EarthLink can’t give away Philly’s Wi-Fi network: Company to shut down operation within 30 days

EarthLink Inc. announced it will be shutting down its municipal Wi-Fi network in Philadelphia in 30 days, handing yet another black mark to the once-burgeoning market for muni Wi-Fi.
After months of negotiations, Earthlink said the parties involved couldn’t even reach a deal to give the city or a non-profit organization full control and ownership of the $17 million network for free.
“EarthLink has worked diligently for many months to transfer our Wi-Fi network to a new owner – at no cost,” EarthLink Chairman and CEO Rolla Huff wrote in a prepared statement. “Unfortunately, our hope that we could transfer our network to a non-profit organization that had planned to offer free Wi-Fi 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 Wi-Fi customers with alternative ways to access the Internet.”
The company said it was willing to pay cash and donate new Wi-Fi equipment, but the transfer unraveled due to the heavy cost burden and “unresolved issues among the city, Wireless Philadelphia and the non-profit,” Earthlink said.
EarthLink plans to shut off service to customers June 12 and begin decommissioning the network shortly thereafter.
The company said the shutdown should have “no material impact to its current financial guidance.”
Indeed, the company said it was looking to sell its muni Wi-Fi business after writing down a $20.7 million charge on discontinued operations related to its municipal Wi-Fi assets.
Municipal Wi-Fi has been dying a slow death for much of the past year, reflected in large part through EarthLink’s troubles in the sector. As of last August, EarthLink said it had operations in about a half-dozen cities and contracts for another half-dozen. At that time, it managed 150 square miles of Wi-Fi networks across all of its markets, covering 600,000 households. EarthLink never disclosed usage numbers for any of its Wi-Fi operations.
Plans in other cities have fallen like dominos. Chicago city official scrapped a deal last summer, citing costs and new technologies coming to the scene with greater promise. AT&T Inc. also pulled out of its first such deal to build a Wi-Fi network in Springfield, Ill.
Silicon Valley is also unsure about selecting Wi-Fi as a technology choice for plans to blanket the entire 1,500-square-mile region with high-speed wireless Internet. Wireless Silicon Valley, the organization pushing for the plan, represents at least 28 cities spread across four counties.
EarthLink has now bowed out of its two biggest footholds in the wireless space; it declined to further invest in mobile virtual network operator Helio L.L.C., a joint venture with Korean-telecom operator SK Telecom.
EarthLink stock was down 11 cents to $9.13 following the news.