Firm's woes imperil Phila. wireless net

One of Mayor Street's legacy projects - wireless Internet for the masses - is facing an uncertain future. But city officials insist the network can be saved.

The company building the citywide wireless network, EarthLink Inc., of Atlanta, has said it is seeking strategic alternatives for the business, which apparently could include selling it. The network is 75 percent finished in Philadelphia and has been plagued by some bugs.

EarthLink will not comment beyond a statement last Friday. But officials in the city and at Wireless Philadelphia, a nonprofit group, say there is a 10-year contract in place to keep the thing running. They are putting on a brave public face. One official admitted privately that it felt like "doomsday around here in the past few days."

Thousands of customers have signed up for the service, and EarthLink and the city are working to address the glitches, city officials say. The technology itself works well outdoors. Inside homes and other buildings, reception can be spotty.

Experts say one problem with the network's business model is that broadband competitors have lowered prices to compete with EarthLink's $20-a-month rate, narrowing its price advantage.

"The city is still committed to completing this initiative," Terry Phillis, the city's chief information officer, said Monday. "It's a valuable asset to have the whole city wired as a hot spot. . . . The city intends to make significant use of this."

City employees can use the network, and part of Street's policy is to expand Internet access, Phillis said.

The contract gives the city the right to buy the network, Phillis said. If it were sold to another entity, the contract would be assumed by the new owner, he said.

EarthLink, which has had flat revenue in recent years and a sharp decline in profit in 2006, says assets in its municipal wireless division are worth about $40 million. According to published reports and city officials, EarthLink has said it would invest $10 million to $15 million in Philadelphia.

In the Friday statement, EarthLink's chief executive officer, Rolla P. Huff, said that making further investments in the municipal-network division "could be inconsistent with our objective of maximizing shareholder value." The company has retreated from wireless projects in other big cities.

A wireless Philadelphia has been a signature project for Street, a tech-savvy two-term mayor who has garnered favorable press coverage as he has championed the network.

Phillis and officials at Wireless Philadelphia admit that EarthLink's apparent pullback comes at a bad time. They are trying to build confidence in a technology that has not been deployed on such a grand scale. Philadelphia says it is the first major U.S. city to try it.

To get reception inside homes, customers need a $70 wireless booster, which EarthLink initially told customers was optional, Phillis said.

"Wireless is not magic," said Kenneth Blackney, associate vice president of core technology at Drexel University, which has a campuswide wireless network. "The signal gets weaker as it goes through wall after wall after wall."

In a sign of how institutions can incorporate the new network into their own organizations, Drexel bought significant time on the EarthLink network so that its students and faculty can use laptops and other electronic devices off the Drexel campus, Blackney said.

Another recent concern with the new wireless network is a lack of designated help-desk lines, Phillis said. Philadelphia calls were lumped with other calls to EarthLink. After the city talked with the company, EarthLink devoted help-desk people to the wireless network, he said.

"I can't say it's good," Phillis said of the wireless network, "I can't say it's bad. It's got its issues."

In the fourth-floor offices of Wireless Philadelphia, above the El Vez restaurant in Center City, chief executive Greg Goldman oversees a program to sign up low-income residents for wireless accounts.

So far, the group has distributed 440 of the 25,000 discounted accounts available for those residents. To open an account, an individual needs a computer, funds to prepay a year of service, and a wireless booster for home, Goldman said yesterday. This costs the nonprofit group, on average, $600 for each new account.

The goal of the wireless project, Goldman said, is to narrow the "digital divide" between the technology-rich middle class and wealthier residents and those in the bottom rungs of the socioeconomic ladder.

Ingrid Jackson, a Center City resident, signed up for the discounted service through Wireless Philadelphia this summer. Even though she has a full-time job at Macy's, she had found monthly bills for broadband Internet service a financial drain. She qualified for the $10-a-month account because of her income level.

Jackson said yesterday that sometimes she has to wait 15 to 30 minutes for a connection. Once on the computer, she sends e-mail and surfs job sites.

When asked what would happen if the new wireless network were shut off, she responded: "We'll all be fighting for computers at the library."