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The Internet service provider announced that it would lay off approximately 900 employees--about half its staff--as the company restructures in an attempt to boost its sagging stock price. The staff reductions will occur as it shuts down operations in Orlando, Fla.; Knoxville, Tenn.; Harrisburg, Pa., and San Francisco. It will also substantially reduce its presence in Pasadena, Calif., and Atlanta.
But the company's newest initiative--building and operating citywide Wi-Fi networks--will also be hit. Don Berryman, the head of EarthLink's municipal Wi-Fi initiative, will be leaving the company as part of the restructuring, EarthLink CEO Rolla Huff said.
The company has won several citywide Wi-Fi contracts with cities such as Anaheim, Philadelphia and San Francisco. The way these deals are structured, EarthLink builds and runs the networks in exchange for using city-owned infrastructure like utility poles. But the Wi-Fi projects haven't gone as smoothly as EarthLink had hoped.
EarthLink's scaled-back municipal Wi-Fi business has jeopardized many cities' plans to bring free or low-cost broadband to low-income residents.
Over the past few years, blanketing cities with unlicensed Wi-Fi signals has been viewed as a cheap solution to bringing affordable or even free broadband access to cities. Politicians and community leaders have rallied around the technology as an economic development tool that could help bring low-income individuals into the bustling economy of the 21st century
But as the economic reality of building a network primarily to serve up low-cost broadband access settled in at EarthLink, the company's top brass decided the strategy isn't viable.
So it appears that EarthLink's dreams of competing against the big telephone and cable companies are fading. For many, EarthLink's cutbacks signal a major setback in the company's evolution to break free of its dying dial-up business and become an Internet player with new services to attract subscribers.
There are already signs that some cities are also starting to lose enthusiasm for citywide Wi-Fi networks. Officials in Chicago said the city is backing away from its planned municipal Wi-Fi service after failing to reach an agreement with either AT&T or EarthLink, which had each bid to build the new network.
Also, EarthLink said it would pay a $5 million penalty to the city of Houston to get a nine-month extension on its contract. The same day, EarthLink also said it was killing plans to build San Francisco's citywide network.
Some CNET News.com readers saw the writing on the wall long ago.
"As a former customer, the whole tone of the company changed when Mindspring acquired them," wrote one reader to the CNET News.com TalkBack forum. "And it went downhill from there."
Vista update on the horizon
After months of silence, Microsoft finally revealed details about its first update to Windows Vista, saying the service pack will arrive in the first quarter of next year. In the next few weeks, Microsoft will start private testing of a beta of Service Pack 1 for Vista as well as a third service pack for Windows XP. The company plans initially to release the beta only to 10,000 preselected testers, though it may expand that release later.
As for what's in the Vista update, it's mostly a collection of existing fixes and tweaks aimed at improving the stability and reliability of the operating system, which went on sale to consumers in January. There are a few minor enhancements, most notably the ability to encrypt multiple hard drive partitions using Vista's BitLocker feature.
The first Vista service pack may serve dual purposes for Microsoft: fixing the operating system's rough edges while simultaneously indicating that it's ready for mass adoption. Microsoft initially downplayed the importance of service packs in an era where patches are easily available online. Also, the company urged businesses not to wait for a service pack to start testing and rolling out Vista.
Nonetheless, in announcing its plans to release Service Pack 1 early next year, Microsoft is noting that the milestone remains an important signal for some businesses that the operating system has reached a level of maturity.
Many analysts have consistently advised companies to hold off on Vista deployments until the first service pack's arrival. By talking about SP1, Microsoft hopes to sway some businesses that have yet to move forward in any fashion to start at least testing the OS.
Meanwhile, AutoPatcher, a 4-year-old project to distribute Microsoft patches and other updates to software that runs on Windows, has shut down because of a Microsoft request.
AutoPatcher had a variety of uses. For example, people with limited bandwidth could download patches once and install them on multiple computers, or people setting up new machines could apply security updates without having to expose the computer to network security risks. AutoPatcher could handle updates from Microsoft as well as third-party software such as Sun Microsystems' Java.
Microsoft said it "discourages" others from distributing supplemental software such as hot fixes, security patches and service packs, and that doing so infringes the company's copyright. "This policy is in place due to concern for the safety and security of our customers, as we can only guarantee the download's contents when it comes from a Microsoft Web site," the company said in a statement.
Piracy and privacy
A judge tossed out of court a lawsuit filed last year by TorrentSpy that accused the movie studios' trade group of intercepting the company's private e-mails.
U.S. District Judge Florence-Marie Cooper threw out the lawsuit TorrentSpy brought against the Motion Picture Association of America last year for allegedly purchasing copies of private e-mails belonging to TorrentSpy executives. Robert Anderson, a former business associate of one of TorrentSpy's founders, acknowledged "hacking" into the company's e-mail systems and rigging it so he would receive a copy of all outgoing and incoming e-mail correspondence. He later sold the information to the MPAA for $15,000.
TorrentSpy.com is shutting down access to users in the U.S. while awaiting a ruling by a U.S. district judge on whether TorrentSpy must turn over its user information to the MPAA. That group filed a civil complaint against the company last year, accusing TorrentSpy of violating copyright law.
Although TorrentSpy doesn't host any pirated movies on its site, the search engine helps users find unauthorized copies, the MPAA alleged in its suit. TorrentSpy has argued that the company has many legitimate uses and is protected under the Digital Millennium Copyright Act.
The MPAA's acknowledgment that it purchased TorrentSpy e-mail correspondence is significant because it comes at a time when the group is trying to limit illegal file sharing by imploring movie fans to act ethically and resist the temptation to download pirated movies. To critics, the revelation by the MPAA is a possible sign that the organization is itself not above adopting unethical practices in its fight against file sharing.
The Electronic Frontier Foundation, a proponent of strong privacy laws on the Web, has criticized the court findings and claim they pose serious threats to Internet users. Yet, the theft of the e-mails did not violate the federal Wiretap Act, according to Cooper. Kevin Bankston, an EFF staff attorney, said Cooper misread the law.
"Essentially, one can do ongoing surveillance of another party's e-mails without their consent and not violate the law," Bankston said. "Not only does this open the door to privacy abuses in civil cases but it also could lead to abuses by the government...It's an incredibly dangerous decision."
Also of note
After more than two years of minor tweaks to its most popular product, it looks like Apple is ready for new iPods...Microsoft settled a long-running and expensive lawsuit with Eolas Technologies, a start-up backed by the University of California that alleged Internet Explorer infringed a patent...Federal regulators slapped three wireless firms, including No. 3 operator Sprint Nextel, with a total of $2.83 million in fines for not meeting a long-passed deadline for equipping subscribers with enhanced 911 service...Apple and Volkswagen are reported to be in talks about an "iCar", which would connect the car to the home PC and entertainment systems...Teenage tech celebrity George Hotz, who unlocked the iPhone enabling it to work on any network, traded the hacked iPhone for three more 8GB iPhones plus a Nissan 350Z.
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