While San Francisco will see Google and EarthLink roll out a couple of tiers of wireless broadband service, including one for free, the next city probably won’t see a free option.
Even though search advertising makes billions for Google (GOOG), it doesn’t offer EarthLink (ELNK) the best chance for making a profit or pleasing its shareholders.
EarthLink CEO Garry Betty told the Wall Street Journal, “We still don’t believe in the free model much,” due to the cost of building a network and supporting it afterward.
“We’re not in business to break even. We’re in the business of making money for our shareholders,” Betty said.
Breaking even means earning $7 in ad revenue per customer per month in a municipal WiFi system, and Betty doesn’t see search advertising generating that much money. In the past, Microsoft’s chief software architect Bill Gates has said each search user is worth about $50 a year to Google.
Although EarthLink recently lost a bid to supply Portland, OR, with WiFi services, they will likely partner with Google again on bidding for other cities. If that’s true, no one is ready to confirm it yet, as the article noted:
“EarthLink has been a longtime partner of Google’s, and we look forward to working together to unwire San Francisco,” a Google spokeswoman said. “We are open to considering other opportunities in this space with EarthLink, but at this time remain focused on the Bay Area and have no specific plans to announce regarding a second city.”
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David Utter is a staff writer for Murdok covering technology and business.
