Virgin Mobile will acquire failed mobile virtual network operator Helio for $39 million in equity and, if the last two years are a trend, much more in costs. Founded as a joint venture between Earthlink and SK Telecom, Helio burned through $560 million in its first two years. [PaidContent]

After EarthLink abandoned a citywide Wi-Fi project for Philadelphia after only 6,000 customers signed up for the $20/mo. service. Now local investors Derek Pew of Boathouse Communications and Mark Rupp, a former Verizon executive, are planning to take over the network, which will be free and ad-supported. When first announced, the project was on of the largest Wi-Fi buildouts proposed. But after being completed, few users signed up because it was slow, didn't reach far into the city's signature row houses if at all, and was not much cheaper than adding Internet to your cable or phone connection. Earthlink had previously attempted to hand the network off an Ohio-based non-profit. But Wi-Fi was never a particularly good technology for these projects, and it's high time to abandon the pipe dream.

No one wants EarthLink's Philadelphia Wi-Fi network, first announced four years ago — not the city, not a nonprofit. EarthLink has filed a federal lawsuit to remove its equipment from street lights and limit its liability to $1 million; it plans to shut down the network on June 12. [CNBC]

It wasn't the interview with now-former CIO Douglas Merrill, which served to convince me that the Canadian-nice Merrill will get eaten alive by the music industry. It wasn't the moment when Jim Killeen of Cobe, Ireland, a Catholic priest, argues the Pope's position on human sexuality with Jim Killeen of Denver, Colorado, the swinger and self-described "tranny chaser."

Rolla Huff, the CEO of Internet service provider EarthLink, has made a choice many in Silicon Valley find incomprehensible: He's no longer bothering to get new customers. Here, the moment you stop growing — no, the very second your momentum falters — you're instantly written off. But the reason why EarthLink swung to a $54 million profit in its first quarter was simple. Its new dial-up customers — yes, people are still signing up for dial-up — simply weren't worth its while, and EarthLink stopped spending money to market service to them. Huff has also pulled the company out of the municipal Wi-Fi market, selling some networks to city governments and shuttering others. He's similarly disentangling the company from its Helio cell-phone joint venture, a half-billion-dollar fiasco. All of that doesn't leave EarthLink with much of a future.

Mayor Gavin Newsom's office tried to garner good press by selling his efforts to bring free Wi-Fi to San Francisco as an effort to bring broadband to the poor, under the auspices of Project Tech Connect. Commercial partners Google and EarthLink just wanted to sell location-targeted ads with a franchise agreement to shut out competitors. Now Brewster Kahle's nonprofit Internet Archive has done what Newsom, Google and EarthLink couldn't. No, not hold yet another press conference. Kahle actually brought 100-megabit-per-second broadband to low-income households.

Instead of holding onto cash, tech firms such as Monster, Palm, Intuit, EarthLink and MetroPCS in recent years bought something called auction-rate securities. Basically — very basically — that means these companies loaned out around $856 million because banks told them they'd earn more than they would just holding on to the cash. Only thing is now, with the credit markets being what they are — crappy — no one else wants to buy the rights to collect on those loans. So all that cash is sewn up in paper. That could soon hurt because the companies are going to need that cash eventually, an exec at one Wall Street trading firm told the WSJ. And when they do, he said, they should expect "a steep loss."

Citing a more challenging consumer environment, greater customer-acquisition costs and investor reluctance to pay above-market prices for shares, Goldman Sachs today cut price targets for Internet stocks including Google, eBay, and Amazon by 10 percent. For more reasons why Wall Street is suddenly less impressed with your tech stock portfolio, see Goldman's entire report, embedded here:

Helio CFO Todd Tappin and execs Michael Zemetra, Terry Boyle and Kieran Hannon will leave the company by March 31. A source tells us former CEO and current chairman Sky Dayton won't remain long, either. The cell-phone carrier started as a joint venture in 2006 between EarthLink, the Internet service provider founded by Dayton, and South Korean phone company SK Telecom. Since then, it has disappointed, and EarthLink ran short on cash to invest. When SK Telecom reupped with another $270 million last fall, reducing EarthLink's share to 22 percent, this kind of shakeout was expected. In fact, our source tells us most if not all executives from the "EarthLink side of the house" will depart the company on or before March 31.

San Franciscans may remember EarthLink CEO Rolla Huff leaving them in the lurch when he abruptly backed out of the city's municipal Wi-Fi project. Well, it turns out Huff, like any sensible CEO, doesn't want to lose money on a venture that probably will minimize shareholder value. The Internet service provider is cutting its losses and abandoning all plans to build citywide Wi-Fi networks. A shame. We thought it was just San Francisco's toxic stew of entitlement, anticapitalism, and government dysfunction that drove EarthLink away.

CAMBRIDGE, MASS. — Could it be that Sky Dayton is feeling a little lonely? EarthLink, the company he founded, refused to participate in the latest round of financing for Helio, the upstart wireless carrier he now heads. In a keynote speech at Technology Review's EmTech conference, he touted his company's service not as, say, letting you make calls and surf the Web, but "connecting you to your community of friends." So it's a social network! Ah, but a social network that requires buying a phone (as much as $295) and signing up for service ($85 to $90 a month, on average). No wonder Dayton's ersatz social network, cleverly disguised as a cell-phone company, only counts 140,000 users, and is losing hundreds of millions of dollars. Somehow I don't think Facebook CEO Mark Zuckerberg is sweating over this one.

Sky Dayton's wireless company, Helio, as rumored, is getting new funding without help from co-owner EarthLink, an Internet service provider facing financial straits. Joint-venture partner SK Telecom is investing $270 million in Helio and renegotiating its agreement with EarthLink. [Reuters]

With San Francisco's municipal Wi-Fi program stuck in purgatory thanks to EarthLink's budget concerns, Internet service provider Sonic.net aims to be the city's wireless savior. Not that legions of dirty hippy leechers deserve free Wi-Fi. Nonetheless, Sonic says customers can obtain a subsidized wireless mesh router and hook it up to a DSL line. Why? To create a network of wireless access points. Web surfers browsing from the wireless network will be served Google ads to subsidize their surfing. Sonic will implement a profit-sharing plan that will credit their customers' accounts. Sounds like both a cheap attempt to turn EarthLink's woes into free PR, and a blatant ripoff of Fon's business model. More power to Sonic. A plan so crass can't help but work.

Helio, Sky Dayton's wireless-service provider, is cutting back, laying off one out of seven employees, mostly in sales. It's now concentrating efforts, the company says, on its 20 largest markets. The company only has 100,000 subscribers, and 600 employees even after the cutbacks, and is expected to lose more than $300 million this year. EarthLink, the troubled Internet service provider founded by Dayton that's one of Helio's two backers, is rumored to be looking to pull out.

Following yesterday's daily dose of EarthLink doom — the Internet service providerlaid off 900 employees, including municipal Wi-Fi networks president Don Berryman — the copmany has decided San Franciscans aren't worthy of free Internet after all. CEO Rolla Huff called up god-mayor Gavin Newsom to say, as a Newsom spokesman put it, "they were not going to be able to fulfill their end of the bargain." The mayor's office says it's still committed to blanketing San Francisco with Wi-Fi, and is counting on Google to remain an "anchor" while the city shops for more vendors. Newsom is also placing a measure on November's ballot asking to use public and private funds to get the network of the ground. Good luck with getting free Wi-Fi, you dirty hippies. As we've said, you don't deserve it.

Earlier this month, Internet service provider EarthLink held San Francisco's proposed citywide Wi-Fi network hostage while asking the city to pony up some extra cash. Turns out that wasn't strong-arm tactics — EarthLink is in a world of financial hurt. To cauterize the bleeding, it's cutting 900 employees. Among the victims is Don Berryman, the president of municipal Wi-Fi networks. EarthLink won't be filling the position.

Google blunderkind Chris Sacca's plans for world domination are currently on hold. EarthLink, Google's partner in building a citywide Wi-Fi network in San Francisco, has delayed city officials' vote on the project's contract, until September, if ever. EarthLink CEO Rolla Huff is earning his last name by giving San Francisco the silent treatment. Not only has it stonewalled the city's proposal for a shortened contract and improved speed and security settings, but EarthLink now wants San Francisco to foot the bill. "The Wi-Fi business as currently constituted will not provide an acceptable return," Huff told Dow Jones. "We're going to look for municipal governments to step up and become a meaningful anchor tenant." Translation: Pony up! Of course, it has to be said: San Franciscans richly deserve this. The way we're behaving, there's no way we deserve free Wi-Fi. No wonder Chris Sacca and his partners are taking their squishy exercise balls and going home.

Say what you want about the Google hegemony, I'd trust them before San Franciscan landlords and neighborhood overlords any day. Reader Davis Freeberg saw San Francisco nutjobs shanghai a town meeting with Google and Earthlink, meant to bring the city one step closer to city-wide free and cheap wifi plans. He reports below, and adds more at his blog.

Five Internet giants are pooling their resources to create the largest child porn library on Earth.

Google and Earthlink just snapped up San Fran's city-wide wireless bid, as long as the Board of Supervisors takes a city panel's recommendation (a recommendation needed for talks to begin).