Local investors to rescue Philly wi-fi

Jun 17, 2008 (The Philadelphia Inquirer - McClatchy-Tribune Information Services via COMTEX) -- ELNK | Quote | Chart | News | PowerRating -- A group of local investors will rescue the city's trailblazing wireless network from what seemed like imminent shutdown, with a new for-profit company that will replace Earthlink Inc. as the system's operator, according to multiple sources close to the deal.

Although the details of the deal were unclear yesterday, the new company is said to be considering an advertising-based business model that would provide free Internet access to all, or at least in those places where the spotty network is available. Earthlink charged $20 a month for the service.

The sources said little, if any, taxpayer money would be used in the deal, which is expected to be formally announced at a noon City Hall news conference today.

Sources said the investment group includes local businessmen Derek Pew and Mark Rupp. Pew briefly served as interim chief executive officer of Wireless Philadelphia, the non-profit organization created by Mayor John F. Street to bring citywide wireless to Philadelphia. A lawyer and former investment banker, Pew is now the CEO of a management investment firm called Boathouse Communications.

Rupp is a former Verizon executive with 18 years experience in telecommunications management. He is also a Boathouse principal. The company they and other investors have created is so new that they have yet to name it, sources said.

Rupp and Pew did not return phone calls yesterday. Calls to Wireless Philadelphia and Earthlink also were not returned.

Spokesman Doug Oliver confirmed that Mayor Nutter would host a WiFi news conference at noon today, but he declined any further comment.

The creation of the citywide wireless network was one of Street's hallmark achievements, winning him and the city national and even international acclaim. But the network -- built by Earthlink using transmitters attached to city-owned streetlights -- never lived up the hype.

The signal is too weak to reach inside most buildings, and Earthlink's $20 monthly fee was not much cheaper than the far-faster broadband offerings of Comcast and Verizon.

Only about 6,000 customers signed onto the service, and Earthlink announced last year that it wanted out of the Philadelphia wireless business.

The network seemed doomed last month when, after a deal to transfer the network to an Ohio non-profit collapsed, Earthlink went to court seeking permission to remove its transmitters from city streetlights.

Though it remains to be seen if the new company can turn a profit, its business model is not at all like Earthlink's. In addition to advertising income, the company is likely to pursue paying institutional subscribers such as hospitals and universities. Those institutions could extend their own secure internal networks into the city over the wireless system, for a price.

Contact staff writer Patrick Kerkstra at 215-854-2827 or pkerkstra@phillynews.com.

For the latest from City Hall, visit http://www.HeardInTheHall.com.

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