
After much negotiation, Earthlink (NASDAQ:EZNK) now has a four-year deal to build a WiFi network in San Francisco. It will, in fact, be the biggest project of its kind.
It will mean free access for its citizens (for 300 Kbps rates). There will, of course, be paid services (for higher bandwidth). Google Inc.(NASDAQ:GOOG) will help monetize things with advertisements.
I had a chance to interview Craig Settles, who is the author of Fighting the Good Fight for Municipal Wireless. His take:
One of the big dangers of the situation in San Francisco from the hype that portrays this as free wireless access for all. While technically true to a point, wireless access at a speed that's going to benefit businesses, government workers and anyone else with serious mobile computing needs is definitely not going to be free. This pandemonium over free is fueling un-realistic expectations within San Francisco and among officials in other cities.
The second danger you're having people's expectations rise assuming that this is a done deal, which is far from the case. There is a movement for an alternative business model in which the city owns the network. And because the city's approach to doing it needs assessment and technology due diligence for the network was lacking, there's enough dissatisfaction and activist criticism that final approval of the contract by the Board of Supervisors is not assured.
Unfortunately, EarthLink, through no fault of its own, is caught in the middle of what could be an ugly showdown. But since they went through a lengthy process with getting City Council approval in Philadelphia, this experience may enable EarthLink to better navigate successfully through these negotiations. There's a valuable lesson here to other cities, which is do a better job getting your ducks in order. Political and constituent consensus on these networks needs to be hammered out before the RFP is released.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.










