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After cutting half their workforce, facing a declining stock price and hemorrhaging subscribers Earthlink is yet again facing more bad news.

It is reported that after winning the municipal WiFi contract in San Francisco, EarthLink is out.

Under the agreement, which was never finalized, EarthLink was supposed to bear the estimated $14 million to $17 million cost of building and maintaining the system.
Google planned to sell ads to help subsidize the free service, while EarthLink planned to try to recoup its investment by charging $21.95 a month for a premium WiFi service that would allow subscribers to surf the Web faster than with the free service. [via]

Also related to municipal WiFi Earthlink is now required to pay Houston $5m for missing deadlines.

The city announced this payment this morning, and EarthLink now has nine months to begin construction. That $5m would be twice the city’s $2.5m anchor tenancy commitment. The city may also consider other offers now, too, without any obligation to return the money. [via]

Kinda feel bad for the poor company that just can’t seem to catch a break.