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Earthlink wins Philly Wi-Fi gig

Revenue sharing deal. Now stop giggling

The smart choice: opportunity from uncertainty

ISP Earthlink has won the contract to provide a citywide Wi-Fi network for the city of Philadelphia, beating out Hewlett Packard at the final stage of the municipal beauty contest.

Earthlink will provide both a retail service to city residents - costing $10 to $20 a month, depending on household income - and resell a higher speed wholesale to other operators.

Earthlink won its bid in part because it will share 'revenue' with a city non-profit. Or whatever revenue Earthlink can generate: the Wi-Fi business to date may charitably be described as a 'non profit' sector.

At first, internet utopians insisted that a huge, untapped market of mobile users would create a thriving and profitable hotspot market. But they grossly overestimated the numbers, and underestimated the demand for data in blue collar and rural areas: some hotspots operated by T-Mobile saw just one or two connections a month, others none at all. Then Wi-Fi lobbyists argued that hotspots would drive up revenue indirectly in places like cafes and restaurants. That, again, foundered on lack of demand and the 'café squatter' problem. So attention turned to lobbying cities to provide the wireless internet access at little or no cost.

Philly's ambitious plan - the city covers 135 square miles - has had a bumpy ride so far. A Pennsylvania statute forbids municipalities from offering a paid internet service where it competes with private offerings. In a controversial move, telco Verizon which has lobbied long and hard against muni Wi-Fi, struck a deal with Philly to let the city's Wi-Fi network proceed.

Earthlink is also bidding to run San Francisco's smaller but more topographically challenging citywide network. It's one of over 20 bidders, including Cingular and Google. ®

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