Wireless Philly: We Hardly Knew Ye

Wireless Philadelphia, R.I.P. The epitaph should read: They couldn’t even give it away.

In what could be the final blow to the already struggling municipal wireless business model, EarthLink Inc. this week said that its $17 million city-wide Wi-Fi network in Philadelphia officially is dead. It will shut down the network completely on June 12.

The ISP said it couldn’t find a buyer for the assets, nor was it able to donate the network to the city, even if it threw in an extra $1 million, as it said it would do. For its part, the city said operational costs would total at least $3.6 million per year.

EarthLink had built the infrastructure with the aim of providing a blanket of city-wide broadband access to close the digital divide. It planned to include a subscription model that would pay for the cost of the build and ongoing opex: pricing was set at $21.95 per month; low-income residents would pay half that. EarthLink expected to gain 10,000 customers for the service at a minimum.

Four years later, the project has gone from a model that sparked the imagination of many other cities to the poster child for an idea that just doesn’t work. The ISP gained a mere 5,942 subscribers and is losing $200,000 per month on the venture. Delays in turning up the system, as well as aggressive DSL and cable modem pricing, are two of the culprits behind the lack of uptake, the company said.

EarthLink has filed suit against the city in U.S. District Court to terminate its 10-year contract and cap its liability at $1 million. It also wants to take down the Wi-Fi gear.

EarthLink is exiting the muni businesses entirely. It said this week it also will close down its New Orleans network, and has cut deals with Corpus Christi, Texas, and Milpitas, Calif., to have the government take over those municipal projects. Meanwhile, the fate of the Anaheim, Calif., network is still up in the air.

The Philly failure is the latest in a string that began last year. Chicago cancelled its planned network, while EarthLink pulled out of a San Francisco deal, citing it as financially unviable.

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