EarthLink Takes A Deep BreathEarthLink Takes A Deep Breath

Taking a breather in a hyperventilating market, EarthLink says it will focus on current municipal wireless projects and consider bidding on new citywide systems "on an individual basis."

The shift came the same day EarthLink reported a loss of $30 million in its most recent quarter on revenue of $324.4 million.

EarthLink is among a raft of companies investing millions of dollars in city Wi-Fi networks despite unproven profitability. EarthLink will continue with projects it's started, including a network in Houston. "We're still going full steam ahead," executive VP Donald Berryman told the Houston Chronicle.

MetroFi--a startup with contracts for several Wi-Fi projects, including one in Portland, Ore.--has shifted its business model away from underwriting the total cost of the networks, according to reports. The company now wants cities in which it provides free, ad-supported Wi-Fi to commit to service levels in advance.

The EarthLink and MetroFi moves suggest that reality is sinking into the metro Wi-Fi market.

EarthLink, which has sought a way to expand its business beyond Internet access, has partnered with Tropos to build some of the largest wireless networks. It's also teaming up with Google on a free network in San Francisco that's been dogged by slow contract negotiations and City Hall politics.

Says wireless consultant Craig Settles, "The era of the vendor-financed muni network may be coming to an end."