Earlier this week, I wrote about the money that EarthLink owes the city of Philadelphia. That’s separate from the portion of revenue that EL is supposed to pay directly to Wireless Philadelphia: the greater of 5% or $1 of each subscription payment. (Has any of that money been paid?) What most people don’t know is that Wireless Philadelphia is actually required to pay some of that money back to EarthLink.
One of the most convoluted sections of the WP-Earthlink Contract covers the structure of payments to PECO, the local utility. WP agreed to cover half of all electricity costs for EarthLink’s wireless routers. WP’s payments would be deferred for the first two years so they could get going, but then the debt from those first two years would have to be paid to EarthLink over the following eight. By my reckoning, those two years are up this fall. How much does Wireless Philadelphia owe?
The motivation for structuring the payments the way they did was to guilt trip PECO into giving EarthLink a better rate. PECO wanted to charge high rates and a new account fee for each of the 5000+ wireless routers. This arrangement made it Greg Goldman’s job to convince them to give EarthLink a better deal. This matter was still not resolved when I interviewed Mr. Goldman in October 2006. Was it ever worked out?
Whatever they worked out would have blown to hell by the unexpected 40 percent increase in wireless nodes, which would bring a similar increase in the electricity usage. The routers use electricity even if no one is using the network. At this point it’s anyone’s guess how much Wireless Philadelphia will owe to EarthLink and PECO come fall. But given how many subscribers there are, you can be sure that WP’s share of the revenue will not cover it.
And that’s not the only expense WP needs to worry about. On top of this debt to EarthLink and any new utility charges, WP received a $1.4 million loan from the Philadelphia Industrial Development Corporation (PIDC) to get off the ground before it even selected EarthLink’s bid.
In City Council hearings in 2006, Councilmember O’Neill expressed concern that this loan would turn into a grant. Has this happened? If so, it represents a significant contribution from the taxpayers of Philadelphia, on top of the $463,000 spent on Civitium and another $800,000 ($200,000 per year from 2004 to 2008) on a project manager in the Mayor’s Office of Information Services.
To be clear, I’m not making any judgments on the worthiness of any of these payments. I’m simply pointing out the taxpayer dollars that have been spent on a project that was supposed to cost the city nothing.
If the debt to PIDC has not been forgiven, then that’s $1.4 million Wireless Philadelphia owes back to the taxpayers of Philadelphia, on top of its debt to EarthLink. Greg Goldman has bills to pay.