MORE THE MERRIER
Reading between the lines in this Dow Jones article, there seems to be a difference of opinion between Google and Earthlink (via Om Malik) on how best to monetize the roll-out of "muni-WiFi" in cities beyond San Francisco.
While Google seems comfortable with an ad-supported free access model, Earthlink's CEO Gary Betty feels otherwise:
"We still don't believe in the free model much," Betty said, citing the expense of maintaining and expanding a network and providing support services to consumers."
As a result, according to the article, the two companies
"...plan to bid for a second U.S. city together under a proposal that would offer more limited free services, EarthLink Chief Executive Garry Betty said."
Om Malik had a good post a couple of months ago highlighting how Earthlink was increasingly staking it's future on providing wireless broadband in the US, a move that could cost upwards of $200 million to finance:
"Twenty cities at $10 million per, could put them in the $200 million capital expenditures."
All this is to highlight that the opportunity of creating a non-cellular, wireless broadband access company that I talked about a few days ago, in effect a "wireless UUNET", is not inexpensive and still doesn't have a clear business model, especially for public market investors.
And this is despite the stars aligning reasonably well to make the case for a national muni-wifi network, as Tom Evslin summarizes nicely in this post.
So although access companies like Earthlink here and Pipex in the UK, who lead the charge on previous access architectures (dial-up, reselling wired broadband like DSL, etc), are trying their best to roll out non-cellular, wireless broadband, they face some hefty financial hurdles.
It'll be especially hard to do for companies like Earthlink, who need to convince their current, public shareholders that such a long-term investment has an attractive, visible, return commensurate with the risks they are taking.
But they have to do something as their existing dial-up business erodes, and their margins re-selling other people's wired broadband, come under pricing pressure.
And their predicament highlights the similar, but less visible pain experienced by their larger peers and competitors, AOL and MSN, both of which are cocooned within larger, richer parent organizations (Time Warner and Microsoft respectively).
But those two organizations in particular, have potentially the most to gain, from a game-changing investment in a nation-wide wireless broadband network.
Yahoo! is the only one of the GYMAAAE companies that has a potential conflict with it's cozier partnerships with the telcos on wired broadband deployment. And most of those telcos are fighting tooth and nail against muni-WiFi initiatives around the country, to protect both their wired and wireless broadband businesses.
As I highlighted in the previous post, the opportunity exists for a:
A nation-wide, non-cellular, broadband wireless consumer online service that charges mainstream, flat, monthly access fees.
But it's going to take considerable investment, risk and invention borne of necessity, on a nation-wide scale, to make it work.
So to paraphrase myself from the earlier post,
"Would this be a worthy mission for the new AOL*?"
Or the new MSN for that matter?
Before Google goes and does it**?
FOOTNOTES:
* I recognize that AOL would have a significant conflict with it's parent's cable broadband business in rolling out and/or supporting muni-wifi initiatives. It's yet another reason why AOL and Time Warner have incompatible business models on the access side.
This was not always so, especially in the early years after the merger five years ago, when Time Warner's Roadrunner cable broadband business could have been more seamlessly integrated to help migrate AOL's nation-leading number of dial-up subscribers to broadband, before the telcos got their DSL act together. In hindsight, this may have been the "mother of lost opportunities" in the AOL Time Warner merger.
Now, the initiatives required to salvage AOL's dial-up business have increasing conflicts with the separate Time Warner cable broadband business.
Perhaps Time Warner management will let competing strategies thrive within it's portfolio of companies, and in effect hedge their bets. But I'm not holding my breath.
** Om Malik's piece a year ago on GoogleNet.
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