City wireless on schedule despite cuts
Wireless Philadelphia said yesterday that its plans to roll out the country's largest wireless Internet hotspot would continue on schedule, despite sobering news from a key business partner.
Wireless Philadelphia said yesterday that its plans to roll out the country's largest wireless Internet hotspot would continue on schedule, despite sobering news from a key business partner.
EarthLink, which will provide Internet services for Wireless Philadelphia as it rolls out high-speed wireless access to the Net citywide, said yesterday that it would cut 900 jobs and close four offices, including one in Harrisburg. The drastic cuts are an attempt to stem costs as the company fights for new customers against stiff competition.
They follow an announcement earlier this year that EarthLink would wait to see how well its current municipal wireless projects do before deciding how to roll out similar networks elsewhere. Yesterday, Chicago officials said that they will shelve a plan to blanket the city's 228 square miles with wireless broadband Internet because it is too costly and too few residents would use it.
But Wireless Philadelphia, which was one of the early announced attempts to build a municipal Wi-Fi network, said its project would be unaffected.
"Despite this announcement," wrote chief executive officer Greg Goldman on the Wireless Philadelphia blog, "the Wireless Philadelphia network deployment is on schedule, and is expected to be completed by the end of this calendar year as planned."
"We are extremely pleased that Philadelphia remains the showcase city for municipal wireless networks," Goldman wrote, " . . . and we look forward to working together with EarthLink to complete the buildout and deploy the network."
EarthLink's moves come as the company continues struggling to generate revenues as dial-up-access customers turn to high-speed alternatives from cable and phone companies.
More actions could be announced by the year's end, but no more cuts are expected, said Rolla P. Huff, the Atlanta-based company's president and chief executive. As part of the plan, EarthLink also said it will repurchase $200 million of its stock.
EarthLink shares climbed 7 percent on the news.
"While we see this as an important first step . . . we are only eight weeks into the process of repositioning EarthLink for the future," he said. "These changes get our cost structure in line, but there is much more to do."
Like many other Internet service providers with roots in dial-up access, EarthLink has sought to diversify its revenue base.
EarthLink does resell some high-speed services, but phone companies in particular have been able to offer cut-rate prices.
EarthLink also faced questions over disappointing results from its Helio project, a wireless joint venture with SK Telecom of South Korea. The company has committed to invest $220 million in Helio and has said it could spend another $50 million on the project, which was blamed for quarterly losses.
In July, the company cut its 2007 revenue estimate after reporting losses related to Helio.
