EarthLink Retools Charter Pact


Boosted by broadband growth, EarthLink Inc. released better-than-expected
numbers for its second quarter Tuesday, and it announced that it is rejiggering
its relationship with Charter Communications Inc.

The Atlanta-based Internet-service provider, which is one of the more
aggressive entrants in the broadband space, posted revenues of $352.3 million,
up 5% compared with the same quarter a year ago and mostly attributed to its
broadband business.

Broadband revenues totaled $88.5 million, up 53% compared with the same
period last year. Broadband now constitutes 25.1% of EarthLink’s total

The company’s net loss came in at $14.5 million, down sharply from the $34.9
million hit it took in the second quarter of 2002.

For the quarter, EarthLink added 102,000 broadband subscribers, including
digital-subscriber-line and cable connections, bringing its total to 993,000.
The ISP does not break out totals for DSL and cable headcounts.

Overall, it now claims 5.04 million paying subscribers, the bulk of them
narrowband customers. Its growth is now focused on the broadband side, with
narrowband’s customer base slipping to 3.9 million, down 4.9% compared with the
same quarter last year.

The ISP also announced that it will reforge its service deal with Charter to
provide wholesale Internet service to the operator in certain markets.

Under a new arrangement it is now negotiating with the MSO, EarthLink will
switch to offering a premium Internet service for an additional fee to Charter
customers in those markets, possibly extending it to all of the MSO’s

Dubbed "EarthLink Experience," the service would add pop-up-ad blocking and
anti-spam software; Web and POP (point-of-presence) mail; eight electronic-mail
boxes; and 10 hours of dial-up access each month. The fee has yet to be set,
according to EarthLink.

The transition to the premium-service arrangement could last up to one year.
During that time, EarthLink will continue to provide its wholesale service to
Charter, but that will drop the ISP’s revenue intake some $4 million for each
quarter. The ISP also will cut out 152,000 Charter subscribers from its
subscriber head count starting in the third quarter.

For the rest of 2003, EarthLink now estimates that it will add between
230,000-280,000 net new broadband subscribers by the end of the