January 8, 2007 1:34 PM PST
Vonage to resell EarthLink wireless Net service
The companies have signed a three-year deal in which Vonage will buy Internet access from EarthLink on a wholesale basis in cities where EarthLink has built a citywide Wi-Fi network. Vonage will then sell the broadband service under its own brand in any market where EarthLink has such a network.
EarthLink has been winning contracts across the country to build these networks, which blanket entire cities using standard Wi-Fi equipment. Service is already available in three markets, Anaheim, Calif., Milpitas, Calif., and New Orleans. The company plans to launch networks in 12 additional markets later this year, including Philadelphia. On Friday, the company announced it had finalized a contract with the city of San Francisco.
While EarthLink sells consumer broadband service directly, its business plan has also always called for it to offer Internet access to other service providers on a wholesale basis.
"As a leader in municipal Wi-Fi networks, EarthLink is committed to open access, which enables other companies to offer their unique services to their customers at consumer-friendly rates," Donald Berryman, executive vice president of EarthLink and president of the ISP's municipal networks unit, said in a statement.
Vonage has not specified pricing or launch dates for the service. But the company has said that it will bundle the service with its voice services, which cost $25 a month for unlimited calling within the United States, Canada, Puerto Rico and to some European countries. The Vonage Wi-Fi service will allow customers to access the Internet even when they're outside the home, so long as they are still getting a Wi-Fi signal from the EarthLink network. In the future, Vonage also plans to offer a Wi-Fi phone that can be used anywhere its Wi-Fi broadband service is available.
Wi-Fi is technology that uses unlicensed radio frequencies to provide Internet access wirelessly to enabled computers, laptops, cell phones, and personal digital assistants or PDAs. It's often found in public places such as airports or coffee shops. The technology is also used widely to create wireless in-home networks.
Vonage has struggled to impress Wall Street investors since it went public in May. But the company, which provides service that lets people turn their existing DSL or cable modem services into phone lines, hopes to expand its market opportunity with the EarthLink deal.
Jeffrey Citron, chairman and chief strategist of Vonage, called the deal "a perfect complement to our platform--helping us reach a greater percentage of consumers and giving them the flexibility and mobility they want."