October 11, 2005 10:00 AM PDT

EarthLink aims to evolve

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on DSL, simply because the phone and cable companies benefit from EarthLink's traffic on their networks, analysts say. But DSL providers especially have been turning up the heat in their quest to win customers. For example, Verizon Communications and SBC Communications have each slashed prices on their DSL services to $14.95, far below the prices Earthlink can offer its customers.

What's more, cable companies and DSL providers have been bundling broadband with other services to offer a "triple play" package that includes TV, high-speed data and telephony.

To combat these trends, EarthLink is also getting into the bundling game. The company will soon launch its voice over IP, or VoIP, service, called TrueVoice. The service is similar to ones offered by Vonage and AT&T, and it will be available to all EarthLink broadband customers throughout the country. EarthLink plans to aggressively price the offering. TrueVoice, plus an 8mbps DSL service, will cost around $70 per month.

"My worry is that by placing all these small bets on all these different things that EarthLink won't end up being able to be a national player in any one of them."
--Joe Laszlo, analyst, Jupiter Research

The company is also launching a line-powered voice service over DSL provider Covad's network. This service differs from other VoIP offerings because it doesn't require a special adapter to sit between the phone and the broadband connection. Instead, phones simply plug into any phone jack in the house. Voice calls run over the traditional local telephone network (whose copper lines are leased by EarthLink at regulated rates) until they get to Covad's central office, where they're turned into a VoIP call.

EarthLink is not completely new to the voice business. It has been reselling Vonage's VoIP service to its broadband customers since 2004. And in June, it launched a free Internet calling product called Vling. The service is very similar to one offered by Skype, which was recently bought by eBay for $2.6 billion.

Plenty of broadband contenders
But competition in the Internet phone business is stiff. Aside from Skype-eBay, there are other new competitors EarthLink has to worry about. AOL has announced its own free Internet voice service, and the company also plans to offer a phone-based VoIP service in early 2006. And Google and Yahoo also have IM-based VoIP.

EarthLink plans to take VoIP one step further by adding a Wi-Fi component into the mix. In 2006, the company will introduce a dual-mode wireless phone, which will allow people to automatically switch between a Wi-Fi-based VoIP network and the regular cell phone network. This service could prove to be a boon in Philadelphia, where residents could use the Wi-Fi network EarthLink is building to bypass the cell phone network when they are talking on their mobile phones within the municipal Wi-Fi coverage area.

EarthLink isn't stopping with VoIP and municipal broadband. It's also getting into the cell phone business. In April, it invested in a wireless joint venture with SK Telecom of South Korea. The new service, which will use the networks of other carriers like Sprint and Verizon Wireless, will launch in 2006. While most Mobile Virtual Network Operators have focused on providing low-cost prepaid cellular service, EarthLink is targeting a high-end demographic. The plan is to bring new cutting-edge services and devices, like the ones SK Telecom has deployed in South Korea, to the U.S. market.

"Basically, we're targeting kids with money," Betty said. "The see-me, feed-me, spoil-me kids are who we are going after. We think they'll find our service something they absolutely can't live without."

But analysts have concerns about EarthLink's strategy to diversify. They think the company may be spreading itself thin.

"My worry is that by placing all these small bets on all these different things that EarthLink won't end up being able to be a national player in any one of them," said Joe Laszlo, an analyst with Jupiter Research.

But Betty argues that all the markets the company is going after are large enough that even if EarthLink gets only a small fraction of the total business, it will still be significant. For example, there are roughly 200 million mobile users in the U.S today, and 40 million of them fit into SK EarthLink's target market. Betty said if the company hits its estimates it will have 1.5 percent of the market, which would translate into $2 billion in revenue by 2009. For EarthLink, 3 million new customers and $2 billion in revenue is huge, but it's a drop in the bucket compared with the rest of the industry, he said.

"If you look at some of the analyst reports out there, we won't have any customers in three years," he said. "But we've got some exciting initiatives under way that I think will continue to transform and evolve our business over the next two to three years. EarthLink of the future will look very different from EarthLink of today and in the past."

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17 comments

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Earthlink True Voice - NOT Viable
After 17 phone calls and 2 and a half hours on the phone (combined hold & tech support time) over the last two weeks, I have pronounced Earthlink's attempt at Do-it-Themselves Voice Over IP dead on arrival.

Not even a dial tone after all those calls. It took 3 tries up front just to get someone to take my order. NO - Earthlink doesn't have this anywhere close to right.

Please understand, I have been an Earthlink customer for years (dial up & cable broadband) ... and a very happy client at that. When I saw that they were offering their own brand of VOIP, I figured it was time to save some money. Instead - all I have is a big box of frustration.

Waiting for my R.M.A.
Posted by jeffriedl (1 comment )
Reply Link Flag
Earthlink True Voice- not viable
I placed an order for Earthlink True Voice on October 28, 2005. As of this writing, December 2, 2005, I have no Earthlink True Voice service. I have spent hours on the phone with courteous customer service representatives who have no new information. Is Earthlink True Voice dead in the water? I too have been a happy Earthlink customer. I begin, however, to doubt if they can pull this off.
Posted by walter haulenbeek (1 comment )
Link Flag
Earthlink Tru Voice
I too am having problems with Earthlink phone service. I just waited on the line for 47 minutes for a rep. My phone service was interrupted from my previous service for 4 days when I had been told there would be no interruption. They switched me from my previous carrier on a target date they had predicted my adapter would arrive. It arrived 4 days later at 5:00 PM-I have just waited another 15 minutes for customer service only to be told that I have 334 days left on my contract. I was never told there was a contract. So beware. There were many things they did not tell me. I couldn't even find out from them how to forward calls from my phone. The only way they knew I could do it was log onto the net and forward them through their internet service. In the last 5 days, I have had phone service for only a few hours today. Their reason I have no service now is the the system is down and it should be back up in 2 to 6 hours at which time I can check my E-mail for a reply from them.

I agree with the others that Earthlink internet has been a good experience but my nightmare with the Tru Voice phone service continues. I do not recommend this to anyone until they get the kinks out if they ever do.

To top everything else off, I cannot go back to my previous carrier unless I get a new phone number because they do not accept transfer numbers from Earthlink. I have had my current phone number for 30+ years.
Posted by jet919 (2 comments )
Link Flag
Earthlink True Voice
I too am a 5 year+ Earthlink customer. My reluctant conclusion is that Earthlink is nowhere near ready to be a phone service provider.

My experience over the last several weeks might make for a great comedy skit (e.g. "What is your mother's maiden name?" repeated dozens of times...) but the end result is I have no VOIP phone service after hours on the telephone (my land line) with Earthlink's customer support staff.


Earthlink True Voice has managed to establish a new benchmark for amazingly poor customer service!
Posted by will.stuart (1 comment )
Link Flag
Earthlink true voice
I have had earthlink broadband service for quite some time now and decided to go with their internet phone service. It seemed fine and I have even signed up for true voice, supposedly an upgrade. Since I did it seems like I have had nothing but trouble with my connection. Half the time I have to reset my box & shut down my computer to get a signal!!

Has anyone else had this problem lately? I am thinking of going back to my regular phone service though I don't really want to.
Posted by scorpio1053 (1 comment )
Reply Link Flag
What a mess!
Can't agree with you more.After a nightmare with E/L Ulmtd Voice, we still didn't learn our lesson and opted to go with E/L True Voice cuz of the cost.Lost our phone svc 3 days ago & have rcvd no response to our CustCare emails.Rcvd a new router in the mail yest only to find out that they moved our svc without providing a new router. More $ but we're going back to Verizon.
Posted by smjlcj (1 comment )
Link Flag
Earthlink True Voice
I agree with Judy regarding poor service from Earthlink True Voice. Who in this wonderful country of ours would want a phone service that will only drive one phone? I was told that the unit would drive one line and this implies, to me at least, all extensions would be viable. However, the unit sent to me will only drive a single phone on an extreamly short phone cable! A call to Earthlink Service ended quickly with the statement, "We don't handle True Voice". After an interminable wait the True Voice tech told me, "yep, that's the way it is"! I have ended up purchasing a new phone system that still does not function in the upstairs area! Only the basement and 1st level are covered, and poorly at that! My frustration continues when I could not even cancel the service without loosing the phone number I have had for over 20 years! Earthlink Internet service has been pretty darn good, but I can't say the same for this True voice system! At least Earthlink could integrate the service organizations or at least provide a simple path that wouldn't require calling multiple numbers with 30 minute waits! GET YOUR ACT TOGETHER!

Larry T. Rabeneck
Vice President
Versatile Visuals, Inc.
Posted by lrabeneck (1 comment )
Link Flag
Earthlink True Voice
You are not alone. We have had Earthlink True Voice for about 4 months now and we have also had nothing but trouble. Our phone will just stop working sometimes. It will unusable for about 2-3 days. The connection is very bad even when it is working and the party on the other end can't hear us. I am very seriously considering returning to our old carrier. The only thing stopping me is the $30.00 a month savings. But is it worth it?
Posted by Foz1013 (1 comment )
Link Flag
Earthlink Truevoice
I activated my Truevoice on 9/09/07. As of 9/16/07 I've had to reset and reboot twice so far, occasionally we get garbled voice, a horrific, garbled echo when calling to Truevoice from our cellphone and clipping. Not happy, don't know if we should stay with Voip (with a different company) or go back to landline.
Posted by tlehnigk (1 comment )
Link Flag
TrueVoice and Chordless Phones
We just established service with Earthlink TrueVoice to replace
our home service with MCI. I have a router set up at home to
provide internet service to three computers and it is through this
router and cable modem service that our one line of Voip is
connected. After receiving confirmation that this was possible
from their Tech Support guys I hooked up two phones, a fax and
an external answering machine (so we can screen calls). I
hooked up their little converter box and took the output from
the live output jack on the voip box and connected it to my fax
machine. The fax has a line out, into which I plugged a splitter.
One line went to our answering machine, the other to a 5.8 Ghz
chordless phone which has two hand units. This took about a
day of wrangling, but in the end, everything worked. Almost
everything. We figured out quickly that there is one vital thing
that does not work. If you are entering an account access code
or making an automatic menu selection with your CHORDLESS
phone, TrueVoice will scramble the digits. You will not be able
to access your TrueVoice voice mail. You will not be able to
check your bank balance or anything else you may be used to
doing over the phone. TrueVoice tech support acknowledged
this problem and told me that the only solution for this is to use
a chorded phone. My fax machine has a phone built into it and
with it I am able to navigate menues via button pushes without a
problem. I will risk putting yet another line splitter in the
system to put a chorded phone next to the chordless phone
where it would be more convenient. From reading complaints
abour TrueVoice, I have become aware of non-integration issues
relating to home security systems that rely on phone lines. I
hadn't even thought about this. I will now check with our
security provider to see what nightmares may be waiting for us
there. If you are smarter than me and are doing this research
BEFORE getting service, consider all these issues... and good
luck.
Posted by John Hagen-Brenner (3 comments )
Reply Link Flag
Update On My Previous Post
Since my last posting I bought a push button AT&T phone to use
for making menu selections. The results are hit and miss. Some
times we are able to enter menu responces, sometimes the
button pushes are scrambled and cannot be understood by the
automated menu we are navigating. Since this is a critical, real
world condition, our conclusion is that Truevoice does not work
and cannot be considered a replacement for your standard
telephone service. We will dump them and look for a better deal
that works.
Posted by John Hagen-Brenner (3 comments )
Link Flag
Very Happy with True Voice
I changed over to truevoice last month, and so far very pleased with the service. Love the Voice mail feature and my Nortel phones have voicemail lights when I have a message. Clarity is fine. Only problem i had was my older ReplayTV unit would not dial up using VOIP, but my Fax machine works fine. Got a Tivo unit that work through over broadband and solved the dialup problem. My Sprint bill used to run $46-$95 per month, now it s flat $24.95 with only about $4 tax added. Phil
Posted by Musicman50usa (3 comments )
Reply Link Flag
 

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