Citywide Wi-Fi goes bust - Top Stocks
 
Search Top Stocks:

Citywide Wi-Fi goes bust

Posted May 14 2008, 02:06 PM by Kim Peterson
Filed under: , , ,
Rating:

Citywide Wi-Fi networks sound like a fantastic idea. Take your laptop with you to the park or the grocery store. Drop your home Internet connection. Look up directions in your car (parked, of course). More than 150 U.S. cities planned to roll out municipal Wi-Fi at one point, but the reality is setting in: these networks don't work.

Latest case in point: EarthLink, which is shutting down its Philadelphia Wi-Fi network in 30 days. Earthlink even tried to give away the network, but couldn't reach a deal with anyone. Too bad for EarthLink, which plunged deep into the municipal Wi-Fi business when its dial-up revenue fizzled. Shares dropped after the announcement, but have climbed nearly 3% today to $9.36.

Why do these networks fail? The business model is unworkable, suffering a triple whammy of costly equipment, a lack of interest and better technology on the horizon. Networks in cities like Houston can cost $50 million to build. People simply haven't signed up, either, choosing instead to stick with cable or DSL for Internet access. And a new technology called WiMax promises fast wireless access over a range of several miles -- access that's more reliable than the spotty service many city Wi-Fi networks offered.

Was there a realistic investment bet in there? Yes, but perhaps unforeseen was the unproductive pairing of big business and municipal governments. Bureaucracy, politics and cost overruns dragged these projects down.

One of the most noble goals of municipal wireless networks was conquering the digital divide. Bringing free, or at least cheap, Internet access to low-income families. Opening the Web to all. But a check around the country shows that citywide Wi-Fi is slowly dying. San Francisco's plans collapsed. EarthLink is shutting down its New Orleans network, and will hand over others to their respective cities in Corpus Christi, Tex., and Milpitas, Calif. Anaheim may be the next to go.

That's not to say that every muni network is a failure. Minneapolis' network is successful, albeit slow, and was crucial during last year's bridge disaster. These networks may be a solution for some cities, but they don't hold the same promise anymore.

Comments

 

After having a close association with muni wi-fi engineering I see the problem of government not thinking like a business and blame this reason for muni wi-fi's failure.  How many cities have a utility (water, trash, gas, elec)?  Here they're given the opportunity to have an income stream by adding to the utility product line and offer wi-fi.  So many possibilities bogged down by bureaucracy and a lack of entreprenurial moxie

I think the people would be interested if there was more publicity about the services, it is just the fact that most people do not know about them. Look at the shear numbers of people that go to a Starbucks or McDonalds for nothing more than a WiFi hotspot... it's only becuase they KNOW through marketing that the service is available there. My 2 cents-

Way to screw up Earthlink.  This is why I dumped your stock a while back.  The reality is, it is workable you just need to get creative.  Stop thinking in a box.  Why isn't Helio a monster in the US right now?  You always start out with good steam but peter out fantastically.  It is the antiquated model of business you are using which limits your revenue growth.  I used to love your stock and you have done marginally well over the last year or so but I think you could have done better.  I know how I would make money with your products and services because I work in Philly and use a cell phone.  You see where I'm going with this?

That's right, you missed the boat by keeping Helio your dark little secret and relegating it to the lower income or pay-as-you go base.  Where is the gsm?  Where is the cell phone that connects to your city wide Wifi for one low low price per month for cheaper calls.  Use the technology you have for goodness sake.  Retool for business!  Philly is a large city for that we need smart phones and wifi everyday.  I can get a sprint smartphone and unlimited data bandwidth for 100 a month.  If you off the same trunk why aren't you offering something better with Helio and enhance it within cities you have muni wifi?  Imagine taking the load off of each business in Philly where they have their own IT department managing their internal networks who pay an arm and a leg for wired services.  You can replace their networks with inexpensive router boxes (they are like 2 inches by 2 inches now) and use that bandwidth to blanket or overlap in the city.  

Anyhow, just my 2 cents.  I'd love to get more of your stock if I thought it would go up and that you get from "A" (good thought) to "B" (execution).

Respectfully,

Derek Clayton

Well i hope they dont give up on our city wi-fi in Oakland County Michigan i as well as other citizens look foward to getting Wi-fi in our community.

nothing is EVER for free...

let's face it - just like not everyone can afford to own a home, not everyone can afford wifi.  I am so tired of trying to make everyone "equal" in material posessions.  Equal rights are very different than equal material status.  Some one will always have more of something than someone else - AND THAT IS OK.

Good Riddens, New Orleans City Wi-Fi connected about 25% of the time and if you were sucessful in connecting the connection would be promptly dropped when you tried to navigate to a different page.

another community benefit lost to the rampant deriliction and mismanagement of tax revenue, so entrenched in America that the only thing that can be viewed as positive has to do with gross profit (emphasis on the gross part) of some corporation's CEO, because it has no immediate winfall, the collective community value is not considered at all

Too bad.  It'll happen, it's just too early right now.

As an IT Systems Analyst... this collapse doesn't really surprise me.  For most people DSL is pretty cheap still, at least compared to cable.  WiMax should really start to take off in the next couple of years.  

Send a Comment

Comments must be directly related to the blog entry. Comments with offensive language will be deleted. Your e-mail address won't be displayed.

(please, no HTML tags. Web addresses will be hyperlinked):