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Earthlink Troubles Spell End Of MuniFi As Third Pipe

[qi:011] EarthLink (ENLK), the beleaguered Atlanta-based Internet service provider that was recently forced to resort to draconian measures — including pulling back on some of its next-generation efforts — has been one of the biggest champions of “MuniFi as the third broadband pipe movement.”

Fighting the cable and phone company duopoly, it was one of the few companies willing to spend dollars and build out MuniFi networks. But given that it’s been hemorrhaging dial-up customers — while at the same time spending money like a drunken sailor — EarthLink had no option but to scale down its MuniFi efforts.

EarthLink’s new CEO, Rolla Huff, is in no mood for funding projects that, while promising, are failing the subscriptions test. He claims, however, that the company isn’t giving up completely. “We have repositioned the Wi-Fi business to have real option value without the high cash spend that we were incurring,” he said in a conference call with analysts and media.

Reports have surfaced over past few days saying that some of the big EarthLink MuniFi projects – Alexandria and Arlington, both of Virginia; Houston; Chicago; and now San Francisco are either on hold or have been suspended. And Don Berryman — who headed up the MuniFi business — is gone and isn’t going to be replaced.

“What you won’t see any more is a new entrant in the telecom business coming in like EarthLink did and trying to build green-field networks and compete against the incumbent to build a third pipe to the consumer,” Ron Sege, CEO of Tropos Networks and a hardware supplier to EarthLink, told the IDG News Service. He argues the incumbents are going to offer WiFi services as tack-on options to their broadband offerings instead.

Don’t count on it. With the biggest commercial competitive threat out of the equation, there is very little incentive for incumbents — already in a bitter price war of their own — to offer services that involve capital expenditure commitments. Some of them have already started to backtrack.

The MuniFi movement has had its issues, notably a misplaced focus and expectations were simply too high. The MuniFi offering from EarthLink, for instance, had to be priced significantly lower than the low-end incumbent broadband plans. The end users don’t seem too enamored by the whole concept.

Supporters of MuniFi point to the successful Google-backed network in Mountain View, Calif. Yes, except it is free to consumers, and is in tech-centric Silicon Valley, where people don’t leave home without their laptops and have an insane need to stay connected.

“Consumers are a weak play for Muni Wireless — expensive to get, more expensive to keep,” says Craig Settles, an independent analyst who tracks the industry.

On the hardware side of things, there is a mini-shakeout looming. Gear makers Skypilot Networks and Strix Systems, for example, are both rumored to have cut jobs in recent days. Why? A massive rethink of MuniFi is happening across the U.S., and the spending on gear is only going to decline.

In comparison, you have lower-cost and more sharply focused networks such as the one being seeded by Meraki that are finding traction and seem to be more economically feasible. What it all means is that the hype-season of MuniFi is over: It’s time for the business to get real and figure out, once and for all, what it can and cannot be expected to accomplish.

Or as MuniWireless writes: “the most successful municipal broadband projects typically involve a municipal department deploying a key application that delivers a clear return on investment.”

That third broadband pipe dream… time to wake up!

32 Responses to “Earthlink Troubles Spell End Of MuniFi As Third Pipe”

  1. The issue (Earthlinks lack of a Business Model)we have been stating all along is that they have selected the wrong technology (a one radio Mesh Node/AP) will not hack it in a carrier grade Wireless Network. 2 Radio networks already are showing signs of struggling to deliver bandwidth/throughput and cost effective services as demands on them increase. 3Mbps of Access after 4 hops does not a viable Mesh Make.
    All Earthlink was doing was helping Motorola Canopy Gateway business grow as they had to regenerate bandwidth every 3rd Node.
    I agree that WiMAX providers will leverage deployed Mesh systems to allow them to cover select Urban areas (where their 2.5Ghz radios will not penetrate-Foliage)with real Broadband services-They will not invest but will both use the Mesh and sell gateways links to them where needed.
    I will also predict that Cisco will not allow this Muni Wireless Mesh market to go away. They will buy this market (for their WLAN products)either directly or with IBM and a installation firm in order to maintain their dominance of this space.
    The only true Carrier Grade type Mesh Vendors todate are Strix (4 & 6 Radio)and BelAir (2 &4 Radios). With Cisco catching up to them in the late 2008 early 2009 time frame when they release their 3 or 4 radio Mesh product.

    Also, the Mesh Network providers have until 2010 to make this a busines after which the winners of the 700Mhz Spectrum being auctioned will deploy a Broadband Fixed/Portable and Mobile service that will effectively dominate most Wired and Wireless Broadband services with a fully Mobile product.


  2. MuniFi is not exactly dead. It is inevitable that all populated areas on the Earth will be covered with broadband speed wireless Internet access in the not too distant future. What is happening now is just the end of the first attempt / iteration.