The agreement is Vonage’s first muni WiFi deal, and will give it access in the cities where EarthLink currently offers the service: Anaheim; Milpitas, California; New Orleans; and Philadelphia.

The deal also will include any new EarthLink muni networks set up during the next three years, including the one currently being negotiated in San Francisco for free basic WiFi coverage, said EarthLink spokesperson Jerry Grasso.

Vonage senior VP Brooke Schulz said Vonage will only be selling bundled VoIP and WiFi services, rather than WiFi alone, because our core offering is the phone service. Initially, it will offer the WiFi service bundled with its existing WiFi phone, launched about 18 months ago, which works only through a WiFi network.

The service will be available only to Vonage WiFi phone customers. In other words, users of other vendor’s WiFi phones will not be eligible, Schulz said.

Vonage would not disclose pricing for its new service, but Schulz noted that it buying EarthLink’s wholesale WiFi service for $10 per user per month. We will mark it up a little bit, she said. And the company’s WiFi phone calling service ranges from between $15 to $25 a month for basic packages.

This likely doesn’t mean the beginning of the end for cellular carriers, given the relatively small size of EarthLink’s muni network footprint. But it will be a smart play by Vonage, particularly if its price is right. Of course, Vonage would do even better by partnering with a cellular carrier to offer WiFi-cellular VoIP roaming.

Later in the year, the company plans on offering a home-based WiFi phone that is not mobile, bundled with the WiFi service, she said. This would be an alternative to the wireless service.

In the future Vonage also plans on selling a new Vonage WiFi phone for use on the EarthLink network, according to a company statement. Schulz confirmed that Vonage was looking to enable dual-mode WiFi-cellular VoIP roaming in order to do more of a true wireless. She said Vonage was open to partnerships with cellular carriers in order to provide VoIP wireless roaming capabilities.

We’re looking at a lot of different technologies, Schulz said. We think this is a really huge area that is going to really explode and that’s where the VoIP market is going to go in terms of mobile. It is going to be one of the top things we’re going to focus on in 2007.

And the deal with EarthLink is not exclusive on either side, she noted. We will be looking for a variety of partnership deals to offer a variety of wireless access options to its customers, Schulz added.

EarthLink currently doesn’t offer its own WiFi VoIP service, but likely will at some future point, spokesperson Grasso said. He declined to provide any timing details. In the meantime, EarthLink expects its own TrueVoice VoIP product and service will win customers on the basis of their quality, he said.

Grasso said EarthLink struck the deal with Vonage in the spirit of open access. Of course, its agreement with the city of San Francisco and likely with the other municipals it operates in specifies that EarthLink makes it network available to other vendors in order to avoid a monopolistic market.

EarthLink’s forthcoming San Francisco network, which was okayed by the city’s major on Friday and is now awaiting approval from the city’s Board of Supervisors, will offer a free 300 Kbps WiFi service to anyone in the city.

Atlanta, Georgia-based EarthLink will also offer a faster 1 Mpbs service, which it will charge $21.95 a month for. EarthLink is expected to spend between $14m and $17m to build and maintain just the San Francisco network, in addition to about $100,000 in city access expenses.

San Francisco will become the second EarthLink muni network, including New Orleans, to offer citywide WiFi gratis, Grasso said.

How well Vonage will be able to compete in these free markets remains to be seen.

This year, Vonage will also continue to invest in its infrastructure and plans to offering new features, including customization and messaging, in addition to mobility, Schulz said.

The re-branded EarthLink service will be run by a subsidiary of Holmdel, New Jersey-based Vonage, called Vonage Network Inc.