Friday, August 18, 2006

EarthLink profits from broadband black holes

The New York Times (registration required) reports ISP EarthLink is transitioning into a telecommunications company and is sitting on piles of cash generated by high margin dial up services to finance the shift in strategy. EarthLink made and still is making buckets of money off the massive broadband black holes that exist in the service areas of the big telcos and cable companies.

EarthLink's current broadband strategy is based on leasing lines from telcos and cables. It is running into difficulty getting lines from the cable companies. And it won't be able to access telcos' fiber optic lines since a federal appeals court ruled this week telcos don't have to share their fiber with ISPs like EarthLink.

It would be richly ironic if EarthLink did an end around around the cable companies and telcos with the gobs of money it makes in dial up thanks to the slow as molasses speed at which the telcos and cable companies upgrade their networks and invested in its own proprietary fiber optic system.

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