Update: EarthLink to build out full Philadelphia Wi-Fi network

The sun came out for EarthLink's Philadelphia Wi-Fi network on Thursday even as prospects for its San Francisco project remain shrouded in fog.

Wireless Philadelphia, a nonprofit group formed by the city of Philadelphia, has approved the 15-square-mile Wi-Fi test network EarthLink built, opening the door for the operator to finish building out a 135-square-mile network covering the city.

The approval comes just a month after EarthLink announced it would scale back its city Wi-Fi initiative, focusing on existing and large cities for the rest of the year. The company has seven or eight cities under contract now and is negotiating with five more, Vice President of Product Strategy and Marketing Cole Reinwand said last week. It decided to stagger its Wi-Fi expansion to conserve resources, he said.

Residents can already use the 15-square-mile network in Philadelphia. The full network is expected to be complete in the third quarter. EarthLink is financing, building and managing the network and will share revenue with Wireless Philadelphia, which will offer cut-rate access for low-income people.

For six months, customers of a 1Mbps will pay an introductory rate of $6.95 per month, which bumps up to $19.95 thereafter. A faster 3Mbps service is available for $9.95 for the first six months and $21.95 after that.

City parks will have free access, and low-income residents can sign up for service at $9.95 per month, before promotions. Customers can also pay for service on an hourly, daily or three-day basis.

The Philadelphia Wi-Fi network is notable because when announced, it set off a storm of controversy that resulted in a Pennsylvania law requiring municipalities to receive approval from incumbent telecommunications operators before building Wi-Fi networks. The law was created after incumbents complained that by financing Wi-Fi networks, cities were building networks that would compete with their businesses.

The San Francisco project, which has drawn attention partly because of Google's planned involvement as provider of a free citywide service, has run into fierce opposition from activists as well as some local elected officials. The Budget and Finance Committee of the city and county's Board of Supervisors held a hearing on the contract on May 14 and will meet again on the issue in July.

EarthLink won approval on May 8 to use some of the utility poles it needs for the project when it reached a deal with the San Francisco Public Utilities Commission. But the company needs city approval to get access to other poles and facilities where it can mount access points.

Internet users in San Francisco would save between $9 million and $18 million per year through increased choice if the network were built, according to a report by the city controller released this month. In addition, the report predicted some residents would start using the Internet for the first time, partly solving the "digital divide" problem that is part of San Francisco's goal for the project. The controller estimated 19 percent of residents don't use the Internet.

The deal would also benefit EarthLink by making it better able to compete against other broadband providers, the report noted.

But some activists and leaders, such as the outspoken Supervisor Jake McGoldrick, are pushing for a network that is owned by the city. And the Wi-Fi project is one of the most prominent goals of a mayor, Gavin Newsom, who has increasingly been at odds with the supervisors.