EarthLink Returns Wi-Fi Networks to Two Cities

EarthLink's bid to link U.S. cities to the Internet with Wi-Fi came closer to an end on Tuesday as both Corpus Christi, Texas, and Milpitas, California, agreed to take back networks owned by the struggling service provider.

EarthLink built networks in a handful of U.S. cities and proposed deals with several others, saying it could put up the networks without tax dollars and make money through advertising or subscriptions. As that business model started to look shaky around the middle of last year and EarthLink struggled with subscriber loss in its dial-up Internet service, new management decided to get out of the Wi-Fi business. In February of this year, the company said it would seek to sell off or give back its five standing networks.

The city councils of Corpus Christi and Milpitas each voted on Tuesday to take possession of their networks, which will leave just three in EarthLink's hands: Philadelphia, New Orleans and Anaheim, California. EarthLink is still in discussions with those three cities, according to Chris Marshall, vice president of corporate communications.

EarthLink's aggressive move into municipal Wi-Fi in 2006 helped build hope for the concept as a way to give residents, visitors and city workers Internet access across a city while getting low-income residents online at a reasonable cost. But paying for the infrastructure through advertising and monthly subscriptions proved difficult, though some cities are still pursuing networks with different approaches.

Neither Corpus Christi nor Milpitas will pay anything for the networks, though Corpus Christi will forfeit US$1.59 million in payments that EarthLink still owed. The assets will be transferred within 45 days in Corpus Christi and 30 days in Milpitas, Marshall said. EarthLink has consumer subscribers in both cities and will continue to serve them for 30 days, after which it will offer them special deals on its dial-up or broadband Internet services, he said. EarthLink will refund all payments for home equipment and prepaid service.

Corpus Christi built its own Wi-Fi network and sold it to EarthLink in March 2007 for about $5.3 million. EarthLink was chosen to build the Milpitas network in March 2006 and launched it in December of that year.