A group of local investors said Tuesday they have bought Philadelphia's wireless Internet network, a week after EarthLink Inc. gave up on the system because it failed to make a profit.
The investors said they plan to form a for-profit company that will provide businesses both wired, high-speed Internet access and wireless service. They also plan to maintain the citywide wireless network Earthlink Inc. built for $17 million and offer wireless service free to consumers.
EarthLink has pulled out of several markets, including New Orleans and San Francisco, because it couldn't make money from Wi-Fi networks it was building.
And on Friday, MetroFi plans to pull the plug on a free, ad-supported Internet service in Portland, Ore. As had been the case in Philadelphia, neither the city nor any private company has stepped in to buy Portland's network.
Earthlink's service didn't attract enough customers in Philadelphia to be financially viable because of connection problems, poor customer service and prices that weren't much cheaper than competitive DSL services.
The Philadelphia investors said they are still working out details of their business plan, but in general, they hope to build a new wired network and provide both wired and wireless Internet access to businesses and institutions such as hospitals.
They did say they purchased the network from Earthlink, but they did not disclose the terms of the deal. Earthlink has withdrawn a lawsuit that sought to remove its wireless equipment from streetlights across Philadelphia and cap its liability for the network.
Esme Vos of Muniwireless.com, which provides information on wireless broadband projects around the world, said it won't be easy to lure businesses to the new service, especially because phone and cable companies can easily slash prices to keep their customers.
"The thing about incumbents, they can always undercut you," she said.
Investors in the deal include Mark Rupp, a director at equity investment firm Boathouse Communications Partners who will be chief financial officer of the new company. Derek Pew, chief executive of Boathouse and former interim CEO of Wireless Philadelphia, a nonprofit that oversaw the city's Wi-Fi effort, will be CEO.
The two other investors are David Hanna, chairman of wireless Internet equipment maker Tropos Networks, and former Philadelphia mayoral candidate and businessman Tom Knox.
Terms & Conditions
RSS Headlines
Fool UK