The High-Tech Texan Blog

Monday, March 03, 2008

Philly WiFi "All Sizzle, No Cheesesteak"

This is a great headline from a story by Sonina Matteo on the NetworkWorld web site today. And very timely considering Houston is apparently getting back into the muni wireless game.

A year after Philadelphia gave EarthLink the green light to build a citywide Wi-Fi network, the grand plan to deliver ubiquitous broadband to tourists, residents, businesses, government workers and low-income households is in shambles.

The story continues with similarities and assumptions similar to Earthlink's deal with Houston...

Under the deal with the city, EarthLink made all of the investment into the network. The city has no financial skin in the game. EarthLink's revenue comes from selling short-term Internet access to tourists and visiting business people, plus service plans for consumers at $21 a month.

The contract that Earthlink signed has some other wrinkles that make the business plan look exceedingly shaky. EarthLink is actually paying the city $2 a month per access point (the company has installed more than 5,000). The company coughed up $1 million to help get the Wireless Philadelphia non-profit up and running. And it agreed to provide service to 25,000 low-income households at half-price.

Analysts are convinced that this business model simply can't work. "Whether city officials of Philadelphia would agree or not, the reality is that EarthLink's public access business model has pretty much died," says Peter Jarish, an analyst at Current Analysis. "What has to be understood is that this isn't an indictment of municipal wireless in general. It is an indictment of going in and trying to justify public access alone."

An interesting note to the Philly and Houston deals. Both agreements were helped along by consultant Brian Anderson. I met him last year during a meeting with Earthlink and City of Houston IT folks. He still lives in Philly and commutes to Houston. My recent attempts to reach Brian have yet to be returned.

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