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EarthLink finalizes Wireless Philadelphia deal

The Associated Press is reporting the details that have emerged about the Wireless Philadelphia as its contract with EarthLink moves to the Philadelphia City Council for approval.

EarthLink essentially will be granted a 10-year franchise as the city's wireless network provider. Philadelphia will migrate an undisclosed, but reportedly substantial, portion, of its telecom spending to EarthLink, but will receive 3,000 free or discounted WiFi accounts plus further discounts on 700 T-1 accounts. EarthLink will pay Philadelphia $74 annually in rent per light post, for a total of $300,000 a year. EarthLink will also pay five percent of its revenues from wireless service provision to Wireless Philadelphia. These funds will be used for digital divide programs.

These provisions, plus an upfront EarthLink payment of $2 million against future revenues, point to some hard bargaining by the city, which earlier in negotiations had agreed to let EarthLink own and operate the wholesale backbone and set wholesale rates for would-be retail ISPs, a change in the original plan that would have had the city itself own the backbone and mandate pricing.

On paper, the deal allays concerns that EarthLink would be given a sweetheart deal to use city property to compete against established wireless service providers. In particular, the $2 million pre-payment will put early pressure on EarthLink to build a subscriber base quickly. EarthLink will also be obligated to provide a number of free hotspots in various parts of the city. Otherwise, EarthLink is targeting a $20 a month rate for 1 Mb/s Internet access. Discounts will be available to low-income users.

EarthLink says it expects to invest $20 million to $22 million in the network, which will cover all 135 square miles of the city, over the life of the contract. Over at Wi-FiNet News, Glenn Fleishman reports that the next phase will see EarthLink build a 15-square-mile test network for city evaluation.

Wireless Philadelphia, nonetheless, still has to play out. To be fair, the buzz around municipal wireless circles is that Philadelphia could be a model for other cities. The question is, do other cities have the vision and will to push for the commitments Philadelphia got? It's doubtful. Judging from its RFP, San Francisco's leaders seem to be pursuing municipal WiFi for the sake of vanity and political payoff, and may end up with the short end of the stick. In addition, Wireless Philadelphia is as much a showcase for EarthLink as for the City of Brotherly Love. The Atlanta-based company may look at the system as something of a loss leader, and be much more aggressive as it expands its operations.


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