EarthLink Delays Muni WiFi in Houston

It appears that EarthLink is re-evaluating its municipal wireless plans in Houston, which, at 640 square miles, represents the largest muni system so far contracted. As part of the deal, the city agreed to pay EarthLink $2.5 million during the next five years to serve as the anchor tenant. That, it turns out, may not be enough to make the project worthwhile. The Houston Chronicle reports that EarthLink has delayed the start of construction and may be having doubts about the ultimate success of the operation. The Chronicle reports:

But EarthLink officials, who declined to comment for this story, have expressed unease recently about the financial viability of wireless projects, which have yet to prove on a scale as large as Houston’s that they will draw enough customers to make a profit. The project here is expected to require an investment of about $50 million, according to EarthLink and city officials. EarthLink officials have not publicly discussed Houston’s network in particular in recent months. New CEO Rolla Huff said in late July the company is reviewing its business model and will not accept new projects until officials are confident they will get their money’s worth. “The Wi-Fi business that’s currently constituted will not provide an acceptable return. We’re actively exploring ways to scale this business more economically,” Huff said during a conference call with analysts. “You can expect that we’ll scale back both new-build capital as well as ongoing operating expense structure.”