As the municipal WiFi business at Earthlink (ELNK) has come under financial pressure, the future of city-wide wireless projects is in trouble. ELNK shares are down over 20% in the last two year, even after a recent run-up due to cost cuts at the company.
ELNK was willing to bank on a program where it would pay up-front costs to get networks up and running. But, due to its financial difficulties, The Wall Street Journal writes "The Internet service provider now wants cities it’s negotiating with to pay for the networks’ construction."
The change in heart at Earthlink may help demand for the WiMax products that Sprint (S) and Clearwire (CLWR) are rolling out. WiMax offer ultra-high speed broadband connections over the airwaves. Sprint is planning to use the technology for its new 4G cellular network.
With Sprint’s shares down 25% over the last two years, and trailing AT&T (T) and Verizon Wireless in cell subscribers, anything that helps the demand for WiMax is critical to the company’s future.
Douglas A. McIntyre