ATLANTA, GA — EarthLink, one of the chief advocates of covering cities with wireless internet service, said Friday it is going to consider “strategic alternatives” for that business.EarthLink chief executive Rolla P. Huff explained in a statement that, after a review, the company “decided that making significant further investments in this business could be inconsistent with our objective of maximizing shareholder value.”
The company said it is looking at “strategic alternatives” for the business, but did not openly disclose what those might be. The company said it would work closely with cities like Philadelphia on its existing projects as it considers the alternatives.
Cities have been finding their projects costing more and drawing less interest from residential customers than expected, and service providers paying for them have been questioning whether the networks will generate enough revenue to justify the multimillion-dollar investments to build and maintain them.
EarthLink had been gradually scaling back its ambitions as it decided it can no longer afford to foot the bill by itself. Unhappy over profits that they had not been making, they pulled out of contracts in Houston and San Francisco. They also announced in August that they will not be bidding on any other municipal city wi-fi programs. EarthLink temporarily pulling out of this industry made Chicago pause their wi-fi plans.
EarthLink now says the business is worth about $40 million which is interesting following cities and local governments becoming free to build their own broadband networks under a bill approved once again earlier this month by a U.S. Senate panel.
The Community Broadband Act, which was approved by the Senate Commerce Committee, is largely a response to the enactment of several state-level laws that limit the ability of municipalities to compete with private broadband providers. If the bill becomes law, it will prevent state and local lawmakers from prohibiting city and county governments from offering Wi-Fi to their residents.
The bill’s action comes amid a very mixed track record currently for city-sponsored Wi-Fi networks. Some cities, such as San Francisco, are still struggling to get their networks up and running, but others, like Minneapolis and Philadelphia, are reporting early signs of success on their networks’ usage.
Hopefully, EarthLink getting back in the game will help get more cities wired in a hurry.
