EarthLink May Dump its Muni Wi-Fi Division

EarthLink Inc.'s municipal Wi-Fi signal grew weaker on Friday as the company said it may sell the business that built wireless networks in Philadelphia and other cities.

The struggling Internet service provider said in a statement Friday it would begin to "consider its strategic alternatives" for the business, which it said has assets of about US$40 million. Strategic alternatives for a business unit can mean a sale, a spin-off or a partnership with another company.

EarthLink said it will seek to work closely with the cities where it has Wi-Fi networks as it goes through the process. EarthLink operates Wi-Fi networks in Anaheim, California; Corpus Christi, Texas; Milpitas, California; New Orleans, Louisiana; and Philadelphia.

EarthLink was placing a big bet on citywide Wi-Fi projects as recently as early this year, negotiating deals in which it would build networks at no cost to the municipalities. But the company has since stepped back from the business amid corporate losses. In a restructuring announced in August, it eliminated the position of president of the municipal Wi-Fi business and said it would stop investing in the free Wi-Fi business model.

The dream of widespread municipal wireless ran into higher-than-expected infrastructure costs and cities' lagging interest in using the networks themselves, in addition to local political struggles. EarthLink was the most prominent player in the business until its retrenchment earlier this year. EarthLink's dial-up Internet service is losing subscribers and the company lost more than $79 million in the third quarter, ended Sept. 30.