EarthLink Inc. has tried for months to sell off the municipal wireless Internet business it set up in cities nationwide, including the Wi-Fi network the firm installed here in 2006, due to plummeting profits.

Milpitas City Council voted 4-0 April 15 to authorize the city manager to execute an agreement with EarthLink for the transfer of Wi-Fi assets to City of Milpitas within 30 days.

"Because of a change in strategic direction, EarthLink is divesting their municipal networks," Bill Marion, Milpitas Information Services director, told council members.

As part of the agreement that had been negotiated since last month, Marion added the transferred Wi-Fi network could be employed for public use here. The agreement will release EarthLink from future contractual obligations.

Marion said the city will assume ownership of all network assets, the approximately $790,000 purchase price plus installation.

In addition, Atlanta-based EarthLink will be responsible for all existing liabilities.

"There would be a 30-day transition period, during which EarthLink would notify their subscribers," Marion said.

He said the city will monitor the Wi-Fi network's operation and performance during that period.

"EarthLink would be obligated to make any corrections, or to correct any deficiencies noted during those 30 days," Marion added.

When the transfer of the network is completed, he said City of Milpitas will likely use a scaled down network for municipal use only, which would cost the city $10,000 to $12,000 a year.

"Our major costs are going to be electricity," Marion said.

Marion said the city intends to sell excess assets worth approximately $200,000 and deposit proceeds in an equipment replacement fund, to cover operating costs.

No subscription service for residents will be offered by the city. However, Marion said the city would continue to provide free public access Wi-Fi at Milpitas' senior center, sports center and community center. Similarly, public access Wi-Fi is planned in Milpitas City Hall's Council Chambers.

The council's approval of the agreement further directs city staffers to return with a progress report at the end of the 30-day network transfer. Marion added city staff would continue to seek a new operator for citywide public access.

"And when we potentially have an operator, bring that back to council as well," he said.

In dismal financial reports released earlier this year, EarthLink's municipal Wi-Fi business lost up to $80 million in 2007, compared to $20 million a year before. Nationwide, EarthLink's Wi-Fi assets are valued at $40 million.

Besides municipal Wi-Fi to Milpitas residents, EarthLink had also provided Wi-Fi services to the city's police and fire departments under a "Government Worker Program." EarthLink's Wi-Fi equipment featuring global positioning system technology had been installed in about 30 Milpitas police vehicles, and about 20 fire vehicles.

The public sector Wi-Fi ties into Milpitas' computer-aided dispatch, and allows emergency dispatchers to locate and send the closest appropriate police or fire units to an emergency.

The new agreement will retain those assets.

On the same night Milpitas City Council approved its own agreement with EarthLink, city leaders in Corpus Christi, Texas approved a similar contract.

However, in its agreement, Corpus Christi will give up $1.59 million in payments that EarthLink allegedly owed that city. Corpus Christi's agreement with EarthLink would transfer the network within 45 days, media reports indicate.

Other cities are affected by EarthLink's decision to bail out of municipal Wi-Fi. Philadelphia, New Orleans and Anaheim, Calif. are still in discussions with EarthLink about the future of their own Wi-Fi networks.