RESEARCH TRIANGLE PARK, N.C. – Like lemmings, Internet Service Providers such as EarthLink plus tech giants Cisco, Nortel and Google have followed the herd toward the gold mine of promise seemingly offered by WiFi networks.
Now, the new chief executive officer at EarthLink is jumping away from the stampede before his company goes over what could potentially be a financial cliff.
Rolla Huff, who took over the Atlanta-based ISP in June, told the Atlanta Journal-Constitution last week that he is chilled, not hot, about building metro area networks based on wireless fidelity technology.
“The WiFi business, as currently constituted, will not provide an acceptable return,” Huff said.
The caveat, of course, is “as currently constituted.”
EarthLink, with projects from Philadelphia to Texas to California, has been among the leaders in the WiFi buildout. Working with cities as partners, EarthLink has struck deals whereby it invests in infrastructure to deliver wireless broadband while cities offer support through buying accounts and providing vital support such as rights to put WiFi antennas on city property.
In agreeing to build the networks, EarthLink also said it would offer discounted access to lower income residents and allow competitors to use the network.
But most of these deals were struck before Garry Betty, Huff’s predecessor, died of cancer in January.
EarthLink also has run into a great deal of resistance from some people within city government in building a network in San Francisco. Plus, as the metro WiFi boon has grown, privacy rights groups have been raising concerns.
Beyond WiFi objections, EarthLink is also bleeding serious red ink due to its wireless venture Helio. EarthLink agreed to put another $30 million into the joint venture along with partner SK Telecom last week. The Helio losses pushed EarthLink into the red, according to its quarterly earnings report.
The ISP’s troubles don’t start there. It lost more than 700,000 customers when a wholesale deal with Embarq wasn’t renewed. And EarthLink’s dialup Internet business is withering on the vine.
Into the breach of red steps Huff, and he’s calling a time out of sorts.
Huff said Thursday that new WiFi projects are on hold. He also told investors he would review EarthLink’s other businesses and make recommendations in the near future.
As for now, Huff is just saying no to the metro gold rush – until he at least sees some real “gold.”