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September 1, 2006

3 Min Read
EarthLink Takes a Wholesale Dive Into Muni Wireless

By Tara Seals

EarthLink Inc. launched its first municipal Wi-Fi broadband network in Anaheim, Calif., kicking off a wholesale strategy that relies on the creation of a nationwide Wi-Fi footprint and standardized program.

EarthLink plans to go after the home broadband user and businesses, spending $20 million to build a standardized platform that can be replicated in any EarthLink city, with shared resources for back-office needs operating in the background. The ISP will aggregate its municipal markets to offer a nationwide service, allowing the company to spread the fixed costs for each buildout across the footprint. Meanwhile, EarthLinks standardized architecture will be the same for each market, and thus cheaper than building a custom project each time. It also will be oriented to supporting quality expectations necessary for business and home users, rather than just enabling the best-efforts outdoor access muni Wi-Fi is known for. With all these aspects combined, EarthLink plans to build out rapidly, while leveraging an economical cost structure to build a profitable wholesale business.

The economics of building a national footprint by reselling DSL dont work well, because you generally pay out the same rates to the LEC that you can charge an end user, says Cole Reinwand, vice president of product strategy and marketing at EarthLink. There is a big need for something like this for those trying to reach the mass market, especially since thats a space driven by price.

The ISP already has two national wholesale partners, PeoplePC Inc. and DIRECTV, the latter of which will bundle in the broadband for a competitive offer to the incumbents in Anaheim. It also is working with AOL LLC on a content arrangement.

EarthLink plans to partner with local ISPs that want to provide Wi-Fi service in their respective markets, big brands without a high-speed infrastructure and other service providers lacking facilities that want to offer a broadband product. Partners simply integrate with us once to gain access to the entire footprint, Reinwand says. And its a full-blown open-access strategy. The partner puts its own e-mail, services, support, pricing and brand ID out there.

The wholesale offer may deepen over time. EarthLink has built a VoIP platform and is working with satellite providers to bundle in video, but theres no word yet on a deployment timeline or whether the services would be available to wholesale partners.

In a unique spin on the wholesale model meant to get the footprint built out more quickly, the ISP also has launched the Network Alliance to offer its platform specifications, the EarthLink brand name and equipment discounts with vendor partners Motorola Inc. and Tropos Networks to other ISPs that want to build out municipal networks. Once the ISP completes the buildout, EarthLink will buy the access back from it at a wholesale fixed rate that guarantees ROI to the ISP partner. EarthLink then will sell to consumers, while the ISP that originally built the network will retain the business-oriented fixed-line accounts.

EarthLinks rollout is under way. Anaheims 49- square-foot buildout is partially live and is expected to be completed by the fourth quarter, while New Orleans turned up on Sept. 1. Philadelphia will be next, and then Milipitas, Calif. EarthLink also has pilots in Minneapolis and Honolulu, and a mobility trial on the Stockton, Calif., to San Jose, Calif., commuter rail. Meanwhile, its high-profile bid win in San Francisco with Google Inc. is in the business modeling and negotiation stages.


AOL LLC www.aol.com
DIRECTV www.directv.com
EarthLink Inc. www.earthlink.com
Motorola Inc. www.motorola.com
PeoplePC Inc. www.peoplepc.com
Tropos Networks www.tropos.com

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