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<http://www.pcworld.com/article/id,136593-c,wirelesstechnologyservices/article.html>

   EarthLink Inc.'s current contract to build a municipal Wi-Fi network
   in San Francisco appears to be dead following a restructuring of the
   struggling Internet service provider.

   The deal, hammered out in months of negotiations last year and
   completed in January, calls for EarthLink to build a citywide network
   at no cost to the city and sell high-speed service to residents while
   Google Inc. provides a free, slower service over the same network.
   But after announcing layoffs of nearly half its workforce and a
   gloomier financial forecast, EarthLink said Wednesday it won't invest
   any more money in that business model.

   "We will not devote any new capital to the old muni Wi-Fi model that
   has us taking all of the risk by fronting all of the capital, then
   paying to buy our customers one by one," President and CEO Rolla Huff
   said on a conference call Wednesday morning.

   That includes currently planned networks where the company hasn't yet
   made capital investments, EarthLink spokesman Jerry Grasso confirmed.
   In San Francisco and other such cities, networks would have to be
   built under new arrangements.

   "We will approach them to discuss the needed changes to the business
   model," Grasso said. He declined to comment on the state of
   discussions with any particular city.

   San Francisco's deal with EarthLink has yet to be approved by the
   city and county's Board of Supervisors, where it faces fierce
   opponents. The deal is due for a vote in the Board's Budget and
   Finance Committee next week that could send it on for full board
   approval. But the changes at EarthLink appear to make the current
   contract a dead issue.

   EarthLink's municipal Wi-Fi woes come as the company struggles across
   most of its businesses and as the overall climate for municipal Wi-Fi
   changes. The promise of free networks supported by advertising or
   residential subscriptions has faded, and EarthLink and other network
   providers are looking to local government as "anchor tenants" that
   support the projects by buying services. Chicago, which had been
   talking with EarthLink and others about a citywide Wi-Fi project,
   dropped the plan this week, citing high cost and low subscriber
   interest. 

   [MORE]

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