New York Seeks to Avoid Wi-Fi Disruption After Gowex’s Fall

Jul 08, 2014 4:06 pm ET

(Updates with comment from neighborhood group in sixth paragraph.)

July 8 (Bloomberg) -- New York City authorities are seeking ways to avoid a disruption of free public Wi-Fi services after Spain-based provider Let’s Gowex SA said it will declare insolvency after having falsified financial accounts.

The city has a contract worth $245,000 with Gowex, one of the organizations picked last year to provide mobile Internet access across its five boroughs, said Ian Fried, a spokesman for the city Economic Development Corp. It has paid the company about $185,000 of that amount so far, he said.

The city government set up free-of-charge wireless corridors last year to cater to tourists and visitors and help attract businesses, and said it’s planning to expand coverage. Wi-Fi connections are becoming more important as they offload traffic from mobile networks and frequently offer higher bandwidth.

In Manhattan, coverage includes areas of Flatiron district and Roosevelt Island. Corridors also run along East Fordham Road from Grand Concourse to Arthur Avenue in the Bronx, areas of downtown Brooklyn, Long Island City in Queens and St. George commercial district in Staten Island.

Downtown Service

The Gowex contract runs through Sept. 2016. The other partners in the program are neighborhood-improvement groups Downtown Alliance, whose sponsors include JPMorgan Chase & Co., Flatiron 23rd Street Partnership and Downtown Brooklyn Partnership and the Brooklyn Academy of Music.

Gowex’s collapse won’t affect Wi-Fi service in a downtown Manhattan corridor overseen by the Downtown Alliance, a non- profit organization, said Maria Alvarado, a spokeswoman for the group. The Downtown Alliance uses a different vendor to provide the service, she said in an e-mail.

Jenaro Garcia, the founder and chief executive officer of Gowex, stepped down July 6 after taking responsibility for presenting fake accounts for at least the past four years. Garcia had previously said a report from research firm Gotham City Research LLC claiming Gowex was overstating its earnings contained “lies.”

Deutsche Telekom AG, Europe’s largest phone company, said yesterday it was reviewing its network-sharing deal with Gowex.

--With assistance from Rodrigo Orihuela in Madrid.