EarthLink looks for muni Wi-Fi exit

EarthLink Inc. late Friday announced it is considering “strategic alternatives” for its municipal Wi-Fi operations, language typically used to signify that a business is up for sale. Indeed, the company even offered what appears to be a price tag, explaining in a short press release that the “net book value of the assets attributable to EarthLink’s municipal wireless business is approximately $40 million.”
The move does not come as a surprise. In August, EarthLink fired 900 employees, including Don Berryman, the executive who led the company’s municipal Wi-Fi division.
In the August announcement, EarthLink President and CEO Rolla Huff said, “we will not devote any new capital to the old muni Wi-Fi model that has us taking all of the risk by fronting all of the capital, then paying to buy our customers one by one.”
On Friday, Huff offered even more pointed words: “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.”
EarthLink said it will work closely with the municipalities in which it has operations as it considers alternatives.
EarthLink has muni Wi-Fi activities in about a half-dozen cities and contracts for another half-dozen. According to a recent Securities and Exchange Commission filing, EarthLink claimed to manage 150 square miles of Wi-Fi networks across all of its markets, covering 600,000 households. So far EarthLink has not disclosed usage numbers for any of its Wi-Fi operations.