EarthLink confirms Net phone service

EarthLink confirmed on Thursday that it has struck a deal with Vonage to offer telephone service over the Internet.

The telephone service will be a part of EarthLink's broadband offering, according to a company representative. The representative did not offer details about whether the company would charge an additional fee beyond its $41.95 to $49.95 monthly broadband subscription charge.

A Vonage representative confirmed the companies have struck an agreement, but neither company would elaborate on the deal's terms or service details. They said the deal would be announced in the next few weeks.

For EarthLink, the agreement signals the company's push to add more services to its business of selling Internet access. The third largest ISP has been trying to expand its broad subscriber base as its core dial-up business begins to erode. Last quarter, EarthLink saw the number of its dial-up subscribers decline 4 percent from 2001 to 4.03 million, largely because of saturation in the market.

The top two ISPs, America Online and Microsoft's MSN, also saw their subscriber bases decline or stagnate last quarter. Both services have responded by shifting their strategy to focus more closely on broadband.

In an attempt to lure more paying users, EarthLink has also struck distribution agreements with other Web services. Last year, the company shook hands with online music services FullAudio and MusicMatch to offer song downloads for a fee. EarthLink also offers online photo processing from Snapfish for a fee.

In January 2002, EarthLink acquired PeoplePC, which sells computers bundled with ISP service, for $10 million. Company officials touted the deal as a way to tap low-cost ISP customers who pay subscription fees of less than $10 a month.