A group of investors has agreed to take over Philadelphia's Wi-Fi network, just as EarthLink was set to pull the plug on the network.
The group of investors, which announced their plans Tuesday, includes Boathouse Communications Partners, a private equity firm based in Philadelphia, technology entrepreneur Richard Rasansky and former Philadelphia mayoral candidate Tom Knox.
Terms of the deal were not disclosed, but the group plans to change the business model. Instead of charging $20 a month for network access, the group will offer free Wi-Fi based on advertisements, according to a story in the Wall Street Journal.
The group also plans to expand the coverage of the network, which is about 80 percent built. EarthLink spent about $17 million to build the network.
The citywide Wi-Fi project in Philadelphia was the largest such network in the country. And at one time it served as the poster child for EarthLink's ambitions to build and own its own wireless infrastructure. It also served as a model to other cities that wanted to partner with private industry to help bridge the digital divide through low-cost wireless technology.
But when EarthLink came under new management last year after the death of its CEO Garry Betty, the company quickly began unwinding many of its Wi-Fi contracts. It eventually pulled out of deals it already had with several cities including San Francisco, Houston, and New Orleans.
Earlier this year, the company officially said it was putting its Wi-Fi business up for sale. And last month, it announced that it was shutting down the Philadelphia network after it was unable to find anyone who wanted to take over the network. Service was supposed to be shut off last week.
But even though the Philadelphia wireless venture has now been saved, the new investors have a long road ahead of them. Several low-cost and ad-supported Wi-Fi networks have failed. Service providers have found that the model just doesn't generate enough revenue to sustain the network.
MetroFi, which built its business around free Wi-Fi supported by advertising, said last month that it was putting its networks up for sale. The company operates service in several cities including Mountain View, Calif., San Jose, Calif., and Portland, Ore.