The Southern California city is key to EarthLink's strategy as it adapts to changing online habits and the evaporation of its dial-up business. Anaheim is the biggest city so far to embrace a nationwide trend of creating citywide wireless internet access for residents and businesses.

"We want to see competition for broadband internet access," said Mayor Curt Pringle, who will join EarthLink executives for a "wire-cutting" ceremony. The project is expected to be completed by the end of the year.

The service will cost $22 a month, more than the base prices of limited broadband offered by phone and cable companies that provide most internet access across California.

Unable to receive cable modem service at her Caracol Toy & Candy shop three blocks from City Hall, Rosie Navarrete became EarthLink's first customer, switching to wireless during a test period that started at the end of April.

"The first thing I noticed was that I got reception everywhere in the store and the surrounding areas outside," Navarrete said.

EarthLink figures it needs to attract 15 percent to 20 percent of the households with internet access to make its effort profitable.

"We're looking at it as a replacement for dial-up internet users, for people who are new to the internet and for those who want a roaming service," said Donald Berryman, president of EarthLink Municipal Networks.

About half the nation's online households still use their telephone connection to dial into the internet, according to Forrester Research Inc.

Last year, Earthlink lost about 300,000 dial-up customers. Despite gains in broadband customers, its net subscriber base fell by 73,000.

EarthLink doesn't own any broadband access pipes and, given changes in regulations, it can't assure itself of holding onto its broadband customers. That's why EarthLink Chief Executive Garry Betty decided to go after the municipal wireless market.

The company is starting to put together a 135-square-mile network in Philadelphia as well as systems in New Orleans and in the Silicon Valley town of Milpitas, Calif. It has won contracts to unwire San Francisco and Aurora, Colo., and is a finalist in bids for building networks in Long Beach, Calif., Pasadena, Calif., Minneapolis, Arlington, Va., and Grand Rapids, Mich.

In Anaheim, EarthLink is building two interconnecting systems based on wireless technologies known as Wi-Fi and WiMax.

Residents within six square miles of City Hall downtown can get wireless broadband now, and coverage will grow to 10 square miles within a month, said Jay Dugas, the company's local network director. By the end of the year, Earthlink plans to cover all of Anaheim's 50 square miles.

At some point, Dugas said, EarthLink also will offer higher speeds to businesses.

But even as EarthLink completes its network, AT&T is rushing to finish upgrading its system to a mix of fiber-optic and copper lines to provide more reliable digital subscriber line, or DSL, and pay TV.

US Senate rejects Net Neutrality Amendment
The U.S. Senate has voted about a Net Neutrality bill yesterday:
A proposal to prevent Internet service providers from charging Web firms more for faster service to consumers failed yesterday to clear a Senate committee.

The vote was a setback for such companies as Google Inc., Yahoo Inc. and Skype Technologies SA, which had pushed for rules that would prohibit telecommunications companies from controlling the flow of online content. The Senate Commerce, Science and Transportation Committee took up the matter as part of a larger telecommunications bill, which passed 15 to 7. But some telecom experts said the party-line, 11 to 11 vote on "net neutrality" could signal a tougher fight to get the larger telecom bill passed on the Senate floor.

These parasitic phone services are running on your high speed data circuits without paying a connection charge or royalty of any kind, but constantly offering dial tone at a lower cost than you, essentially stealing from your profitable consumer and business phone plans.

Well what are you going to do? The answer is simple—just swat these blood sucking leeches and be done with them before they grow too big! You call all your henchmen together for a meeting, stomp your foot, just like something right out of a Hollywood script. "I want these buggers taken care of!" you'd shout.

That's a dramatic scenario—and perhaps one that consumers don't question. Believe it or not, however, the operators of large telco companies, though profit driven, do not run roughshod over the consumer. Below we'll detail some of the more likely scenarios and trade-offs being made in the face of this new competition.

Cultivating a reputation of trust is foremost with the service providers. Despite the bumps in the road, these folks know you have some choices as a consumer and are sensitive. Yes, I'll concede that large providers do cycle through periods of poor service followed by corrections like any other business. Keep in mind this is due to the normal apathy that creeps into any large organization and not some far flung conspiracy to rape consumers. There is enough competition, and consumer-based political pressure, that the last thing any provider wants to do is bring on a self induced firestorm of criticism for an unsustainable short-term gain.

FON, which aims to create a network of home users and small businesses to resell wireless access to passersby, said on Sunday it will subsidize $60 Cisco Linksys or Buffalo routers for $5 in the United States or 5 euros in Europe.

Routers are small boxes users connect to cable or telephone Internet connections to broadcast wireless signals to nearby devices, inside a home, business or surrounding neighborhood.

Juergen Urbanski, North American general manager, said FON, which in February raised $21.7 million from backers including the founders of Google and Skype, is looking to turn the brand-name equipment into what it calls "social routers."

The goal of the Madrid-based company is to build block-by-block networks of shared wireless connections around the globe, turning local Wi-Fi users into an army of "foneros"—its term for people who share wireless access.

As the company's name implies, FON aims to provide wireless Internet access not just to computer users but also for mobile phones and the latest portable gaming devices as they roam.

"(Wi-Fi) coverage is universal in big cites, but access is not," Urbanski said of how many of the wireless Internet links broadcasting from businesses, homes, hotels and cafes remain private and unavailable, even to users ready to pay for them.

Urbanski, a former director of marketing at data storage maker Network Appliance Inc., said FON is aiming to have 50,000 working hotspots worldwide by September, 150,000 by year-end and 1 million hotspots by the end of 2007.

So far, 54,000 people globally have signed up to become "foneros," up from 3,000 in February, according to the company. The $5 router giveaway is designed to overcome obstacles to helping consumers quickly set up hotspots using FON software.

In exchange for receiving a $5 box, users must agree to share their wireless connections with other FON users for 12 months, the company said. Shipping and taxes are extra.

"We are changing the economics of Wi-Fi," Urbanski said during an appearance on a wireless innovation panel at the Supernova conference on Friday in San Francisco. "We are just piggy-backing on the back of existing Wi-Fi connections."

But FON could face legal battles with telephone and cable TV carriers who bar users from sharing Web access they supply, similar to how Hollywood sued and put the original Napster out of business for enabling millions to illegally share music.

Urbanski said FON is seeking to win over carriers who lease the underlying Internet connections by arguing its strategy can expand the market for Wi-Fi by giving customers a way to roam away from home, making them more loyal subscribers at home.