Earthlink Pays Houston $5 Million Late Fee

Earthlink is delaying its city-wide wireless project and may end up pulling out of its contract with the city of Houston altogether. Houston Public Radio's Laurie Johnson reports on the announcement made by Houston Mayor Bill White.

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"They want an extension and they're paying $5 million to get it."

That was the latest update on the current status of the city's contract with Earthlink. Houston Mayor Bill White told city councilmembers that Earthlink is paying the $5 million penalty in exchange for a nine-month extension. The extension allows Earthlink to start build-out of the wireless network any time during that period. It also allows them to pull out of the contract completely.

"Five million permits them to walk away but you know, I think we can find people who are willing to build wi-fi for the City of Houston. Earthlink has more experience with these systems, so I'd rather have somebody who has experience than somebody who doesn't have experience."

While the city won't put out any requests for proposals from other companies, the mayor says they will review any bids that are sent in. But he says his preference is to keep the contract with Earthlink in place. Earthlink's CEO balked on the terms of the contract after taking charge of the company upon the death of the prior CEO. The leadership change led to an overhaul of the company's business model. Earthlink laid off 900 employees nationwide this week as part of the restructuring. Despite all the changes, White says he's not disappointed by where the negotiations have led.

"I'm glad we did this, we're going to be $5 million to the good."

Houston is among a number of major cities, including San Francisco and Philadelphia, that continue developing a city-wide wi-fi network. Chicago completely dropped its plan to install a wireless network earlier this week. Laurie Johnson, Houston Public Radio News.

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