News & Observer | newsobserver.com | Philadelphia Wi-Fi plan withers

Published: May 14, 2008 12:30 AM
Modified: May 14, 2008 02:43 AM

Philadelphia Wi-Fi plan withers

Technical glitches undermine several cities' ambitions of being tech innovators

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PHILADELPHIA - They built it, but few people came.

Philadelphia's dream of becoming a Wi-Fi model for the globe is officially dead after EarthLink announced on Tuesday that it's pulling the plug on the city's troubled wireless high-speed Internet network June 12.

Technical glitches, deployment problems and competitive pricing from cable and phone operators conspired to doom a vision of putting Philadelphia on the high-tech map.

EarthLink, based in Atlanta, has given up on its Wi-Fi plans across the country. In Philadelphia, the Internet service provider said it could not find a buyer for the network that it spent $17 million to build, and talks to donate the network to the city or a nonprofit organization failed, even after it sweetend the offer with $1 million in cash.

The city said it would cost taxpayers at least $3.6 million a year to operate the network.

EarthLink also is suing the city in U.S. District Court for permission to remove its Wi-Fi equipment from light posts, cap its liability at $1 million and -- effectively -- terminate its 10-year contract.

Wi-Fi wasn't a big seller. The company has 5,942 subscribers in Philadelphia out of a projected minimum of 100,000, according to its lawsuit. EarthLink said it is losing as much as $200,000 a month operating the network because subscriber fees covered less than half the company's costs.

"It's been an unfortunate situation," Earthlink Chief Executive Officer Rolla Huff said. "It was a great idea a few years ago, ... but it's an idea that simply didn't make it."

Huff said EarthLink will stay focused on serving people using dial-up Internet service and casual Internet surfers who want an economical plan.

Earthlink plans to shutter a similar network in New Orleans on Saturday. The company has reached agreements with the cities of Corpus Christi, Texas, and Milpitas, Calif., which are taking over ownership of their networks. It is in talks with Anaheim, Calif., about its network, Huff said.

Huff said EarthLink's Wi-Fi assets are now part of the company's discontinued operations. He does not expect to take a charge against earnings for closing down Philadelphia's network.

Four years ago, Philadelphia officials announced that they would try to create one big citywide Wi-Fi hot spot to make high-speed Internet access the norm in poor neighborhoods.

The plan, announced with great fanfare, attracted attention from cities around the world and built Philadelphia's cachet among technophiles. Under a contract finalized in early 2006 and soon approved by the City Council, Earthlink agreed to charge $21.95 a month -- and half that to low-income households.

EarthLink paid the full cost of building the network and pledged to pay the city rent for use of light posts where Wi-Fi equipment would hang. EarthLink's goal was to create a direct Internet pipeline into homes so it would not have to buy capacity from phone companies. But the technology proved unreliable and difficult to deploy.

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