Houston went through an elaborate process of bidding and approvals for a city-wide wifi deal that is now dead. Earthlink found it cheaper to pay The 5M contract penalty than to build the network. First the facts, and then I’ll move on to why this is the city’s fault and we got what we deserved. (thanks for the heads up Katie)
With little fanfare, the City of Houston’s wireless network deal with EarthLink
Inc. has gone dead.
The Atlanta Internet service provider last week said it was not making any
future investments in its $40-million municipal wireless business.
In August, when EarthLink (NASDAQ: ELNK) announced it would cut 900 jobs,
Houston city officials said the citywide
Wi-Fi network was still in the works despite already being behind schedule
by about three months due to infrastructure planning.
Houston city officials were unavailable for comment.
So what went wrong? Well, Earthlink, a COMPANY, couldn’t make money on the deal. The balance sheet said "the negotiators were using bad numbers and the city hood winked us." So they backed out. Which if you were an Earthlink shareholder is exactly what you would want them to do. So that part is a no brainer.
How did we get here? The bidding process was intense and lengthy.