Internet provider Earthlink announced on Tuesday that it will shut down its Philadelphia municipal Wi-Fi network, the flagship of its municipal wireless initiative and remove it from the city's street lights.

According to Macworld, Earthlink released a statement citing months of negotiations with the city and a nonprofit that had planned to offer free Wi-Fi access on the network. The deal fell due to a disagreement among the city, the nonprofit and the group Wireless Philadelphia.

Earthlink has declared that it will provide a 30-day transition period, finally shutting down the network on June 12th. The company will offer its Wi-Fi subscribers discounts on other Earthlink services.

The Philadelphia Wi-Fi project, begun three years ago, spanned 135 square miles yet drew criticism from Verizon Communications, which claimed it was unfair to use tax dollars to create a network that would compete with private service providers. Per Earthlink's proposal for the project, the company financed, built and operated the network at no cost to taxpayers, sharing revenue with Wireless Philadelphia. The idea was to make Wi-Fi available to residents and businesses throughout the city, reaching areas the city said didn’t have broadband, and to offer the service at a subsidized rate to low-income residents to bring them online.

Despite the popularity of the idea, delays occurred in rolling out the network and the user base remained small. In court papers filed yesterday, Earthlink claimed it only had 5,034 regular residential and business subscribers and 908 customers under its subsidized plan. EarthLink said it knew by late 2007 that the business was unsustainable.

Similar municipal Wi-Fi networks from Earthlink also failed to deliver and the company began to close its municipal Wi-Fi unit in 2007. Since then, Earthlink has given networks back to cities including Corpus, Christi, Texas and Milpitas, California. The company offered to give the Philadelphia network to the city or the unnamed nonprofit for free, after which the nonprofit would offer free service, according to EarthLink. Representatives of the city and Wireless Philadelphia were not immediately available for comment.

If you're a Philly resident or can offer additional details about the network closure, please let us know over in the comments or forums.