The city of Philadelphia can be generally credited with launching the muni Wi-Fi craze, and is now seeing the down side of that trend. Earlier this week, the City Council held a hearing at which the status of its ambitious municipal network was examined, given the fact that the service provider, EarthLink, has stated it will no longer invest in municipal wireless networks.
EarthLink’s grand plans have run afoul of business realities, and nowhere is that more evident than in Philadelphia. The company said it has spent $20 million to build out Philadelphia’s network, which is still substantial but not complete, more than the $12 million to $15 million expected. The original contract between EarthLink and the city and its Wireless Philadelphia not-for-profit organization was hopelessly one-sided. As noted by the MuniWireless Web site, EarthLink is expected to pay $2 million to the city, $450,000 in inspection fees and rental fees of $2 per month for each streetlight used in mounting antennas, along with 3700 free accounts for city workers to access the network. The contract also calls for 23 free zones and 25,000 reduced price accounts for low-income families that qualify in WP’s digital inclusion program.
All of that, on top of the higher-than-expected cost of actually installing Wi-Fi citywide leaves EarthLink in no position to do anything but bleed red ink. Subscribership is not likely to cover those costs any time soon, if ever. The company did not attend the hearing, sending an unsigned statement claiming confidentiality, but it’s obvious that EarthLink is between a rock and a hard place here.
In a report also issued this week, the New America Foundation blames Wireless Philadelphia for handing its network over to a private concern. I didn’t read the whole report, but here’s a blogger who did and takes issue with it, for reasons I understand.
Rather than parsing out blame, however, it seems to be that some reasonable re-negotiation needs to take place that doesn’t leave Philadelphia’s ambitious plans for bridging the digital divide in limbo but also doesn’t bankrupt the company attempting to make those dreams a reality. The municipal Wi-Fi market has come a long way and much has been learned – the hard way – in the process. Philadelphia pioneered once, and it could do so again.