Not only is EarthLink losing dial-up customers, but its broadband business took some blows earlier this year on the regulatory front. First, the U.S. Supreme Court ruled that cable companies don't have to share their networks with ISPs. Soon after, the Federal Communications Commission said the same thing about DSL providers. For EarthLink, which depends on access to these networks to sell its broadband Internet service, the news was bad.
Betty has been with the company since 1996. He helped steer it through an initial public offering as well as a merger with former competitor MindSpring. He recently spoke with CNET News.com about the changing Internet landscape and what that will mean to EarthLink. He also had a message for critics ready to count the company out of the game: We still have a few tricks up our sleeve.
Q: With the Brand X Supreme Court decision basically saying that cable operators don't have to share their networks and the FCC changing its classification of DSL, it seems like it's getting harder for EarthLink to compete in broadband Internet service.
Betty: It hasn't gotten any more difficult. It just hasn't gotten any easier. We expect to continue negotiating commercial agreements with DSL providers because it's good business. I've got 400,000 retail DSL customers in the U.S. That's a big chunk of business, and our relationship with these providers has never been better.
But it's important for you to own some infrastructure yourself, right?
Betty: It's important to have an alternative to broadband and cable in order to create some real competition. For 75 percent of the country, I can't provision an EarthLink service over the cable plant. With networks like the one Philadelphia is developing, we'll have another option beyond the telephone network to give consumers a choice, where that choice today doesn't exist.
Is that why EarthLink has chosen to build the wireless network in Philadelphia instead of just leasing capacity from another provider, like Hewlett-Packard?
Betty: We've been so disenchanted with our ability to get access to broadband pipes that we felt like we needed to take a more proactive stand. We would prefer to be a nonfacilities-based provider. But if you don't have the people who own the network willing to sell it to you at a price where you can make a living, you have to change the name of the game. This is part of changing the name of the game.
But I thought you said that your relationships with access providers are going well.
Betty: They are. But it's a hard living. It's like being a sharecropper. They are basically selling (access) to me almost for what they are selling it to consumers. It's hard to tell the consumer, "Hey! I've got a better service, but you're going to pay me $10 dollars more a month for it."
So, why be in this business at all?
Betty: Because it's the business we're in, and we have 1.5 million broadband subscribers. We're probably getting about 20 percent of the relative market share in broadband. But we're not getting what I believe, ultimately, we can get in terms of market share, if we had a level playing field.
Do you anticipate having to fight any more regulatory battles?
Betty: Oh Yeah! The telephone and the cable companies never quit. They will continue to take every
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