Wednesday, July 26, 2006

Anaheim's first taste of EarthLink muni Wi-Fi

ZDNet has a short piece about EarthLink's Anaheim roll-out. It is nicely balanced between the hype and the hassle that is intrinsic in the municipal WiFi experience.

I liked the interesting parallel between Earthlink's $21.95 a month tariff and The Cloud's recent announcement of an £11.99 all-you-can-eat package in the UK. These rates are clearly aimed at displacing wireline solutions: in the UK you are required to pay at least £11 for your telephony line BEFORE you can even add broadband (for somewhere between £10 and £20). The question is whether they are maintainable rates for the WISPs, or if they are loss-leaders to build a market and win hearts-and-minds?

Earthlink's investment in Anaheim to date is estimated at $6M and they claim to be able to make profit in 2 years. They are betting on 15K - 20K subscribers and a handful of "day-trippers". In my opinion this is incredibly optimistic given that their projected coverage is only 340K people - are 6% of these people really going to sign up, and do so in the next 2 years?

However, if these companies can recoup their investment in anything less than 10 years, they will be outperforming the mobile operators who bet the farm on 3G and are unlikely to see it turn a profit for a long time to come.

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