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Helio, the mobile virtual network operator (MVNO) that tried to sell MySpace-branded handsets and service, has been purchased by Virgin Mobile. 

After EarthLink bailed out, SK Telecom pumped an additional US$270 million into Helio in a last-ditch effort to save the struggling business.

The Helio kiosks in Ala Moana Center never looked very busy. I’m not sure how many Helio subscribers signed up in Hawaii, but the nationwide numbers had gone down to 170,000, compared to Virgin Mobile’s 5 million. Young adults seem to carry T-Mobile’s Sidekick or a Verizon phone, although the iPhone may gain traction in a few weeks with its new low price. 

See this TechCrunch article titled Helio Hangs It Up for more details. 

Related articles and pages on billso.com

• iPhone
• 9 June 2008: iPhone 3G
• 13 April 2008: MySpace keeps trying to sell music downloads
• 29 September 2006: ESPN sacked, Helio scrambling

This morning’s Honolulu Star-Bulletin reported that Tri-Net Solutions has been installing a mesh WiFi network in Honolulu’s Chinatown. Mayor Mufi Hannemann will make a formal announcement of the new free wireless system at tomorrow’s First Friday event, but the network is already available. It’s not as fast as other services in the downtown area, but the city’s service is free and encrypted.

This project was first announced over a year ago. My first article on this topic was posted on 26 May, along with a preliminary map of the coverage area. Gordon Bruce, the city & county’s CIO, says that coverage may expand across downtown. The Star-Bulletin’s map shows several access locations near HPU, including Fisher Hawaii on Hotel and Fort Streets, and the Marks Garage. Tri-Net has installed at least 25 inexpensive mesh routers. Local business and property owners volunteer to host the routers and antennae.

There have been some changes. Hawaiian Electric and EarthLink have dropped out of the project. I discussed EarthLink’s recent problems on 27 August and 28 August, and discussed HECO’s plan on 11 June.

The city also revealed that first responders, including police, fire and other emergency services, have been outfitted with WiFi-equipped devices so that they can use the city’s service in their jobs.

EarthLink, the primary contractor for Honolulu’s municipal WiFi project in Chinatown, is laying off more than 900 employees and closing 4 offices, according to news reports. This is a massive cut that affects almost half of the company and several business units.

In one of yesterday’s posts, I discussed some of the changes in the wireless Internet industry. EarthLink’s retrenchment in municipal WiFi was announced earlier this year, when the company said it wouldn’t pursue new contracts until it had a better idea of the financial returns on current projects. Sprint’s recent alliance with ClearWire, Google’s continued efforts in mobile applications and wireless access, and the stagnating economy are other factors that have affected EarthLink’s competitive position.

Helio hath no fury… or market share

It isn’t the WiFi market that’s hurting EarthLink, though. The company’s investment in Helio has not worked out well. I mentioned Helio on June 17 and April 17. The iPhone and the industry’s various responses to that service have put Helio in a lousy position for a startup company. According to The Register, Verizon is moving fast with its new offerings, with some help from Samsung.

It’s been a year since Google started offering free WiFi in Mountain View, California. Their mesh network uses 400 access points scattered around the city to support 15000 users each month. There’s more details in Google’s blog post.

Meanwhile, there isn’t much news about Earthlink’s WiFi project in Chinatown, just a few steps away from my office. I discussed this effort on May 26. The project was announced last summer in several articles, and Hawaiian Electric was a partner. HECO was considering WiFi as one medium for smart electric meters, which I discussed on June 11.

If Anaheim can build out a wireless network for its residents, as discussed in this Wired article, Honolulu could do the same. In the meantime, Road Runner has been adding WiFi Speed Zones for its customers, and is allowing residential users to hook La Fonera mesh routers to their existing cable modem connections.

Meanwhile, Clearwire and the mobile telcos are still marketing their laptop data cards. These devices tap the mobile phone network to deliver a connection in the 50-300 mbps range. It’s not as fast as WiFi, but these connections tend to be more secure than a WiFi connection through an unknown router.

This is all leading up to a reallocation of the wireless spectrum in the US, as mentioned in GoingWiMax. Rumors are popping up again that Google is developing its own mobile device or gPhone.

Given Google’s net-centric business model, a gPhone might need a fast wireless connection. Judging from the photos, it might also need some design work.

Gordon Bruce, the director of the City & County of Honolulu’s Department of Information Technology, announced yesterday that the Earthlink WiFi project in Chinatown will start service in June.

EarthLink is providing the service, which will be free for the first year. After that, the C&C will have to find a company to pick up the tab, possibly through paid subscriptions. The main competitors for subscription wireless in downtown Honolulu are WiMax (Clearwire), and mobile carriers that offer cellular data cards and limited WiFi access (Sprint, T-Mobile and Cingular).

EarthLink operates municipal WiFi networks in 8 other states and cities like New Orleans, Philadelphia, Atlanta and Anaheim. It’s been a a steep learning curve, and EarthLink has decided to limit its bidding process for future sites, to concentrate on current markets. An AP story from May 21 questioned the entire business model, based on problems that another vendor has encountered in a publicly-owned project in Lompoc, CA. I agree with the PF HYPER Blog that these problems don’t seem likely in an outsourced project such as EarthLink’s.

The coverage are includes the core of HPU’s downtown campus. The university has operated its own WiFi network for several years. I’m eager to see how far the EarthLink signal penetrates into our classroom and office buildings, and how much interference HPU and other businesses encounter from the EarthLink service.

“Once up and completely running, the network will provide Internet access across a 27-block area ranging from North Beretania Street to North Nimitz Highway, and from Fort Street Mall to the Nu’uanu Stream.” Here’s a map of the coverage area, courtesy of the Honolulu Advertiser.

The system includes 19 antennas mounted on traffic lights and light poles to create a mesh network capable of delivering 1 Mbps of bandwidth throughout the coverage area.