Earthlink WiFi Initiative Tanking

As the rollout of municipal Wi-Fi is hitting some speedbumps in recent months, Earthlink is laying off 900 staff members, or almost half of its workforce.

Earthlink had been trying to build Wi-Fi networks in New Orleans, Philadelphia, and three California cities including, most famously, San Francisco (where it partnered with Google to beat out five other bidders for a city contract).

But the well-publicized San Francisco rollout stalled earlier this year when the San Francisco Board of Supervisors delayed a vote on the project -- reportedly after EarthLink didn't respond to requests for changes to the contract, including increasing the speed of the line and offering new privacy controls.

With EarthLink in retrenchment mode, it's not clear what will happen to municipal Wi-Fi where the company had planned to create networks. It's also not clear that there's still the same demand for municipal Wi-Fi as when those projects were conceived several years ago.

Consider, many more users are on broadband lines at home now than two years ago, when municipal Wi-Fi was just getting underway. Pew recently reported that 70% of home Web users now connect via broadband lines, while almost half of all homes now have high-speed Internet access. Additionally, many Web users in urban areas are finding ways to tap into existing Wi-Fi networks. These developments indicate that many Web users already have the bandwidth they need, at least at the moment.