Covad, a provider of high-speed Internet connections, was the eventual winner, but the terms of the deal were not released.
By offering digital subscriber line (DSL) service, Fry's is the latest brick-and-mortar retailer to become an Internet service provider. Others, such as Best Buy, Kmart and Staples, have launched ISPs as a marketing strategy. They say they hope to lock customers into visiting their sites each time they log on.
Kmart's e-commerce unit, BlueLight.com, has tapped into the retailer's huge customer base by handing out software disks at each of its more than 2,000 stores. BlueLight announced this month that it has attracted more than 3 million customers.
Unlike most of its competitors, however, Fry's does not sell any merchandise on its site. A company representative said in February that this was "the first stage" in Fry's Web strategy.
Fry's has 16 stores in California, Arizona, Oregon and Texas, many of which are designed around a theme, such as a Mayan temple or crashed space ship.
Some stores also contain unique technology artifacts. The Sunnyvale, Calif., store, for example, has the motherboard of an original Apple computer on display.
Customers, however, have something of a love-hate relationship with the retailer. Geeks, bargain hunters and early adopters praise the chain for its everything-under-the-sun inventory, which runs the gamut from pretzels and stuffed animals to processor upgrades and 60-inch televisions.
But the stores have developed a reputation for having long lines and spotty customer service. Several customers have launched Web sites that include diary-like commentaries exhaustively detailing their experiences.