Big City MuniFi and Sand Castles - Fun While They Lasted

1. EarthLink was uniquely desperate, and took Big Risks because they expected Big Rewards. As a non-facilities based ISP in early 2005, EarthLink was in a bind. They didn't have a broadband network, but they needed one, and in a hurry. They were losing dial-up subscribers and their revenues were dropping, with no end in sight. Then in Summer 2005, the Supreme Court in the Brand X decision, and the FCC following, allowed cable and telecom companies to close their networks to third-parties. See Pass the Brand X, Please and DSL Ruling Will be a Landmark.

So when EarthLink's contracts expired, there would no longer be a guarantee that they would have access to the network facilities they would need to provide their customers with broadband, the new direction for the Internet. Their customers were converting to broadband, and without facilities, how would EarthLink be a player in a changed market? Their answer was Big City Muni Fi, and EarthLink began a high-risk experiment to build out large cities with a new type of network that they would own. It was a unique set of circumstances that made a large risk - huge citywide unlicensed wireless networks - seem like the way to go. Perhaps it was for EarthLink, but not for many other companies. The pull back applies more to circumstances at EarthLink than to a general market failure.

2. Cities' over-reliance on EarthLink and a unique set of circumstances. The game changed when EarthLink came to Philadelphia and said "we will build this network you want for free - no out of pocket expense for the City." As long as somebody else was taking the Big Risk (EarthLink et al), it looked like cities would get a Big Reward without betting a comensurate amount. That is a rational process, if the circumstances hold, but as many suspected, they were not meant to last.

But the prospect of free Wi Fi was so enticing, many city leaders wanted to believe that it was possible to get something for nothing, and they felt the political heat to get after it, so they suspended their disbelief and charted a course to see if they could get the same deal. But EarthLink had limited resources to begin with, and only a few cities could get a deal like that, if indeed the deal lasted. So the gold rush was on, a race to get a free network. When the music stopped, you didn't want to be left standing. Quick, get an RFP out on the street.

The mistake on some cities parts was not in pursuing their Plan A, but rather in not having a sound Plan B - developing a rational study of the underlying problems that called for a Wi Fi solution, principally, the Digital Divide, and spending time and effort to develop a set of alternate plans should the Plan A fall through. That's where we're back to now. The mistake here was in starting off a new risky venture with very large cities, rather than multiple experiments in smaller cities. The other mistake was in focusing on Digital Divide and residential Internet access, and in hoping to get something for free, or way below market value. That says nothing about smaller cities, or cities that pay for infrastructure they value, or projects that are based on sound business planning.

3. The process took longer than anyone expected. Nobody ever accused city's of going too fast in their procurement processes. And that goes double for large cities and large projects. When it came to large city Wi Fi, the politics came into play and slowed things down even further. EarthLink's plan to build out large city networks had several flaws, but a big one was in putting most of their eggs in just a few baskets. In partnering with the largest of cities, where their deals would be subject to intense public scrutiny and at risk of being held hostage by one or more political groups with an agenda, they faced even greater risk of having their project sidetracked. See San Francisco especially and its delays amid political rancor. The mistake was in thinking that this would be easier than it proved to be. But just because something is difficult, doesn't mean it's not worth doing, it just means that fewer people will be motivated to undertake the task.

As with any gamble, there's always the chance of losing. That's why it's called gambling. And as the saying goes, " the bigger they are, the harder they fall." By shooting for the moon with a focus on very large projects, EarthLink rolled the dice and took a fatal step. By getting caught up in hype and betting on getting something for nothing, some of the larger cities spent unnecessary effort on a low-probability outcome and hoped for an easy ride.

I can look at the snapshots of sandcastles I've built on summer vacations past, see the sunburned shoulders and happy faces, and cherish the memories of the good times had with my small children, now growing up way too fast. Those memories and good times are the value I gained from those activities, as the sandcastles themselves never made it past the next incoming tide.

Similarly, we can take a second look at the energy and creativity of the past three years and take a closer look at the potential of new technologies and new business processes. We can change some of the disproved assumptions and try some new experiments. There is no reason to stop trying to find solutions and there is no reason to castigate ourselves and others for trying to make a positive change. But we should not regret the loss of a fantasy, and a return to reality.

The most important thing is to see these past three years in the glowing wisdom of hindsight. We have good memories and great lessons learned - there is no wasted effort if we analyze what went wrong and maintain momentum to bring in broadband in new ways. Let's not lose sight of the value that was created by Big City Wi Fi projects, nor lament for too long sandcastles that are now washed away.