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By Declan McCullagh, 5 October 2005 11:40

NEWS The city of Philadelphia has awarded EarthLink a high-profile contract to build a Wi-Fi network stretching over 135 square miles, marking the formal start of the largest municipal effort in the US to offer wireless internet access.

Dianah Neff, Philadelphia's chief information officer, said on Tuesday the Atlanta-based internet provider has won the contract to place Wi-Fi access points on telephone poles throughout the city, beating a competing proposal from HP. Most city residents will pay $20 per month for access.

Neff said: "EarthLink will fund, build and manage the wireless network, and will provide Wireless Philadelphia with revenue-sharing fees to support our non-profit goals of getting computers into households with training and working with our neighbourhoods to do economic development."

While other municipalities have created local wireless networks, Philadelphia is the largest city to date to formalise such a project. Negotiations on some remaining details - such as what percentage of subscriber fees go to the city - are scheduled to take place over the next 60 days, with a final contract signed and construction expected to begin at that time. (On Monday, San Francisco mayor Gavin Newsom announced details of his plans for a citywide wireless network.)

Philadelphia's plans haven't exactly engendered political amity. The city has faced criticism from local telephone provider Verizon Communications and local cable operator Comcast.

It also generated a state law aimed at restricting municipal wireless networks - and even sparked proposed federal legislation that would effectively prohibit state and local governments from providing internet, telecommunications or cable hook-ups if a private company offers a "substantially similar service".

Philadelphia's plans differ from those of many other municipalities in one crucial way: EarthLink will own the hardware and take the financial risk associated with providing the service. If it flops, city taxpayers won't lose the money.

Neff said EarthLink will operate what amounts to the Wi-Fi backbone but multiple ISPs will be permitted to sell access. She said: "We're not looking to create another monopoly. We have that in the telecom and cable fields."

Donald Berryman, executive vice president of EarthLink customer support, said in a statement: "Initially, we will construct a 15-square-mile proof-of-concept area, and upon completion of the testing phase, Wireless Philadelphia and EarthLink will begin building out the remainder of the city's wireless network."

Wireless Philadelphia is a not-for-profit group created by the city government.

Discounted access to low-income households is expected to be about $10. By having cheaper wireless networks available to workers such as police and building inspectors, the city hopes to save about $2m per year over the cost of Verizon's EV-DO service, which typically costs about $70 per month.

Declan McCullagh writes for CNET News.com