As The Earth Spins

Yesterday Om Malik speculated that EarthLink might spin off its muni wireless business. Om is one connected guy, but as the person who started EarthLink’s wireless business I have a different perspective on what they might be doing.

One thing you have to always remember about EarthLink. They are not in the technology business. They are in the service business. They use technology to deliver the services that consumers want. They do not have deep expertise in developing consumer applications.

EarthLink has a nice little pile of cash these days. On top of that their core business, dial up Internet access is throwing off tons of it. The problem is their core business is dying and their primary growth business, broadband, has smaller margins. The reason for this is that they have not been able to work out the type of deals that they want with the RBOCs and cable companies. Strategically they are not in a great place. They gotta do something.

The first of that something is expanding into the mobile wireless business. This has now taken the form of Helio, which will be launching in the not too distant future with high end products. Deep consumer mobile application products.

The second of that something is the muni wireless effort. How as a service company, EarthLink has never felt the need or wanted to run a large network. Just like the MVNO play, they buy network access at wholesale prices, bundle it up and sell it at a profit. But they can’t get their paws on the broadband pipes in the manner they want. Hence the Wi-Fi play. EarthLink may be willing to partner with a large network operator to run the network for them at acceptable margins, but I do not see another joint venture.

What I do see them thinking about is how to bring EarthLink (including muni), Boingo, and Helio together when the world of converged Wi-whatever and 3G networks emerges down the road.

They get their pipe, have deeper IP in consumer apps, and the potential for growth.

February 24, 2006  |  Comments  |  Tweet  |  Posted in Uncategorized