Earthlink, Where's my WiFi?

Late last week, San Francisco delayed voting on the proposed Google-Earthlink municipal wireless network following comments from Earthlink's CEO about Earthlink's desire to offer the service under the current terms. The Earthlink CEO is quoted, "The Wi-Fi [wireless] business as currently constituted will not provide an acceptable return."

Earthlink's legacy business is providing internet access, traditionally through dial up connections, and in recent years through broadband connections. This legacy business has been under attack by cheap packaged broadband internet connections from telephone and cable companies. In the most recent quarter, Earthlink lost net 177,000 subscribers.

The company has been struggling to find a way to fill the void, spending on two initiatives- municipal wifi and MVNO wireless carrier Helio joint venture with SK Telekom. In the most recent quarter, their share of Helio's loss was $41 million. The company has recently committed to invest up to another $100 million in the money losing venture. The other popular MVNO Amp'd Mobile recently declared bankruptcy.

With their legacy business dwindling, and their two initiatives far from ready to start providing returns, the future is not looking bright for Earthlink.

Disclosure: no positions