EarthLink Inc. plans to begin offering a consumer high-speed Internet and online-calling package in three metropolitan markets in coming weeks through an expanded partnership with Covad Communications Group Inc.
The company based in Atlanta, has partnered with broadband access wholesaler Covad Communications to offer the Voice over Internet Protocol, or VoIP. EarthLink will offer the service in the San Francisco and San Jose area, Dallas and Seattle starting in the first week in February.
EarthLink is bundling the new service with DSL (Digital Subscriber Line) broadband access. More cities in Covad’s territory will offer the service later this year; EarthLink would not specify which.
The Covad partnership, terms of which were not disclosed, will allow the Internet service provider to offer a competitive digital subscriber line, or DSL, and Internet- telephony service without having its own agreements with telecommunication companies.
Unlike other VoIP services; including the one EarthLink currently sells for $20 a month, the new service does not require consumers to add hardware. Customers can use their existing phones and plug them into phone jacks as they would with any regular telephone service. The technology, called "line-powered voice," puts all the intelligence and equipment for offering VoIP service in Covad’s central office, where all the gear to provide the DSL service is housed.
This approach differs from that of most other VoIP services, such as Vonage’s. Those services require a special adapter to be hooked to the phone and the broadband connection.
That is important because the Federal Communications Commission ruled in August that phone companies would no longer be required to lease line capacity to competing ISPs link EarthLink and Time Warner Inc.’s America Online under common carrier regulations, threatening the ISPs ability to offer competitively priced DSL services.
The line-powered service works just like a plain old telephone system, said Jim Bagnato, director of voice services for EarthLink. You simply plug your existing phone into the wall and it works. But the calls go over an IP network, so you are also able to get all the IP features.
These new features include e-mail-based voice mail that lets people listen to their messages by clicking on a link in an e-mail, a blocked-caller list that stops annoying calls from ringing and prohibits blocked callers from leaving voice mail messages, an integrated contact list that merges contacts in e-mail with the phone service, and many other call features.
However, common carrier rules still require incumbent carriers to lease the connections between consumers’ homes and their central offices to competing carriers like Covad.
By us moving in this direction, we are jumping on the piece of the regulation that remains intact, says Bagnato.
The squeeze is certainly on for EarthLink, says Enda Flynn of consulting firm BusinessEdge Solutions Inc. ‘EarthLink recognizes that they need to become more transport agnostic, more of an arms player.’
EarthLink will offer three package deals: One providing DSL service at a speed of up to 1.5 mbps and 500 minutes of local and long-distance calling for $49.95 a month. A second that adds unlimited local and long-distance calling for $64.95 a month; and a third that also provides unlimited calling and takes DSL speeds up to 8 mbps, using emerging "ADSL 2+" technology from Covad, for $69.95 a month.
We feel that these are very aggressively priced for what the consumer will be getting, Bagnato said.
As dial-up Internet users abandon slower access for broadband, EarthLink has been challenged to find broadband pipes on which to sell its service. Unlike phone companies and cable providers, EarthLink does not own its broadband infrastructure. It must rely on other providers to lease capacity in order to sell a service.
Last year, the company suffered a couple of serious blows as first the U.S. Supreme Court and then the Federal Communications Commission said that cable modem and DSL providers do not have to share their infrastructure with competitors like EarthLink.
As a result, the company has been looking for alternative access technologies, such as broadband service delivered via power line, WiMax and citywide Wi-Fi.
EarthLink said it intends to bring its offering with Covad to other major metropolitan areas in the future, but declined to name any cities or provide a timeline for the expansion. Covad, whose relationship with EarthLink dates back at least seven years, has access to 40 million households. Its top markets are New York, San Francisco, Los Angeles and Washington, D.C.
Plans in its first markets will include EarthLink Internet features like spyware and spam blocking as well as voice features like caller blocking, call forwarding, three-way calling and 911 service. Email and phone contacts will be stored and managed through one address book. The phone service will not require the adapter VOIP competitors like Vonage Holdings Corp. use and will be available during power outages, like with traditional phone service.
This is a fire-your-phone-company product, said EarthLink spokesman Jerry Grasso.
The company has also been investing in new technologies that could make it less beholden to network operators and a more effective competitor, including Wi-Fi municipal networking, wireless service and broadband over power lines.
The company has won a bid to build a citywide wireless network in Philadelphia, based on Wi-Fi technology. It also plans to build similar networks in several other cities, including Anaheim, Calif.