Houston's Wi-Fi Network Deal Dead

HOUSTON -- A public wireless network for the city of Houston is apparently dead, KPRC Local 2 reported Wednesday.

EarthLink, the company that was supposed to set up the Wi-Fi network, announced it is not doing that type of service anymore.

Houston city council approved a plan to partner with EarthLink to build a municipal Wi-Fi network in February.

But the deal has been on life support for the last few months, after the EarthLink renegotiated it, agreeing to pay the city $5 million compensation.

"They had a change in their corporate leadership, looked at the business model and for whatever reasons decided they couldn't make it work financially," said Frank Michele with the mayor's office.

EarthLink recently nixed similar deals in San Francisco and Philadelphia.

The problem is public and private partnerships require a big investment but return less profit.

"You've got city bureaucracy and you've got another company who are trying to compete on the same playing ground with all these established providers who have infrastructure, have the wires already out there and have the subscription base," said Barrett Canon with Houston Wireless Users Group.

The city of Houston already provides some free Wi-Fi. The central library branch is one location and the plan is use money from the settlement to set up other locations.

But it will not be near the 95 percent saturation citywide called for in the EarthLink deal.

It also could be awhile before private companies can match the price -- the monthly subscription to the city network would have been $12 or less.

"That should be allowed to every citizen because it would be just a very, very good benefit to have," student Daniel Dyer said.

The city is going concentrate now on making low-cost Wi-Fi available to senior citizens and low-income families.

EarthLink released the following statement.

"EarthLink today announced that it would begin a process to consider its strategic alternatives for its municipal wireless business. After thorough review and analysis of our municipal wireless business we have decided that making significant further investments in this business could be inconsistent with our objective of maximizing shareholder value," said Rolla P. Huff, EarthLink president and CEO."

"Accordingly, at this time, we are considering our strategic alternatives with respect to this business," Huff added. "EarthLink will seek to work closely with the municipalities in which it has operations as it considers these alternatives. The net book value of the assets attributable to EarthLink's municipal wireless business is approximately $40 million."