi is a great idea, but fuzzy-headed government sponsored neo-socialistic WiFi doesn't work out well in practice.

WiFi will show up one day, but the private market will bring it to us.


RE: WiFi
By TomZ on 11/20/2007 2:47:20 PM , Rating: 2
I completely agree - if there is a business case that can be made, then private business will make the investment. Otherwise it's just a waste of money and time.


RE: WiFi
By eyebeeemmpawn on 11/20/07, Rating: -1
RE: WiFi
By TomZ on 11/20/2007 4:53:56 PM , Rating: 2
Yes, as it should be. Much better than the alternative in this case which would be pissing away taxpayer dollars for somethine less valuable than the amount invested, in addition to erasing the possibility of any legitimate commercial venture that might want to offer WiFi in the same location.

Government should focus on essential functions, and providing free WiFi doesn't fall within that definition.


RE: WiFi
By eyebeeemmpawn on 11/20/07, Rating: -1
RE: WiFi
By eyebeeemmpawn on 11/20/2007 5:08:08 PM , Rating: 2
d'oh, to the last part:

that is your opinion, luckily for all the people that survive on public outreach programs, you don't define the scope of government. Granted, WiFi would be a luxury. I don't have your faith in the private sector, they've done a hell of a job with health care.


RE: WiFi
By Ringold on 11/20/2007 7:18:27 PM , Rating: 2
quote:
I don't have your faith in the private sector, they've done a hell of a job with health care.


Typical line of attack. Health care is an abomination -- do you understand what a free market in health care would even be? That'd be you not relying on big pappa employer to pick your plan for you, and having firms compete in price over comparable coverage products.

Like Switzerland. Sort of.. But sure as hell not like here, though Romney prodded MA in that direction.

Anyway, I think the socialist news site is here:
http://www.huffingtonpost.com/

At DT, some people actually showed up on occasion when they took principles of (macro/micro) economics when forced to take it in their college careers. Don't worry, that wont be a problem over there.


RE: WiFi
By Oregonian2 on 11/20/2007 8:17:26 PM , Rating: 2
quote:
Health care is an abomination -- do you understand what a free market in health care would even be? That'd be you not relying on big pappa employer to pick your plan for you, and having firms compete in price over comparable coverage products


The USA health care is superb. I'd rather be sick here than anywhere else (so long as my insurance will cover it -- see below).

That which you talk about above isn't health care. You're talking about insurance that's used to help afford/pay-for health care.

Health care is provided by the Doctors and Hospitals, etc. Not by insurance companies. Doctors will usually take cash or credit card. They are the the providers of health care, one doesn't get one's health looked after by an insurance company. They are excellent (with normal variance in that it involves humans where some are a lot better than others).

Now if you want to say the health insurance in the US is messed up, I'll agree with you. It's very uneven and varies from excellent to messy (but don't worry, the government will step in and even things out -- making everybody/everything messy).

But that's not health care. Just the financing of it, or the "accessing" of it, if you prefer. The health care that's available to be accessed is superb.

Note that I'm not minimizing the problems of how to pay for the tremendous costs of health care and how to control costs. But only that it's not the health care itself that is poor. Superb health care is in the USA to be had.

P.S. - One does not have to have one's "big pappa employer" provide a health insurance plan. My wife bought a personal by-herself individual insurance plan twenty years ago, and still has it.


RE: WiFi
By JonnyDough on 11/20/07, Rating: 0
RE: WiFi
By barclay on 11/20/2007 10:43:49 PM , Rating: 2
Actually he is correct about the quality of the treatment available. The US has some of the shortest wait times and the highest survival rates for many ailments. (Cancer: http://www.ncpa.org/pub/ba/ba596/ )

The main reason the US does poorly on the WHO world ranking (#37) has to do with access and cost. Quality wise, the US is the world leader.


RE: WiFi
By Talcite on 11/20/2007 11:21:33 PM , Rating: 2
quote:
Quality wise, the US is the world leader.


That's quite irrelevant.

Access and cost are huge factors. I'm sure everyone who has a high paying job and an amazing insurance plan can afford health care. However for the rest of the people that can't afford it, you can have the best health care in the world in the US, but it's not going to help if you can't access it .

You want evidence? Look at the average life expectancy of a US citizen compared to that of one from a publicly funded health care system (lets say Canada). The US ranks in at 77.8 in 2004 while Canada ranks in at 79.7 in 2002

Granted this isn't the most scientific of studies, but there's a lot to gain from this observation. The diet between a US citizen and a Canadian citizen isn't very different, nor is the climate. Gun control laws alone won't account for the whopping disparity between the two countries either. You can take a look at switzerland or anywhere else you'd like. There's definitely something to take from this.


RE: WiFi
By barclay on 11/21/2007 12:04:43 AM , Rating: 2
> "Access and cost are huge factors."

I agree. But before proposing policy changes, it is important to have a clear picture of the US system--both its strengths (quality) and its weaknesses (cost).

Historically, in a free market quality goes up while costs go down. Healthcare in the US has only seen the first part while the cost has ballooned. Why? If we do not understand this, we cannot accurately address it and risk making it worse.

> "You want evidence? Look at the average life expectancy"

As you started to address, life expectancy is strongly determined by numerous variables besides the healthcare system. As such, it makes a very poor metric for healthcare system comparions. Just look at the disparity of LE by geography, race, and gender within the United States.
http://health.dailynewscentral.com/content/view/00...

A more accurate, but still somewhat flawed metric for the healthcare industry is birth mortality rates. Unfortunately, inter-country comparisons are currently flawed, as nations vary in how they calculate their rates. For example, in Switzerland "an infant must be at least 30 centimeters long at birth to be counted as living." Such a qualifier (and Switzerland is definitely not the only one) will improve a countries score by discounting pre-mature infants.
http://www.nationalcenter.org/NPA547ComparativeHea...


RE: WiFi
By Ringold on 11/21/2007 12:28:39 AM , Rating: 2
I really didn't mean to start a whole health care debate yet again. I agree with you guys -- it's not a perfect system. It has, undeniably, the best quality of care in the world, for those that can get at it. The system also needs some sort of reform.

Can we not all agree the OP's perception that the health care system here is a "free market" hasn't been further from the truth since roughly WW2? Society stuck the burden of responsibility on the corporation; corporations are profit-generating structures, not suited to such tasks, so of course it hasn't served us well. We're all not really that far apart.

I'll also throw in that the current arrangement is the result of government market intervention trying to put a cap on wages -- we get what we ask for.


RE: WiFi
By barclay on 11/21/2007 12:50:11 AM , Rating: 2
You are absolutely right about the timeline. The decision during WW2 to not include employer provided health insurance as taxable income is the largest contributor to our current infernal 3rd/4th party payer system.

> "corporations are profit-generating structures, not suited to such tasks"

I'm not sure if I understand you completely. If you mean that having our employer provide healthcare is horrible idea, I couldn't agree more. There is no more reason for a company to pay for employee healthcare insurance than there is for them to pay for employee groceries.

If you mean that there should not be any profit motivate in healthcare, then I strongly disagree. The profit motive is what is driving nearly all the innovation.

I think you might enjoy David Gratzer's The Cure: How Capitalism Can Save American Health Care .
http://www.amazon.com/Cure-Capitalism-Save-America...


RE: WiFi
By Ringold on 11/21/2007 6:45:19 PM , Rating: 2