Wi-Fried

Mayor White announced during City Council Wednesday that EarthLink will pay the city $5 million for not meeting its first deadline for building a wireless network across the city.

A Chron story spells most of it out but the reader comments are pretty harsh. Some are pissed at EarthLink; others are ticked at the mayor and the city. Both sides make good points but here are my thoughts after talking with my contacts close to the project between Houston and Atlanta, where EarthLink is based:

• Houston, as of now, comes out smelling pretty good. The City is $5 million richer than it was when the RFP began last year and it has learned valuable lessons. They know what issues in the process need improvement and thus have the knowledge to rectify those if they enter another contract.
  
• Why did EL pay the whole $5 million penalty fee when they were only the line for $2.5 million if they missed their Year 1 (of 2 years) goals? According to my sources, EL put up a $5 million letter of credit when they signed the contract with City Council. The money was sitting in a fund so they will soon release it all to the city.
  
• Apparently EL still has the right to build out the network, at least for the next 9 months. EL will look at many ways to see if it is possible for them to complete the project alone or with a partner (i.e. Google). To recoup their money, EL may want to find a company to buy those rights to build a network. Though I believe the city has the right to refuse any company that comes in. At the end of the day, EarthLink's primary goal is to raise its stock price - not just build a wireless network. Since August 8, their stock price has risen 20% probably on speculation they may be pulling out of the municipal wireless business.
  
• As of now the whole project is in a holding pattern. The Digital Houston website which is hosted by the city is not being updated regularly. Mayor White and his city IT department are weighing options of building out the network themselves - starting downtown - and opening it up for other city services (they now have a well-funded coffer to use). Some speculate the entire project be put off until better technology catches up such as WiMAX.

Any way you slice it Houston will not have a citywide wireless network in the very near future. So the debates continue - public or private operated system, free or subscription, ad-supported or sponsor-free. I'm all for Internet access everywhere and I'm relatively happy with my wireless laptop cards now.

Let's just hope Mayor White doesn't push this issue too far and too fast for the wrong reasons like leaving a lasting legacy. We know where Lee Brown's legacy is today.