The company has been struggling to get its finances in order. On Tuesday, EarthLink announced its plans to cut costs by shedding 900 jobs – nearly half its workforce – and closing its offices in four cities, including San Francisco. But it was hit with a $5 million penalty on Wednesday for not meeting its first deadline for building Houston’s wireless network.
Under the four-year agreement, EarthLink was supposed to bear an estimated cost of as much as $17 million to build and maintain the Wi-Fi network. Google planned to sell ads to help subsidize the free service, while EarthLink planned to recoup its investment by charging $21.95 a month for a faster premium Wi-Fi service. EarthLink's CEO Rolla Huff said in a statement that the company was re-evaluating its approach to providing Wi-Fi in cities because the practice was not providing an acceptable rate of return.