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.
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
Join the conversation! Add your comment
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.
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.
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!
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.
Larry T. Rabeneck
Vice President
Versatile Visuals, Inc.
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.
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.