EarthLink Goes Live in Cable Markets

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Time Warner Cable's Columbus, Ohio, subscribers became part of the industry's new world of multiple high-speed-data providers earlier this month, thanks to the MSO's deal with EarthLink Inc.

EarthLink started signing up customers for its cable-modem service in Columbus on Sept. 10, although it opted not make its market-launch announcement in the wake of the next day's terrorist attacks in New York and Washington, said EarthLink vice president of new products and services Tom Andrus.

The ISP followed its Columbus move up with a service rollout in Time Warner's Syracuse, N.Y., system Sept. 26. It plans to add systems in Raleigh-Durham, N.C., and Tampa, Fla., soon.

While Andrus didn't disclose exactly how many market rollouts are set for 2001, "it's more than 10," he said.

The launch is a major step for EarthLink, which inked the access deal with the nation's second-largest MSO back in November 2000. The move was a condition of federal approval for the America Online Inc.-Time Warner Inc. merger.

The deal allows EarthLink to sign up new customers referred through Time Warner or to sell to them directly. In the latter case, the customer would never see a Time Warner Cable logo on any promotional material.

EarthLink is offering customers an introductory $41.95 monthly fee, which includes service and the modem. Andrus said there is no date set for that offer to end.

"We wanted to go out with an aggressive price so our customers who have been waiting can sign up quickly," Andrus said. Though that price is lower than what customers of other cable-modem services pay, "it's a profitable product and we are not losing any money on it," he said.

On the technical side, there were some surprises in the Columbus trial that forced EarthLink to reengineer some of its provisioning, including customer pre-qualification and the handoff of information to sales.

That's one reason the ISP will send a team to each new market 60 to 90 days ahead of launch. The teams will work with Time Warner technical staff to iron out technical bugs.

EarthLink also has created an affiliate sales department to focus on cable-modem markets.

"It is a Herculean task to launch this many markets as fast as we are," Andrus said. "It is a risk, so understanding that risk we have staffed up to handle that."

The ISP is also conducting trials with Comcast Corp. and Cox Communications Inc. and plans to take part in AT&T Broadband's Boston trial this fall. Andrus thinks those rollouts will follow a deployment pattern similar to Time Warner's.

"We're really getting the MSOs and ISPs to be at ease with each other and make sure that we can do this technically," he said.

Nagging questions about provisioning multiple ISPs over cable networks still remain, but the fact that EarthLink has moved from trial to rollout is at least encouraging, according to Jupiter Research broadband analyst Joe Lazlo.

"I think that there was a worry going into this — as these deals moved from technical feasibility trials to actual commercial deployment — that the charges that would be imposed on independent ISPs would be just too high to make for an economically viable proposition for the independent," Laszlo said. "So I think this is, in some ways, encouraging that this is not the case — that there may really be a way for an independent ISP to build a business model."

But it will take more than one market to prove that business model, and even on a level playing field, competing with AOL Time Warner may be like trying to filch bananas from an 800-pound gorilla.

"The perception is that there is sort of a brand tie between AOL Time Warner [divisions] overriding an independent's ability to capture significant market share," Laszlo said. "I'm really not sure about that.

"You look at the Bell companies with their DSL [digital subscriber line] offerings — by and large, at least Qwest and SBC and BellSouth have really been quite successful at steering customers to their retail offerings."

Still, EarthLink has been successful in getting its narrowband customers to upgrade to DSL and satellite broadband products. That strategy could hold true for cable, if EarthLink can capitalize on its early entry, Laszlo said.

"But it definitely involves being judicious with how you spend," he said. "It involves making broadband available to as many of your subscribers as quickly as possible.

"It's definitely going to be key to follow through with that aggressively and not let those timetables slip, as they sometimes tend to do."

Andrus said EarthLink's intent is to do just that.

"The key point is the magnitude of what this first launch means," Andrus said. "It is the first domino of the cable divisions. From EarthLink's standpoint, it is the beginning of really reaching our broadband access beyond the small patchwork that we've had."

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