Houston WiFi, the next stage

So we know that EarthLink is basically abandoning the municipal WiFi market, and we know that the original deal the city had with EarthLink is more or less kaput, in spirit if not yet in legal terms. Where do we stand now? Unclear.

[The City will] use part of the $5 million penalty fee that EarthLink paid in September to finance a “digital inclusion” program intended to help students and the elderly in low-income neighborhoods access the Internet.

“One of the goals of the WiFi plan was to bridge the digital divide, and because of the city’s good contract, we have substantial money to invest in that,” Mayor Bill White said Tuesday.

EarthLink paid the $5 million penalty for missing a deadline to begin building the project earlier this year.

Under plans being drawn up by the city, $3.5 million of that penalty fee would go toward creating free, WiFi hotspots in 10 neighborhoods and helping residents there acquire equipment and training to use the Internet, said Richard Lewis, the city’s director of information technology.

Those neighborhoods have not been chosen, he said, but the first should see access nodes by March. He said he hoped corporations will come forward with money or equipment to supplement city funds.

The remaining $1.5 million will go toward other city wireless projects, including public safety, Lewis said.

EarthLink officials admitted in September they were not ready to start building the network in Houston, which was supposed to span the city’s 640 square miles.

The $5 million penalty bought the company another nine months to decide whether to continue the project.

Because the company does not face any further penalties, there is wide speculation that it will drop or alter the $50 million Houston project. White said he had doubts about whether EarthLink will follow through on the contract.

[…]

Unlike some other cities where EarthLink has wireless plans, the city of Houston has agreed to serve as the company’s anchor tenant, paying $2.5 million over five years to use the network.

But since the subscriber model has yet to prove it is financially viable, even Houston’s anchor tenancy may not be enough for EarthLink to make money here.

Let’s assume that EarthLink ultimately decides to bail on Houston. What are the city’s options at that point?

1. Find another provider, perhaps a local consortium like the one that lost the original bid to EarthLink. As I noted before, there’s still a lot of political support for the citywide WiFi idea. The main question here is whether there is another vendor to be found. It’s not clear yet whether the entire concept of citywide WiFi is being abandoned by the industry, or if it’s just not at a point of viability yet, but if EarthLink won’t do this, I’m not sure who will.

2. Scale it back to something smaller, cheaper, and less ambitious. Maybe just make downtown a WiFi zone, as Austin did, with some “digital inclusion” hot spots in low income neighborhoods as described here. Or just do the neighborhood hot spots. This would accomplish something, and would put some infrastructure in place in the event that a citywide extension becomes feasible again, and would likely be cheap enough to be provided by the city for free, thus making up a bit of the sting for scaling the big vision down.

3. Give up completely and reallocate all dedicated resources elsewhere, as Cory suggests. This is obviously the cheapest solution, and as with #2 still allows for the possibility of trying again if conditions become more favorable.

I’d guess #1 is the preferred option for the city. If it’s not possible, look for some form of option 2. I can’t see a complete abandonment happening, given that the amount of public money involved is fairly small and the lack of any organized opposition to the citywide WiFi initiative. What do you think?

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