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Carrier WiFi

Philly WiFi Stake

In the biggest push yet into the fast-growing market for municipal wireless networks, the city of Philadelphia detailed plans for a citywide WiFi network on Wednesday. To be built by nationwide ISP EarthLink Inc. (Nasdaq: ELNK), this will be the first high-speed, wireless data network serving an entire large city in the U.S.

Measured by budget size or geographical reach, the Philadelphia network marks the largest commitment yet by a service provider to supply a city with blanket wireless coverage. The concept of municipal WiFi has caught on rapidly in the last year, with cities including London and San Francisco unveiling plans to unwire their metro areas, but the cost of building such widespread networks makes potential profit margins unclear. (See Muni WiFi: Changing the Game.)

"EarthLink is using their funds to build, maintain, and support the network," says Diana Neff, chief information office for the city of Philadelphia. "They will own the network and charge ISPs a wholesale fee per subscriber to use the network."

Philadelphia Mayor John Street says that the city, along with Wireless Philadelphia, the nonprofit that is overseeing the WiFi initiative, has signed a 10-year agreement with Atlanta-based EarthLink. The contracts must be approved by the city council.

Expected to be completed by the spring of 2007, the network will cover 135 square miles and comprise some 4,000 WiFi base stations on light posts throughout the city. In addition to the capital cost of building the network, EarthLink will pay the city almost $300,000 a year to rent the lamppost space and will return 5 percent of its revenue from local ISPs to Wireless Philadelphia.

That money will go toward providing thousands of computers and training to kids and low-income households.

The company says it will charge ISPs less than $12 a month per subscriber, in addition to providing access to up to 25,000 low-income households at $9.95 a month.

The goal, says EarthLink spokesman Jerry Grasso, is to keep retail prices under $20 a month.

"The initial cost to build the network out will be around $13 million," Grasso adds. "As it stands now, the network can handle about 250,000 subs, and we expect to sign up 50,000 to 80,000 subs by the end of the second year."

The Philadelphia WiFi network faces stiff competition from Verizon, which plans to offer DSL service in the city starting at $14.95 per month (for 768 kbit/s).

— Richard Martin, Senior Editor, Unstrung

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