The salvation of free Wi-Fi for Philadelphia?

Earlier this week, the City of Philadelphia announced that a group of local investors had agreed to take over operation of the city-wide Wi-Fi mesh network originally deployed by Earthlink.

(One of them, Mark Rupp, is featured in our Newsmaker of the Week podcast.)

Whether this will in fact "bring free wireless to Philadelphia," and whether the new and for-profit operator, called Network Acquisition Company, can create a successful business, remains to be seen.

And it remains to be seen how much will actually be seen: there's a striking lack of transparency about the entire deal.

I'm struggling with a cold so I haven't been able to pursue this in as much detail as I'd like. Here's what I've come up with so far.

There are significant changes in the new arrangement compared to the old. The operator seems to have complete autonomy from both the City (which continues its politically motivated stance of "championing" free Wi-Fi without actually doing anything, or paying anything, to bring it about), and from Wireless Philadelphia, the non-profit group of local businessness executives and activists who launched the city-wide wireless project several years ago. Earthlink, the former operator, at least had contractual committments to the the non-profit on behalf of the city.

Another change is that the myth of an Wi-Fi blanket that users can link to indoors is finally being abandoned: this will be an outdoor wireless network, bundled with wireline broadband services, and aimed at enterprise users.

So far, I've not been able to find any details of the actual transaction, or even any confirmation that the new operator, Network Acquisition Company (NAC), is actually paying anything to take over and run what the City and Wireless Philadelphia persist in calling a "valuable asset."

NAC's focus will be not on residential users but on business users, including enterprises, big non-profits (such as colleges and hospitials) and government customers. It will bundle outdoor Wi-Fi services with a variety of wireline broadband access and managed services based on fiber and copper. According to a sketchy one-page press release, NAC's "value proposition" lies in offering these customers cost savings that outstrip rival broadband providers, coupled with a range of new or improved network services, and the claim to "connect wired and wireless networks [that] other providers can not replicate" especially for customers with multiple locations.

Network Acquisition Company is a paper company. Its founders are evidently long-term, local business and social acquaintances, and more. Derek Pew is chairman of Boathouse Communications Partners, a local venture fund specializing in telecommunications. He was also the initial CEO of Philadelphia Wireless and, after a new CEO was brought in, continued as the group's primary strategic and technological consultant. Mark Rupp is a founder and director at Boathouse, a former accountant at Coopers & Lybrand and a former vice president for Verizon Wireless.

Both men are directors on the board of a Boathouse-backed voice and data provider, Remi Communications, founded in 2001 to provide advanced network services, including metro Ethernet, virtual private LAN service, and Layer-2/Layer-3 Multi-protocol Label Switching, to enterprise customers. In August 2007, Remi was awarded a Philadelphia city contract to design and support a new core network architecture to be the city government's main network transport. Remi's president, CEO, and CTO, is David Malfara, the third named investor in Network Acquistion Company, and like Drew and Rupp a founding director of Boathouse Communications. He's also listed as principal, along with Drew and Rupp, in Pew Broadband Advisors, a consulting firm that specializes in municipal broadband.

NAC seems to be a legal entity that will rely on the actual resources of Remi Communications to create, provision, and support the bundle of network services aimed at Philadelphia enterprise customers.

A fourth founding investor is Rick Razansky, founder of eCal Corp. www.ecal.com, which offers Web-based software for group scheduling, communication, and collaboration to e-commerce sites, carriers, and enterprises. He also founded MPower Mobile (originally Saphire Mobile Systems), offering to Europe and Asian customers banking and payments services through its Phire mobile debit network.

Two others identified are the former CEO of insurance giant UnitedHealthcare, local businessman Tom Knox, a Democrat who last year spent millions of his own money in an unsuccessful bid to Philadelphia's next mayor; and Dave Hanna, chairman of Hanna Ventures, a local venture fund.

This cozy set of personal and business relationships isn't inherently wrong, or even badf: it could in fact facilitate the evolution of the Wi-Fi mesh in the city. But so far, there's been no disclosure about what, precisely, the "deal" between NAC, Wireless Philadelphia, and the City actually entails, or how the terms of the deal will be judged or enforced.

The City's press release said the Mayor's office paid a "local, independent consultant to analyze the merits of the deal and ensure that it was structured correctly to meet the ultimate goal of digital inclusion." But the consultant isn't named.

What has been made clear is what NAC is NOT doing. It's not "affiliated" with Wireless Philadelphia or the City. Meaning: it's just one more privately held company offering broadband services to the city customers.

NAC will not optimize the Tropos-based mesh network to reach indoors. The Wi-Fi net will be only for outdoor network access.

And NAC will not offer residential/consumer customer service help. You might be able to connect inside your home if you're close enough to a mesh node ("this is not a goal for the company", according to the press release), but don't count on it, and don't count on NAC helping you.

So "free Wi-Fi service" now means "being able to connect to the Wi-Fi net when you're outdoors." NAC's first steps over the next several months are to evaluate the existing network, tune it for outdoor use, and expand coverage through the rest of the City. The avowed goal is to "extend the reach of wired networks rather than competing with them."

That's not a bad idea, actually, though I can't see that sitting well with most "digital inclusion" advocates. This idea shifts the focus from all-wireless to using wireless where it makes sense, and using it to leverage existing and new copper- and fiber-based broadband services. It's also an idea that a variety of tier 1 and tier 2 network operators are acting on.

NAC is "exploring" services that will bring in additional revenue, apparently to subsidize those of its business customers who would be willing to wirelessly share their broadband access with nearby consumers and residents. The services could include sponsorships, location-based advertising, and specialized but unnamed consumer applications.

The NAC release says that Wireless Philadelphia and Knight Foundation will "continue to use the network to deliver their important work of education, training, and digital inclusion for area residents." If it was really important, NAC or the City would actually do something about it.

So far, from what I can see, this deal means a group of investors have been given a gift of several millions dollars worth of wireless mesh that they're going to tie into an existing bundle of wireline broadband services for people who can pay for them.

In other words, they're going to do something very similar to what Philadelphia-based Comcast, and Verizon Wireless are doing.