Network Acquisition Company, LLC, the company that acquired the Philadelphia’s EarthLink Wi-Fi network, today provided additional information on the network and business model.
NAC is buying the network for pennies on the dollar. In conjunction with its free community Wi-Fi offering, NAC is exploring services that would help offset its operating costs and provide opportunity to local businesses to reach consumers.
NAC founders include Derek Pew, Mark Rupp, and Richard Rasansky. NAC is a private company and does not have any affiliation with Wireless Philadelphia or the City of Philadelphia. They will offer a wide range of fully integrated wired and wireless Ethernet-based services including high-speed Internet access and broadband private network service susing fiber and copper.
NAC will initially focus on evaluating and improving the acquired Tropos-based Wi-Fi network by tuning its performance for outdoor access, expanding coverage areas and assessing the future build out of the network’s current footprint.
Services may include location-based advertising, sponsorships and revenue sharing with specialized consumer application providers. NAC is offering free Wi-Fi Internet access but has no plans to optimize the network for indoor users nor to provide customer service assistance for this community service.
The AnchorFree Ad Network (above) puts a persistent banner at the top of a page.
Portland’s free MetroFi service (which I’m using right now), uses Microsoft’s Side Guide, which automatically places ads on the sides of your internet browser. Metrofi also offered businesses broadband connectivity using their own backhaul system which included Dragonwave gear.
The network reportedly cost EarthLink $17 million to build, and the company was losing $2.4 million a year on it. Dianah Neff — the Philadelphia CIO who engineered the deal with Earthlink — is no longer with city government; she joined the public broadband consulting firm of Civitium in 2006. The firm released a six-page analysis (pdf) with its view of events after EarthLink abandoned the project.
Civitium explains why Philadelphia didn’t accept a “free” network (pdf):
EarthLink’s announcement stated that the company had failed to reach a settlement agreement with the city (and with the nonprofit involved in the negotiations, OneCommunity), even after offering to “give the network to the city or the nonprofit for free, along with a $1 million payment.” This caused many to question whether the city was being irresponsible or too risk-averse; not accepting an asset estimated at having cost $17 million to build.We propose that this apparently generous offer to the city is posturing on the part of EarthLink, especially when considered alongside their court filing to remove their equipment and cap their liability at $1 million. While transferring title to the network over to the city at no cost may sound like a great deal, the fact that EarthLink has admitted it is currently losing $2.4 million annually on the network operation, and that it is already obligated under the terms of the original agreement to pay the city $1 million, sheds new light on how difficult it would be for the city to accept such an offer.
Perhaps it’s not unlike the Iridium satphone fiasco. Although the satellites and other assets and technology behind Iridium were estimated to have cost on the order of US$6 billion, investors bought the firm for about US$25 million.
Maybe Philadelphia’s investors should talk to Portland’s MetroFi. Been there. Done that. Dailywireless has lots more stories on Philadelphia’s WiFi Network.
