The Chronicle‘s Alexis Grant and Matt Stiles report that Earthlink is already behind on its scheduled rollout of municipal Wi-Fi:
Months after the City Council approved a contract to allow EarthLink Inc. to blanket Houston with a wireless network, the build-out still has not begun.
The delay is prompting concern that the company, which publicly has said it is rethinking its business model, may be having doubts about whether to proceed in Houston as planned.
Mayor Bill White acknowledged Friday that the company is two or three months behind schedule. But he said EarthLink is obligated under contract to build the network within a certain time, so if there are significant delays Houston would receive compensation.
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The company has yet to sign an agreement with CenterPoint Energy to lease its light poles for the project, according to CenterPoint spokeswoman Leticia Lowe. City officials expected that to happen soon after the council approved the city’s contract in mid-April.
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The city contract allows EarthLink to build a wireless network over Houston’s 640 square miles. Residents, city employees and visitors then would be able to access the network for a fee through an Internet service provider.
The city agreed to pay the company $2.5 million during the next five years to serve as the anchor tenant.
But EarthLink officials, who declined to comment for this story, have expressed unease recently about the financial viability of wireless projects, which have yet to prove on a scale as large as Houston’s that they will draw enough customers to make a profit.
The project here is expected to require an investment of about $50 million, according to EarthLink and city officials.
Fiscal reality may finally be setting in for Earthlink.
Local blogger and techie Larry Hendrick has been talking about the economics of municipal wifi and the holes in the city’s plan for quite some time now, so this news probably comes as no surprise to him or his readers.
It will be interesting to see if Earthlink decides to proceed with the current agreement, bails on the agreement (with whatever financial penalties that apply), or tries to renegotiate with the City to charge even more for anchor tenancy.
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