ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Wednesday, May 14, 2008

EarthLink and Wireless Philadelphia Disconnecting

According to the Wall Street Journal, EarthLink announced on Tuesday that it would be discontinuing its wireless Internet service in municipal Philadelphia. 

Since 2006, Earthlink had been working with Wireless Philadelphia to provide low-cost wireless Internet service in the city.  EarthLink anticipated that 100,000 customers would sign up for the service, but less than 5,000 have done so.  EarthLink CEO Rolla Huff explained, "This was about a business model that simply didn't work."   Wireless Philadelphia vows to fight on, as the organization put it in a press release on its blog:

Today we received an announcement that EarthLink intends to discontinue operation of its Municipal Wi-Fi Network in Philadelphia. The reason cited was that negotiations with a certain party failed to come to a positive conclusion. The transfer of the EarthLink network is by definition a complex, time-intensive, multi-party transaction. Despite today's announcement, Wireless Philadelphia and the City are still working actively together to identify alternatives for preserving this network and applying it to numerous civic, commercial and social purposes. We remain optimistic for an orderly resolution of this matter. Regardless, Wireless Philadelphia is utterly steadfast in its determination to extend internet access to all members of the community, and we intend to do everything in our power to continue the momentum generated by WP in support of Digital Inclusion.

But wait.  Apparently EarthLink is not free to simply walk away from its partnership with the city.  It has therefore filed suit seeking permission to remove its Wi-Fi gear from utlity poles on June 12th and seeknig to cap its damages at $1 million.  Wi-Fi Net News's Glenn ("I haven’t read the contract’s provisions for this set of circumstances, and I’m not a lawyer") Fleishman expresses skepticism about the prospects for this suit:

EarthLink will ultimately have to pay much more than $1m, I predict, and I suspect some of the settlement will leave gear in selected neighborhoods behind for more modest networking purposes.

Apparently EarthLink is shutting down other, less ambitious, urban networks as well.

HT: Alan White (again!)

Update: The contract is available here.

[Jeremy Telman]

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Posted by: Joannah | Mar 17, 2009 11:38:44 PM

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