Earthlink

Free muni-WiFi - Wireless Turkeys 2008

Phil Goldstein — Thu, 20 Nov 2008 09:48:40 -0500

Why is it a turkey?

It was supposed to be the next great broadband hope, but free muni-WiFi saw its major supporters shutter their operations in 2008. EarthLink and MetroFi shut down their networks after the cities they served didn't want to buy their networks outright and they didn't want to pay for any services.

What was the main lesson learned about muni-WiFi? Primarily, public access muni-WiFi is not the optimal business model. There wasn't an easy return on investment--at least in the near term. And the limitations of WiFi on a wide coverage basis made it difficult to offer a true broadband competitor to cable or DSL. In some areas such as Portland, residents were disappointed with the limitations of the network. Signals couldn't penetrate indoors and service was sparse throughout the city.

WiFi is now much more of a broadband extension, not a broadband alternative. Providers of broadband services and fixed-mobile converged services are accepting WiFi as a key part of their solutions.

Yet, muni-WiFi is reinventing itself in many cities where network operators are working with more sensible business models that include local government anchor tenants and/or a few other high-user tenants such as colleges and medical campuses. One of the common threads weaved through the successful deployments in many cities is that they have committed to using the WiFi networks for their own purposes whether it be to provide remote access for automate meter reading, control traffic congestion or public safety.

Tom Wheeler - Top U.S. Wireless Innovators of All Time

Sue Marek — Thu, 13 Nov 2008 10:21:40 -0500

As the former CEO of the Cellular Telecommunications & Internet Association, Wheeler is credited with evolving CTIA into the multi-million dollar trade association it is today. While at the CTIA, Wheeler became skilled at navigating between regulators, wireless carriers and technology vendors.

Wheeler, who served at the CTIA for 12 years before he left in 2004, is still very involved in the wireless industry, heading up Core Capital, a wireless investment firm. He is also a member of the board of several wireless firms. He represents Core on the board of Roundbox, UpdateLogic, LimeLife, Jacked and Twisted Pair Solutions. He is also on the boards of Earthlink and Helio.

Virgin closes Helio deal

Sue Marek — Mon, 25 Aug 2008 10:50:53 -0400

Virgin Mobile USA completed its planned acquisition of Helio. Helio shareholders SK Telecom and Earthlink have received shares and limited partnership units equivalent to 13 million shares of Virgin Mobile stock valued at $38 million. In addition SK Telecom and Virgin Group will each invest $25 million in Virgin Mobile USA. SK will have a 17 percent investment in Virgin Mobile and two seats on the Virgin Mobile board of directors.

The deal, first announced in late June, was contingent upon certain requirements--mainly that Helio had to cut its sales and distribution costs prior to acquisition. Virgin said all terms and conditions had been met and necessary regulatory approvals obtained.

For more:
- Read this release

Related stories:
Virgin buys Helio for $39 million
Helio closes all but one retail store

Will Virgin Mobile really benefit from Helio?

Lynnette Luna — Mon, 30 Jun 2008 03:59:11 -0400

Struggling MVNO Helio was able to avoid the humiliation of going out of business by finding a savior in Virgin Mobile, which announced its intention to purchase the company for a mere $39 million from EarthLink and SK Telecom for 13 million shares of Virgin Mobile stock. Moreover, the deal was even sweeter for Virgin because both EarthLink and SK Telecom agreed to invest $25 million in equity capital in Virgin.

Virgin says that the Helio deal will be good for the MVNO because it will allow the company to offer differentiated data applications and enter the postpaid market. Helio has approximately 170,000 subscribers with an ARPU of about $80 and a handset inventory of 85,000 devices valued at $17 million.

But you have to wonder how much of a difference such an acquisition will make on Virgin's competitive position in the long-run.

Virgin launched in the U.S. with a razor-sharp focus on the prepaid youth market, a strategy that CEO Dan Schulman himself in the past has said is a critical factor to the success of the MVNO because it differentiated the company from wireless competitors. Now Schulman says it is necessary to compete with a postpaid product with the help of the Helio acquisition because 20 percent of the firm's disconnects come from customers going to postpaid products.

But this move into the postpaid market, and it's recent launch of an unlimited minutes plan for $80, puts Virgin competing head-to-head with national operators for the higher class of consumers--a segment where the stakes are higher and competitors are even more fierce for these lucrative customers than in the prepaid market. Moreover, what if we see an all-out price war break out among the nation's operators? Can Virgin negotiate even better wholesale terms on Sprint's network? Plus, pushing into the postpaid market requires a better market presence, which translates into higher marketing costs.

These days, Virgin seems to be losing its differentiation by pitting itself against national operators. What happened to the edgy company that launched in 2002 with a half-naked Sir Richard Branson sliding into Times Square promising cool content and no BS pricing to the youth market? The Helio acquisition does bring 3G capability to Virgin, giving it the ability to differentiate itself once again with cool content such as video and music. But it has to tread carefully. Other MVNOs such as Amp'd Mobile that have tried to take on national carriers by differentiating themselves with content services have all gone out of business.

If Virgin doesn't keep its original business plan in mind as it uses Helio's assets, the acquisition will have little impact on Virgin's competitive position. --Lynnette

Investor group takes over Philly WiFi network

Lynnette Luna — Tue, 17 Jun 2008 16:35:07 -0400

Philadelphia Mayor Michael Nutter and Wireless Philadelphia officially announced today that they have reached an agreement with a local investor group called Network Acquisition Company LLC (NAC) to take over the operations of Philadelphia's Wireless Initiative. Under the terms of the agreement, NAC will assume operation of the existing EarthLink infrastructure and will expand the network as part of their plan to eventually bring free wireless to the city. In May, EarthLink pulled the plug on its $17 million municipal WiFi network in Philadelphia after failing to reach an agreement with the city to take over the network.

Rick Rasansky, local entrepreneur and co-founder of the Mid-Atlantic chapter of global wireless networking group Mobile Monday, co-founded NAC and led this transaction on behalf of the investor group. Rasansky worked with City Councilman Bill Green, the Mayor's Office and a number of government agencies to bring the deal together within weeks.

"Greg Goldman and Derek Pew from Wireless Philadelphia spoke at the inaugural Mobile Monday Mid-Atlantic event in September 2007, so our group was already well aware of the opportunities presented by the muni-WiFi infrastructure," Rasansky said in a press release. "When EarthLink decided to cease operations, we invited Councilman Green to speak to our May meeting, where he expressed his view that free city-wide WiFi was a 'must have' for the city, the region and its residents... We felt that the unique business and community opportunities that would be made possible by ubiquitous WiFi coverage in Philadelphia more than justified the additional investment needed to complete the network build, so we set out to bring together a group of local investors and businesspeople to keep the vision of Wireless Philadelphia alive."

According to Councilman Green, the efficient use of the network by the city itself could save the municipality $3 million per year in the short term and $10 million to $15 million per year in the long term. The network is 80 percent complete.

For more:
- check out Mobile Monday Mid-Atlantic

Philly gets 11th hour WiFi save

Lynnette Luna — Tue, 17 Jun 2008 12:17:36 -0400

Philadelphia's mayor is expected to announce today the 11th-hour save of the city's muni-WiFi network, which was shut down by EarthLink. According to industry analyst Craig Settles, head of Successful.com, Councilman Bill Green felt the network was a vital asset to the city so he initiated contact with potential investors back in May. Private investors structured a deal in which they are creating a company to finish and operate the network. The network will offer fee-based wired and wireless services for businesses such as the city's healthcare and college communities.

Philadelphia itself has the option to create RFPs for wireless and wired broadband services and the company will be invited along with other eligible providers to bid on the RFPs. The City could potentially become the network's largest customer. Wireless Philadelphia will have the same digital inclusion mission, though how it tackles this mission may change as a result of the new company's involvement. Basic WiFi service will be available to the general public for free wherever within Philly they can access it, but the service won't be supported by the provider or the city, Settles said.

In May, EarthLink pulled the plug on its $17 million municipal WiFi network in Philadelphia after failing to reach an agreement with the city to take over the network.

Stay tuned to FierceWireless for more on the topic.

Related stories:
No deal: EarthLink pulls plug on Philly WiFi. Philly WiFi story
How hard did EarthLink try to help its muni-WiFi customers? EarthLink editorial

MetroFi considers sale and end to muni-WiFi projects

Lynnette Luna — Mon, 19 May 2008 00:56:24 -0400

The shake-out continues in the muni-WiFi market as MetroFi indicated it is mulling a sale and ending its muni-WiFi initiatives in the nine cities where it operates WiFi networks. Like EarthLink, MetroFi is struggling to make any money on its muni-WiFi initiatives. EarthLink last week pulled out of Philadelphia, the latest in a string of pullouts.

Lucie Poulicakos, MetroFi's vice president of operations, told The Wall Street Journal that the company couldn't navigate the budget restrictions of these municipal projects. Like EarthLink, MetroFi struggled with the free and low-cost Internet service aspect of the business. MetroFi's biggest project, Portland, Ore., has stalled because of financial troubles.

Poulicakos said the company has approached the cities it serves, which also include Aurora, Ill.; San Jose, Calif.; and other Silicon Valley towns, with plans to sell their networks to them or another party. If no buyers emerge, the company will shut down the networks in 30 to 60 days. Cities were notified earlier in the week, and were surprised.

MetroFi's business appeared on shaky ground a year ago, when the company said it would no longer offer free public WiFi in newly contracted cities that won't commit to minimum municipal service purchases.

She also said that MetroFi, based in Mountain View, Calif., is considering options for itself, including a sale to a larger company.

For more about MetroFi's muni-WiFi struggles:
- check out this article from The Wall Street Journal (sub. req.)

It's official: Virgin Mobile USA is in talks with Helio

Brian Dolan — Wed, 14 May 2008 11:21:25 -0400

After a week of speculation and rumors about a possible tie-up between Virgin Mobile USA and SK Telecom's MVNO Helio, Virgin Mobile has finally come forward and announced that the two are in preliminary talks. Virgin Mobile's brief statement characterizes the talks as "in early stages" and cautions that no transaction may result. The MVNO said it will have no further comment on the talks unless a definitive agreement takes place. Just yesterday, SK Telecom denied reports that it was in talks with Virgin Mobile USA about a possible tie-up.

If Virgin Mobile USA were to acquire Helio, it would mark the end of an era: Now that Mobile ESPN, Disney Mobile and Amp'd Mobile have ceased MVNO operations, Helio is the last big MVNO in operation from the content-heavy class of virtual operators.

For more:
- read Virgin Mobile's statement about Helio talks

No deal: Earthlink pulls plug on Philly WiFi

Brian Dolan — Wed, 14 May 2008 11:06:28 -0400

Following up on our report earlier this week, Earthlink has pulled the plug on its $17 million municipal WiFi network in Philadelphia after failing to reach an agreement with the city to take over the network. Originally, reports claimed that Earthlink would give the city until the end of this week to come up with a deal, but now the company says no deal could be reached. City officials told the Wall Street Journal that the network would cost taxpayers millions of dollars each year.

"It's been an unfortunate situation," said Earthlink CEO Rolla Huff. "It was a great idea a few years ago... but it's an idea that simply didn't make it."

Earlier this year Earthlink announced that it was no longer interested in the municipal WiFi business. The Philadelphia network had reached about 80 percent of its build-out. Earthlink has already stepped away from contracts with San Francisco, Houston, New Orleans and others. The only big contract outstanding is now Anaheim, CA, according to Earthlink.

For more on Earthlink pulling the plug:
- read this WSJ report (sub. req.)

Earthlink to Philly: We will pull the plug

Brian Dolan — Mon, 12 May 2008 12:00:51 -0400

Earlier this year Earthlink announced that it was no longer interested in the municipal WiFi business, but after investing $20 million in a metro-wide WiFi network project in Philadelphia back in 2006, the company is still trying to disentangle itself. According to a report in Metro Philadelphia, Earthlink has given the city until the end of the week before it pulls the plug on the WiFi network, which has reach 80 percent of its build-out. Earthlink wants Philadelphia to devise a plan to take over the network or sell it to a third party by week's end. The company already stepped away from contracts with San Francisco, Houston, New Orleans and others. The only big contracts outstanding are Philly and Anaheim, CA, according to Earthlink.

For more on the deal:
- read this article from CNET

Helio: Losses up, revenue up too

Fri, 29 Feb 2008 06:59:56 -0500

Mobile virtual network operator Helio continues to hemorrhage cash...but on the bright side, its 2007 revenues increased 264 percent over the previous year. In its annual report to the SEC, Internet service provider EarthLink, which launched Helio in conjunction with Korean mobile operator SK Telecom, notes Helio lost $327 million in 2007 against $171 million in revenue; a year ago, the MVNO posted losses of $192 million on $47 million of revenue, which combined with 2005 losses of $42 million means Helio has now posted total losses of $560 million in three years. Helio ended the fourth quarter with slightly more than 180,000 subscribers, a 28 percent increase over Q3 totals. But while revenue still exceeded Helio's $140-$170 million guidance, and losses fell shy of its $340 million to $360 million guidance, EarthLink admits in the SEC filing it "may not realize the benefits we sought from our investment in the Helio joint venture."

The EarthLink filing goes on to note "We have made $210 million of cash investments in Helio. The financing of Helio's operations has adversely affected our cash position. In addition, Helio will require additional funding in the future and Helio has incurred losses and we expect Helio to continue to incur losses. In addition, Helio may not be successful in implementing and marketing its wireless voice and data initiatives, and there can be no assurance that these initiatives will be commercially successful. We cannot assure you Helio will be able to achieve or maintain adequate market share or revenue or compete effectively." -Jason

For more on Helio's 2007 results:
- read this Silicon Alley Insider article

Related articles:
Helio gets Buzzd.
Sky Dayton resigns as Helio CEO.
SK Telecom pumps another $270M into Helio.

Earthlink lost $111.3M on Helio last year

Fri, 08 Feb 2008 06:59:56 -0500

Because Earthlink reduced its investment in Helio, which it co-owns with SK Telecom, to zero during the third quarter of last year, the company will no longer record its share of the MVNO's net loss. For all of 2007, EarthLink's share of Helio's net loss amounted to $111.3 million.

In general, the fourth quarter included $32.1 million in losses related to muni WiFi, while the full year included $80.3 million in losses related to the discontinued operations related to the municipal WiFi assets. That compares to the $6.9 million and $20.0 million, respectively, during the fourth quarter and full year 2006.

For more on Earthlink's losses:
- read this press release

Helio CEO Sky Dayton steps down

Tue, 29 Jan 2008 06:59:57 -0500

Mobile virtual network operator Helio announced that founding CEO Sky Dayton has resigned his post, with president and COO Wonhee Sull named as his replacement. Dayton was appointed non-executive Chairman of Helio's Board of Directors--the company said he will remain actively involved in shaping its strategy and initiatives. "Helio has reached a point in its development where I feel the timing is right for this change," Dayton said in a statement.

Dayton's move will no doubt further speculation that EarthLink (the ISP he founded in 1994) is planning to sell its stake in Helio, which it launched in association with Korean operator SK Telecom. Last fall EarthLink president and CEO Rolla Huff reiterated the company's commitment to Helio: "I think that the investment that we've made there absolutely has value," Huff insisted at the time. "We have no plans to go out and sell it. It's a growing business. It's a business that we support."

In announcing Dayton's resignation, Helio also reported usage statistics for its nearly 200,000 subscribers, claiming an ARPU of $85 and a 2007 revenue run rate of over $240 million based on December actuals. Helio also reported:

An average of over 550 text messages per member per month
95 percent of subscribers access the web via mobile device
Each month, 60 percent of subscribers access MySpace via Helio and average nearly 500 page views
In December, subscribers uploaded photos from their device to the web at a rate of five times the industry average
57 percent of Ocean users downloaded Helio's exclusive YouTube application within two weeks of its launch -Jason

For more on Dayton's resignation:
-read this release

Related articles:
SK Telecom pumps another $270M into Helio
Helio squashes rumors of massive layoffs
Helio to succeed where Mobile ESPN failed?
Helio adds online content, feels the Heat
Helio reveals plans, partners for mobile gamingÃ‚Â Ã‚Â

EarthLink to cut still more employees?

Thu, 20 Dec 2007 06:59:57 -0500

According to reports from GigaOM and DSLReports, EarthLink is poised to have another round of job cuts, following a cut of 900 employees in August. The reports claim that even some senior executives could be let go. Rumor has it that EVP Mike Lunsford, CTO Jon Kerner and VP of production operations Eric Alfaro could all be departing.

For the full scoop:
- check out this article from DSLReports
- also read this post from GigaOM

Related Articles:
EarthLink not selling Helio stake, for now Article
EarthLink ends Helio funding Article
EarthLink may bow out of WiFi Article

ALSO NOTED: Muni-WiFi moving ahead; T-Mobile's latest Samsung handset; and much more...

Tue, 20 Nov 2007 06:59:50 -0500

> Muni-WiFi moving ahead despite Earthlink pullout? Article

> Sony Ericsson patents "drag and drop" feature for transferring files from one handset to another. Article

> T-Mobile USA launches the Samsung SGH-T439. Article

> AT&T to enhance U.S. Airways cargo tracking. Release

And Finally... Vodafone users now have access to virtual phones within the virtual world SecondLife. Article

Earthlink mulls whether to shed muni-WiFi biz

Mon, 19 Nov 2007 06:59:58 -0500

After cutting 900 jobs and closing several offices in August, Earthlink now is mulling an exit from the muni-WiFi business altogether. In a statement on Friday, CEO Rolla Huff said the company "decided that making significant further investments in this business could be inconsistent with our objective of maximizing shareholder value." Earthlink has long been looking to stem losses associated with its muni-WiFi business and its MVNO joint venture, Helio, with SK Telecom. In September, the company indicated it wouldn't invest anymore in Helio for now and revealed that partner SK Telecom will invest an additional $270 million in the MVNO.

Since August, Earthlink has bailed out of a deal to provide WiFi service to San Francisco and Houston. While Cincinnati halted plans for a muni-WiFi network amid Earthlink's struggles.Ã‚Â

The ISP said it is looking at "strategic alternatives" (aka selling) for the WiFi division, which it said was worth about $40 million. As it considers the alternatives, the company said it would work closely with cities it already has deals with.

To read more:
- check out this article from AP

Related articles:
Muni-WiFi market shakeout? ReportÃ‚Â
Earthlink drops out of SF WiFi deal Report

C&L: EarthLink's muni architect now at Civitium

Wed, 14 Nov 2007 06:59:52 -0500

Civitium hires EarthLink's former lead architect of its municipal wireless networks project, Jason Shannon, as its new CTO.

GigaBeam hires Michael Hinton as director of channels and alliances.

SK Telecom gains control of Helio

Mon, 12 Nov 2007 06:59:58 -0500

SK Telecom has effectively gained governance over its MVNO Helio, which up until now has been run by co-owner EarthLink. SK Telecom allocated $70 million to make the transition, but it's also pledged another $100MÃ‚Â for future devices and marketing initiatives.

Launched in May 2006 and led by EarthLink founder Sky Dayton, Helio reported a $192 million loss last year, with SK Telecom forecasting losses between $330 million and $360 million for 2007. SK president Kim Shin-bae nevertheless predicted in July that the MVNO would turn a profit by the end of 2008, citing projected subscriber totals of 200,000 by the end of 2007.

EarthLink CEO Rolla Huff denied rumors in late October that EarthLink would cut its losses and sell off its Helio stake. "I think that the investment that we've made there absolutely has value," Huff insisted at the time. "We have no plans to go out and sell it. It's a growing business. It's a business that we support. We clearly understood that putting needed cash into that business was not in the best interest of our shareholders from here on out. We're going to continue to be part of the governance structure and I think I've been saying all along, we believe there's value in this business."

For more on the shift:
- read this report from Engadget

Related Articles:
Helio to cut 100 jobs Article
SK Telecom to invest $270M in Helio Article

Helio: $52M in revenues, $92 million in losses

Fri, 26 Oct 2007 06:59:58 -0400

Earthlink reported the results of its third quarter and reassured analysts that it had no plans to sell its stake in Helio, which the company said "is continuing to roll out and ramp up its innovative wireless services." During the third quarter the MVNO brought in $52 million in revenues, up from $13 million this time last year, and produced a net loss of $92 million, also up from last year's $62 million. Earthlink executives also commented on the recent financing SK Telecom pumped into the MVNO and why Earthlink chose to back away from more investment in Helio.

"Earthlink is restructuring its Helio joint venture agreement with SK Telecom, thus eliminating the need for Earthlink to contribute additional money to that effort while maintaining a significant ownership position in that growing venture," CEO Rolla Huff said. "While the definitive amended joint venture agreements are still being finalized by our respective lawyers, the key economic provisions have been agreed to in principle. We believe this will result in our Helio investment having future value as Helio continues to grow."

"While we all know there's been some disappointing stories in this space, Virgin Mobile hopefully has proven that value can be created with the right business model," Huff said. "I think that the investment that we've made [in Helio] absolutely has value. We have no plans to go out and sell it. It's a growing business. It's a business that we support. We clearly understood that putting needed cash into that business was not in the best interest of our shareholders from here on out."

For more on Helio's Q3:
- read this press release
- check out the transcript of the conference call

SK Telecom to invest more in Helio

Mike Dolan — Mon, 24 Sep 2007 11:02:42 -0400

SK Telecom plans to invest up to $270 million in Helio, the wireless voice and data services joint venture that the company shares with EarthLink. The MVNO had 130,000 subscribers in August, however it could post a loss of up to $360 million for the year. The continuous losses have been affecting EarthLink's bottom line. EarthLink's stock got a bump in the right direction upon announcing the SK Telecom cash infusion.

For more:
- read this press release
- read this article from BusinessWeek