EarthLink Inc., which built and maintains the system, announced yesterday that it would end service June 12 and begin dismantling the system's physical infrastructure soon after.

As recently as two weeks ago, a deal seemed imminent that would have let the network survive and even grow under the ownership of an Ohio-based nonprofit called OneCommunity, all at minimal cost to taxpayers.

That complicated deal collapsed, however, due in part to the city's unwillingness to commit itself financially to the project, as well as to concerns that Wireless Philadelphia - the small nonprofit with a digital-inclusion mission - would not survive the transition.

Wireless Philadelphia's chief executive officer, Greg Goldman, said he still held out hope that a new network owner could be found before EarthLink dismantled the system.

But that possibility seemed unlikely yesterday.

"It really feels that the only possible option is EarthLink taking down the network and focusing on transitioning our roughly 6,000 customers," said EarthLink spokesman Chris Putala.

Mayor Nutter said he was "disappointed" by EarthLink's decision, but he was quick to criticize the citywide wireless business model and suggested that technological advancements had made the system nearly obsolete.

"This has been a tortured situation for a long period of time," Nutter told reporters.

It wasn't always a tortured situation.

Mayor John F. Street was hailed as an innovator when he pitched the notion of a citywide wireless network in 2004.

In 2005, National Geographic cited it as one of the reasons Philadelphia was America's "Next Great City." Municipalities big and small sought to emulate Philadelphia, seeking out wireless partners of their own.

But the reality of the network never lived up to the hype.

The original goal of Wireless Philadelphia - to promote Internet use among the city's poor - was overshadowed by the buzz. EarthLink, which built and maintained the $17 million network with virtually no taxpayer money, couldn't find a way to profit off the system. And users complained that the signal was weak, undetectable in many areas.

By last year, it was clear that EarthLink wanted out of the municipal wireless business.

OneCommunity, which built a high-speed network connecting nonprofits and public institutions in the Cleveland area, had the right experience to take the network over. And it had the means to administer the system and invest in it further, thanks to a $25 million digital inclusion grant from the Knight Foundation.

According to sources close to the negotiations, OneCommunity was prepared to offer free access to the wireless network to all Philadelphians (users now pay a fee). The nonprofit also offered to cover the network's $3.6 million annual maintenance costs by bringing on paying institutional clients, such as universities and the City of Philadelphia.

In a statement released to the media, EarthLink said it had reached a deal with OneCommunity and laid the blame for the breakdown squarely at the feet of the city and Wireless Philadelphia.

According to sources close to the negotiation, the city balked at becoming a paying client on a OneCommunity-owned network. Wireless Philadelphia wanted any deal to include some funding to help ensure the small nonprofit's future viability, the sources said.

Small as those problems might seem, they were big enough to scuttle the deal.

Yesterday, EarthLink filed suit in federal court, asking for permission to remove its equipment from the city's streetlights and requesting that its liability in the contract dispute be limited to $1 million.

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