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Wireless Philadelphia, the nonprofit company charged with starting and maintaining wireless Internet throughout the city, was looking for suitors about a year ago to help Philadelphia go “live.” Mayor John Street incorporated Wireless Philadelphia as a nonprofit in March 2005 with the initial task of finding contributors to get the infrastructure up and running. The work that goes along with making a deal like that happen – including sifting through request for proposals, contract negotiations, government relations, technology and intellectual property – was divvied up between several local attorneys. Wireless Philadelphia went from looking for contributors to help it build the wireless network to getting a proposal from EarthLink that would put all of the cost on the Internet provider. Bringing together a local government, a nonprofit and a major corporation with the hopes of everyone being happy in the end is not the easiest of tasks, but through the work of almost a dozen attorneys, Wireless Philadelphia is about to begin the first stage of making Philadelphia . . . well, wireless. Thomas H. Speranza of Kleinbard Bell & Brecker said he and his firm were involved through firm managing partner David L. Hyman’s close relationship with the Street administration. They handled the corporate and transactional aspect of the deal as well as a bit of lobbying on behalf of the nonprofit. Speranza said his firm did some bond work for the city, and when this deal came about, the administration called Hyman. EarthLink offered to pay for the cost of the project and give a portion of the subscriber fees to Wireless Philadelphia each year, Speranza said. Once it agreed to enter into contract negotiations with EarthLink, Wireless Philadelphia brought on technology law attorney and solo practitioner Stuart Rudoler. EarthLink’s local representation included Marilyn Z. Kutler of Schnader Harrison Segal & Lewis and A. Michael Pratt of Pepper Hamilton. Kutler said she got involved with the deal when EarthLink’s counsel in Atlanta mentioned her as someone who could handle public/private contracts in Pennsylvania. She said she dealt with the Pennsylvania and Philadelphia government issues in regard to contract negotiations, but left the lobbying to Pratt. Speranza said that because this deal was the first of its kind, it took “forever.” EarthLink was in the process of negotiating similar deals with other major cities, and Speranza said that the company would sometimes try to use what it was learning to get a better deal with Philadelphia. He said, however, that it was very helpful to have the mayor and his chief information officer, Dianah Neff, heavily involved in the negotiations. Speranza said “quarterbacking” the whole project was often a difficult task. Rudoler said that after moving to solo practice from Wolf Block Schorr & Solis-Cohen, it was a nice to have the large corporate backing again. “It’s a good example of how, sort of, a solo-practitioner can work with a large firm,” he said. It was coordinating everyone else that sometimes became a little bit difficult. “One of the big challenges was that as a sort of quasi-governmental entity [Wireless Philadelphia], the city had a ‘we’ll tell you the terms of this contract’ mindset,” Rudoler said, adding that such a mindset makes sense because that is how a city government generally works. “EarthLink rightfully took the approach that this isn’t a typical government contract” because they are paying for everything and taking the risks. Rudoler said that it made for some very long nights, but ultimately allowed him to work on the largest wireless Internet deal in the country. The contract was ultimately signed in mid-February 2006, Speranza said. Neff, Hyman and Denise Smyler of Smyler & Gentile in Philadelphia handled the lobbying efforts on behalf of Wireless Philadelphia when the final contract went before the city council. The council approved the contract with a few changes, Speranza said. City Solicitor Romulo L. Diaz Jr., Divisional Deputy City Solicitor Michael Athay, and special corporate counsel Kevin Greenberg were involved on behalf of the city. Neither the law department nor Neff returned calls for comment. Smyler and Pratt did not return calls for comment either. Deal Details Under the agreements, EarthLink will build, manage and maintain a wireless network over the city’s 135 square miles at no cost to taxpayers. EarthLink will install transmittal devices on approximately 4,000 of the city’s street lamp pole arms for which it will pay the city. In addition, EarthLink will provide city residents and visitors with free hotspots in 22 locations around Philadelphia, and provide the city with 3,000 free or discounted WiFi accounts and 700 discounted T-1 accounts to be used at the city’s option, according to a release issued by the mayor’s office. According to Speranza, it will cost about $20 million for EarthLink to build the network, plus the minimum of $2 million over the first two years that it will pay Wireless Philadelphia. EarthLink will also pay an annual pole-use fee to the city for the use of the electrical poles to mount necessary equipment, Speranza said. He estimated that fee to be around $500,000 per year. Wireless Philadelphia will use the revenues it receives from EarthLink (5 percent of access revenue) and other money raised to invest in educational and social programs to help Philadelphia citizens. The $2 million that EarthLink pays to the city will also be used for programs to help bridge the digital divide. Initial plans include purchasing 10,000 discounted computers for children and low-income residents to use and for associated training programs. Wireless Philadelphia will also be responsible for building awareness of the program among audiences across the city, according to the release. The costs of the service will be geared to users’ different needs. Economically disadvantaged users will be charged $9.95 a month, while other Internet service providers will be charged a wholesale rate that allows them to sell access for $20 a month or less to retail customers, according to the release. According to an official statement from October 2005, Earthlink will implement a 135-square-mile citywide WIFI mesh network expected to be operational by the fourth quarter of 2006. Rudoler said that EarthLink is most likely gearing up to start the initial phase of the contract, which calls for a trial run that is set up on 15 square miles of the city to look at the results. Please send any Deal Makers stories to Gina Passarella at [email protected].

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