EarthLink’s Citywide Wi-Fi Gamble is a Calculated Risk

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EarthLink’s Citywide Wi-Fi Gamble is a Calculated Risk

7:30 am on June 6, 2006 | Category: Business, Wireless Technology, Telecom Services, Internet, Wi-Fi, Editorials

Lacking its own wireline broadband network, dialup ISP EarthLink, has lost a significant portion of its customer base over the past few years.

A recent spike in broadband adoption, combined with prices hitting rock bottom in the dial-up industry, has forced EarthLink to seek out a new and vastly different business model. The company has made an attempt to resell the broadband offerings of cable and telecom providers, but can’t make a profit without charging a $5 to $10 monthly premium, something that obviously doesn’t appeal to prospective customers.

With the dialup market continuing to shrink, EarthLink has now started venturing in to the cutting edge world of citywide wireless networking. By providing wireless broadband service throughout a metropolitan areas, the ISP hopes to capture both residential and enterprise customers, and become a viable alternative to DSL and cable internet plans.

After winning contracts in Philadelphia, San Francisco, and New Orleans, EarthLink’s mesh Wi-Fi prospects are looking pretty good. There’s no doubt that it has found a way in to the mesh Wi-Fi market, but the question is whether this largely unknown market is strong enough to be profitable.

If a significant portion of internet users are willing to pay about $21/month (less than the cost of most DSL offerings) for wireless broadband service, EarthLink could be on the ground floor of one of the most exciting and groundbreaking tech markets ever. If customers aren’t interested, however, the company will have sacrificed its quickly mounting investment.

There’s no doubt that entering citywide Wi-Fi is a gamble, but for a well-established ISP like EarthLink, it can also be a smart and calculated risk. In the long-term, sticking to dialup is a recipe for failure, and building a wired broadband network is not a feasible option for an independent ISP.

Ultimately, going wireless is probably one of the smartest and most business savvy moves the company could make in these difficult and unpredictable times. How things play out will depend on market conditions, but at least EarthLink has made an investment in the future, rather than becoming a thing of the past.