Corpus Christi Disconnects EarthLink

by Cassimir Medford on 15 April 2008, 13:20

Categories: Media - Communications - Finance
Topics: texas , earthlink , craig settles , Muni Wifi , Cassimir Medford , Corpus Christi , John Sendejar

 
The city of Corpus Christi, Texas, on Tuesday reacquired responsibility for a municipal Wi-Fi network it sold to national Internet service provider EarthLink a year ago for $5.3 million.

The unusual arrangement was initiated by EarthLink, which is re-evaluating its involvement in the management of citywide wireless networks, a popular concept that has run into problems in a number of cities in the U.S.

Industry analyst Craig Settles sees EarthLink's divestment  as an opportunity for Corpus Christi and other cities to reassess their wireless goals as they are now "burned, weaker, and wiser."

The concept of free or almost free Wi-Fi for the masses has proven unsupportable under the kind of joint municipal and commercial arrangement undertaken by cities such as Corpus Christi, said Mr. Settles, president of Successful.com.

The Corpus Christi network was built initially for automated water and gas meter readings, but in March 2007 the city saw public and commercial WiFi potential and sold the network to EarthLink and became the ISP's anchor tenant.

Since then EarthLink has had a change of heart about its arrangement with a number of cities including Corpus Christi and informed the city of its desire to opt-out of its contract.

The city decided to accommodate EarthLink, and negotiated what seems like a good parting deal.

EarthLink paid Corpus Christi $3.71 million in cash, which means it still owed $1.59 million. EarthLink made $1.76 million in network improvements and will pass on $860,000 worth of radio equipment.

No money will change hands in the reacquisition of the network and the city estimates that it has netted $3.19 million on the deal.

"The city will forgo EarthLink's remaining payment and take the network back with all its assets," said John Sendejar, acting general manager for the city's wireless corporation. "Given the circumstances, we feel that these are good conditions to reacquire the network."

Except for the management of 10 hotspots which are part of EarthLink's legacy, Corpus Christi will use the network for municipal services and steer clear of consumer Wi-Fi.

The city will use the network primarily for services such as meter reading, traffic video, and restaurant inspections.

It plans to add asset tracking, automated vehicle location, and remote monitoring among other municipal applications, and the network would be run as a sort of public utility rather than as a commercial business.

"The good thing about municipalities is that they collaborate, but when bad ideas are circulated it is really bad because ideas such as free wireless take root," Mr. Settles said. "Now we are seeing ideas grounded in more sound, replicable reality."