The Death and Rebirth of Earthlink

service provider earth Link. I talked about how Sky Dayton founded the company, which started off with ten modems that would connect customers with the Internet at large dial up modem systems is what we're talking about here, and then how Dayton and his team grew that business by partnering with other companies to expand service. Earth Link least capacities from companies like credit card verification Services and other I s p s to reach across the United States and

then eventually into Canada and then beyond. Now along the way, Sky would step down as CEO. He handed control over to Gary Betty, while Dayton would stay on as chairman of the board. For a while longer. Earth Link made

several acquisitions. They bought up a lot of regional, small I s p s and they grew as a result, until in nine the company announced it was going to merge with another company, mind Spring, which was a rival I SP located out of Atlanta, Georgia, my hometown, And in two thousand those two companies became one, and the merger meant that the new version of earth Link was the second largest I s P in America at that point, behind America Online. Uh, America Online actually had a pretty

significant head start in the consumer market. Now, one thing I should clarify is that balance of customers, because often I find myself thinking of I s p s from a household customer perspective, because I mean I am I am an I s P customer like a household customer, and I'm not actually running a business like that. But obviously a lot of I s P customers are actually businesses, not consumers, not individuals. And earth Link was a leading I s P for enterprise customers, meaning earth Link had

a lot of businesses as their clients. And when you look at the consumer market, there were other companies that were performing much better in that market, like the aforementioned America Online as well as Prodigy, which, like America Online, had begun as an online service provider, which is not the same thing as an I s P. It's sort of a walled garden network. It's not access to the Internet at large, but they had also transitioned from that

to an Internet service provider. By two thousand, America Online had twenty million subscribers, largely because a o L was sending out installation CDs like they were nothing. I mean, if you were back around those days, like if you were checking your mail, you probably made a few jokes about turning a O L c d s into drink coasters or a mobile for your kid or something, because it seemed like you would get a couple in the

mail every week or so. But that kind of strategy was actually working, as a o L had around those twenty million customers. Earth Link, by contrast, had slightly fewer than five million customers, so yeah, there's like a fifteen million person gap there. But earth Link also had a huge number of enterprise customers, so the company was doing pretty well from a financial perspective, at least as far

as revenue. When it came to profit, not so much, but that's because earth Link was pouring a lot of that money into acquiring other companies and growing, so it was kind of a growth engine. But not a profit engine at this point. Now, something else was going on

in the technological world while earth Link was growing. So we're gonna be doing some backtracking in this episode because there was stuff that I guess technically I could have covered in part one, but I really wanted to get to that that description of how earth Link and MindSpring

would become the earth Link of the future. But uh, the thing that we want to go back to right now is the ascension of other technologies that allowed for internet broadband connectivity, because not only would it create alternatives to dial up, it also was tied into what would become the major competitor and ultimately the death knell for a lot of internet service providers. So earth Link launched in the dial up modeme era as it was passing

its peak. So dial up was starting to get to the best, the most that it's ever been, and then it was very slowly starting to decline. Now, dial up modems are still very much a thing. They're not gone. They exist to this day. So when I talk about a dial up era, um, I really mean the period in which that technology was the dominant one. Also, when Earthlink launched a state of the art consumer modem which gets you the blistering speed of twenty eight point eight

killabits per second. But around the corner was the emergence of fifty six kilabits per second modems. Still, other technologies would enter the fray and change things, and we were about to enter the era of broadband. Now, anyone who used an old dial up modem to do something like load up a web page knows that it could be

painstakingly slow. If you had a twenty eight point eight killabits per second modem and you wanted to log into a page that had two of images and other stuff in it, it would take more than a minute for that web page to load on your browser, and a lot of early web pages went sparingly on images for that reason. So let's say you wanted to do something even more intensive, like you wanted to download an MP three a song, And for the sake of this exam, well we'll say it's an MP three of a song

that's five megabytes in size. Now, over a twenty eight point eight kill abits per second modem, that would take you about half an hour to download one song. And this was the top of the line modem when earth Link was launching, and a lot of people were actually using modems that had much lower data transfer rates. Even when we'd get up to fifty six killa bits per second, you'd still be talking about waiting almost fifteen minutes to download a single song, and the whole time you're taking

up a phone line. So some folks like my parents would arrange to have a separate phone line specifically for the computer modem, which was a good idea because if you were using a shared line and somewhere somewhere else in the house picked up a phone, it would interrupt your connection and you would have to reset, and if you were in the middle of a file transfer, you

might have to start all over again. But as I mentioned, there were other technologies that were poised to keep things moving along at a faster pace, and one of them was a tech that had been in development more as a method of allowing telephone companies to compete with cable companies, not necessarily in the internet space, but in the providing of video type space. So this is going to get

a bit technical, but stick with me. We need a super quick history of cable television, and I'll be specifically talking about coaxial cable, though you should know there's also fiber optic cable, but that would come much later. Coax cable essentially started in the nineteen forties with people who couldn't get a broadcast signal at their homes because they were just too far away from the center of broadcast and the antennas that they were using weren't picking up

a strong enough signal for them to see anything. So they began to erect antennas in strategic locations, like at the top of a hill, and then they would run cable from the antennas down to the televisions in the nearby neighborhoods. Uh. There were enterprising individuals who did this and set it up as a business. And so their business was that they would build the antenna and then you would pay them for them to run cable from the antenna down to your home. And this was called

community antenna television or ce A TV. That was the birth of cable television. People discovered that the cable signal would weaken the further it has to travel. So if you lived a far distance from that hill where the antenna was, and you just ran cable from the antenna to the TV you still might not get something that is watchable, but you could put in amplifiers so the signal would come into the amplifier. The amplifier would boost the signal and push it further down the line towards

the televisions. You might have several amplifiers on a single line. However, amplifiers could also introduce noise into the signal, and thus that could get boosted as well. And cable systems weren't terribly reliable, so they weren't incredibly popular. They were just seen as the only alternative to no television at all if you happen to live outside of a broadcast area,

so they were better than nothing. But it wasn't until the nineteen seventies that advancements in technology and process would improve the experience and cable companies the way we know them today would become viable. The coaxial cable is an important part of this. If you were able to see the layers in a coaxial cable, you would see that at the very core of it, there is a conductive material,

copper wire. Surrounding that copper wire is a layer of dielectric insulating material, and surrounding that is an outer conductor called the shield. So the outer and inner conductor are both aligned in the same direction, along the same axis. Think of a small straw nestled inside a larger straw, and that's why it's called a coaxial cable because they're both along the same axis. Information travels through coaxial cables

along a carrier way, which then is modulated. You can modulate it by its amplitude, by its frequency, and by its phase. This gets into the electromagnetic spectrum, which is the range of all types of electromagnetic radiation. From super long radio waves that are miles and miles long two super short gamma rays. We can describe these waves in terms of wavelength, how long those waves are, or frequency. Frequency refers to the number of wavelengths that pass a

given point within a second. We measure frequency and hurts, with one hurts being one wave per second. Okay, so how does cable TV send all those channels of content simultaneously? How come they don't all get mixed up? Well, the word channel is the key. A channel is actually a band of frequencies that is reserved to a specific television source like MTV. I mean, why not MTV I want my MTV. So in the US, AT channel consists of a bandwidth of spectrum within that that cable. You know,

the cable can hold a certain spectrum of frequencies. Well, a channel is a bandwidth of six mega hurts, so it's six mega hurts wide across the available spectrum that the cable can carry. And within that six mega hurts band is all the information of that specific channel of television. That six mega hurts belongs to MTV. But you move over another six mega hurts to the next band, and you're at a different channel, and your cable box acts as a tuner. It switches over to accept signals from

a specific band of frequencies. So it goes from one specific six mega hurts band to tune into whichever channel you want to watch. And the capacity of coaxial depends on a few factors, but generally we're talking about the ability to carry more than one hundred six mega hurts channels on analog signals that can travel across a coax cable. Now, note I said analog things switch up when you go to digital. Now, the reason I went into all of that is twofold one is because the telephone companies were

rather jealous of cable companies. Telephone companies already had wired infrastructure laid out across entire countries. If a phone company could deliver content the way cable companies did, it would represent an enormous jump in revenue. Because remember, once you've built out your infrastructure so it so it meets, you know, the vast majority of of individuals who could be customers, you've hit market saturation. You can't really grow anymore, so

you have limited ways of increasing your revenue. And we typically reward companies that show growth year over year. It's not just it's not just good enough to perform well, you need to grow. The other reason is that later on in the two thousand, we'd see the rise of cable internet connectivity, which would make a huge impact on the I s P industry. But first let's go back over and look at the phone companies. So the telephonic infrastructure relied on what are called twisted pair cables, which

doesn't mean that they're deviant or anything. They're not that

kind of twisted. They're literally twisted together. This is something that dates all the way back to Alexander Graham Bell himself twisted pair cables consists of pairs of wires, So you get two wires, they form a circuit that's capable of transmitting data, and these two wires are twisted together, which in turn shields those wires from interference also known as cross talk, from other pairs of wires which are also twisted, and a cable is made up of lots

of these twisted pairs, all bundled together. By the nineteen eighties, researchers at telephone companies were working hard to figure out how to deliver more information over telephone wires in an effort to come pete against cable companies. It was possible to transmit data like video across these lines. There were television studios that we're using twisted pair cables to send

video from a studio to a broadcast area. But you couldn't do it with the same amount of throughput that you could manage with cable that twisted wires just couldn't carry as much data per unit of time, And a big part of the problem was that having the same bandwidth for upstream and downstream transmissions, in other words, having equal amounts of capacity to send stuff up and to bring stuff down would cause problems, and an engineer and

scientist with Belcore named Joseph lech Lighter would find a big breakthrough. Lech Lighter found that if you offset the upstream and downstream bandwidth allocation, meaning you'd allow more data to travel in one direction versus the other in that same amount of time, you could dramatically increase the overall

amount of information that could travel over those lines. So it's called a symmetric meaning the upstream and downstream band what's are not symmetrical, and because most users tend to pull down more information than they need to upload, the downstream side would get the most love, and to this day it's pretty common to see a much higher download rate than an upload rate, though it's not always about the same process that Leclighter found, but that that's not

really important and it would take about two decades for lec Lighter's work to have a real practical application. It would be called a d s L for a symmetric digital subscriber line. Most of the time we just referred to it as DSL A, and not all DSL is asymmetric. There's also symmetrical DSL, but a lot of people just shorten it to DSL anyway. Now, a DSL connection allowed for much greater data transfer rates than what you could

accomplish with a regular dial up modem. The dial up modems, again they maxed out it fifty six bits per second, but DSL could reach speeds of more than ten times that, and over time, as technology improved, it would reach speeds

of up to one hundred megabits per second. Now, if you listen to my episode about Section two thirty and what that's all about, you've heard me talk about the Telecommunications Act of If you recall, I mentioned that this Act was a truly huge piece of legislation and section to thirty is just a tiny, tiny piece of it. And Section to thirty, for those who don't know, is a passage that grants widespread legal immunity to Internet platforms

for stuff that people post to those platforms. So, in other words, it means that if someone posts illegal content on a platform, the platform itself isn't held accountable for that act. But Section to thirty was such a tiny piece of the overall picture that I think it's safe

to say most politicians weren't really focusing on it. One thing the Act did was open up the possibility for both the cable industry and the telephone industry to get into the business of being Internet service providers, considering these industries already had massive infrastructures built into the fabric of the modern society, and that technologies like DSL and cable would mean they would eventually be able to offer up faster service than dial up I s p s could.

It would mean that there would be some fierce competition in the space, and that companies that were once bulletproof, like America Online and earth Link would have a more uncertain future. When we come back, I'll talk about how all this would converge and what would happen to earth Link in the meantime, But first let's take a quick break.

So throughout the nineties, as telephone and cable companies worked to create an economically feasible means of entering the I s P industry now that they had the green light to do so from the US government, dial up remained the primary way most people were connecting to the Internet, and companies like earth Link we're doing well, but there

was a ticking clock element going on. No one was certain when the broadband era would really take over from dial up, but it seemed pretty much a guarantee that that is what was going to happen. But in those intervening years, earth Link kept making big moves. So back in the nineties before the mind Spring merger, earth Link continued to make strategic partnerships with companies like sign Net or p s i Net, another early I s P to provide access to more of North America, including Canada,

and it also signed a deal with Microsoft. Earth Link would provide customers with the company's browser Internet Explorer, much as they had done with Netscape Navigator earlier. In return, Microsoft included earth Link in a suite of pre installed applications on Windows and I cannot stress to you how valuable that would be for a company to have your app, your portal to your service in looted as a native application on the most popular operating system in the world.

It is beyond valuable. Earth Link also began to offer I S d N service. Now, this was sort of a step between the normal phone lines being used with modems and the upcoming DSL lines. It provided faster data transfer rates, but it never really caught on in a huge way, particularly since DSL would outperform I s D and benchmarks, So it was kind of a stop gap measure that came a little too late. So no one,

not not that many people really adopted it. In out in California, earth Link signed a deal with Charter Communications and a cable company, and the partnership would be one of the early ones to provide cable internet service to a particular region. So this wasn't nationwide or anything. It was for a very specific market, and it did involve

cable modems. So this was an early example of that earth Link executives were clearly thinking ahead because even as modems speeds were switching over to fifty bits per second, they were looking at technologies that were clearly going to be faster and would replace dial up service within within a few years. So now it's time to talk a

little bit about how cable modems work. Now. I mentioned that television channels each take up six mega hurts of a band of frequencies across the available spectrum of frequencies that can travel down a coaxial cable. With cable modems, the downstream Internet traffic to customers likewise takes up six mega hurts band of frequencies. Upstream is a little different.

Instead of taking up a whole channel, it actually only uses a two mega hurts band of frequencies, so you get six mega hurts width down two mega hurts with up and since most people are downloading way more than their uploading, this really isn't a problem for most people. At the provider end of this system, you've got your cable modem termination system. At the customer end, you've got your cable modem, and that cable modem has a few

components that allow you to access the Internet. First, there's the tuner. This component tunes the modem to the specific channel that's carrying the Internet signal as opposed to channel carrying C A TV signals. The incoming signal then goes to the next component, a demodulator. Now, the most common

demodulators have four functions. A quadrature amplitude modulation or q a M demodulator takes an encoded radio frequency signal and turns it into a simple signal that can be processed by the analog to digital converter or a D converter. The converter's job, it's in the name, really, it's to take an analog signal that is a continuous signal, which in this case is an electric signal with varying voltage, and then transforms that continuous signal into digital information, which

means it turns into a series of zeros and ones. Next, you've got your error correction module. This module analyzes the signal and compares it against a known standard to identify any potential errors that happened in transmission. Frequently we're dealing with data that is an IMPEG format for the purposes of grouping data into network frames. IMPEG is not just for movies and music. It's it's a kind of a

data arrangement strategy. So there's also an IMPEG synchronizer in cable modems, which really is just there to make sure that the frames are all in the correct order. You can kind of think of it as being responsible for making sure all the puzzle pieces are going to the right place to make the full picture. Likewise, the modem also has a modulator to take the data you're sending back upstream and convert it into a radio frequency signal

that can travel over the cable connection. Another component of cable modems is the Media Access control or MAC address Now, this is pretty much a standard part of all networking equipment, and that includes devices that connect to works, and it serves as a way for these devices to differentiate themselves on a local network. So we're really talking about local networks here, not Internet. But it's important because otherwise you wouldn't have a way for the network to send the

correct information to the correct device. If you have a bunch of different devices connected to the same local area network, they have to have a way to say this is who I am, so that the right data goes to them. All devices connecting to a network have a MAC address, and it's how we make sure the right data goes to the right device. Otherwise you'd have an issue with multiple devices connected to a local area network as a further connection to the Internet at large, and everything would

be mixed up and that would be terrible. Cable modems also have a microprocessor to oversee operations within the modem itself, and that's a quick and very high level look at how early cable modems worked. There's a lot more to it than that, but it would require its own episode. The important thing for our story is that the cable modems represented another big step forward and speed. Also as a cable connection as well as the DSL connections are constant.

That means you don't have to worry about turning it on and turning it off, like assuming there's no interruption in service. You always have a persistent connection to the Internet, unlike a dial up which has to activate a phone line and then it has to hang up at the end of the session. Your your cable modems are always connected. Your dial up modems are only connected when you activate it.

So Internet services in general and the Web in particular started to offer more data intensive features such as streaming audio or video. The need for broadband solutions became more pressing, but we're still in the early days here, and dial up modems would remain a big player for a while.

Earth Link kept making big alliances. The companies signed a deal with Sprint that gave Sprint a stake in earth Link in return for access to Sprint's customers, and a deal with Apple would mean that earth Links software became the default Internet connectivity software and apples i'm ac computers. Earth Link also was the default connectivity software for n ec Ready computers and Packard Bell computers and comp us A chose earth Link to be the default Internet connectivity

software provider for the computers sold in retail stores. All of this led up to that merger with mind Spring, which was likewise making big deals. Mind Spring was doing very much the same sort of stuff earth Link was doing, but over in Atlanta, and earth Link was able to dip its toe into DSL through its partnership with Sprint. And a quick word about the differences between DSL and cable. So DSL goes over phone lines, but you didn't have

to have a landline to also get DSL. You can think of DSL traffic is taking up a frequency of bands and telephone lines that's well outside the frequency bands that are used to transmit voice communications. With DSL, you can get pretty fast Internet speeds, much faster than dial up. But it also depended upon how far away you were from the DSL provider, kind of like when I described cable early or if you're really far away from whatever the provider is, you're going to get lower transfer rates,

so you're gonna get lower Internet speeds. That's the way we typically think about it. Cable, on the other hand, could provide a good experience even if you were far away from a provider. However, DSL allowed for a dedicated line to each customer, So when you had a DSL line, you had a dedicated connection, whereas cable is a shared

connection across entire neighborhoods. So with cable, if there are a lot of people in your neighborhood who are all really heavy Internet users, you're gonna see your speeds take a hit because they might be streaming for a K video or something, or they might be gaming, they might be doing something that's just taking up a lot of bandwidth, and so as a result, the overall bandwidth that's shared

for the entire community is taking a hit. Anyway, earth Link was now working with partners that would allow it to kind of trans Asian from dial up, but only

because they were piggybacking onto these other providers. After the merger with MindSpring, the new company officially called earth Link Incorporated, would continue to grow, and like we've seen, that growth was mainly through acquisitions, such as when earth Link purchased an I s B called one Main dot Com that's O N E M A I N and earth Link continued to branch out beyond dial up, DSL and Cable Access partnering with Hughes Network Systems to provide satellite broadband

services for customers who lived in rural areas where cable or DSL connections could not reach. So satellite systems work differently from DSL and cable and that you need to have a transceiver in other words, of satellite dish to interface with the system. You still have a modulator, which is the bit that translates data from one form to another.

When you send something on your computer to the Internet, the modulator converts the digital information from your computer into radio signals that the satellite dish then transmits up to a satellite that's up in orbit way above the customer, and the satellite then beams that information back down to the provider, which sends data back up into space to that satellite, which then beams it back down to the customer.

So it all works the same way, but in reverse. Now, as you might imagine beaming data up into space and then having it come back down again, and having that happen in two different directions means that there can be a bit of delay when you do something on the Internet, like when you click on a link, and then there could be a delay before you see a result. The

data rate transfer speed can still be really high. You can still get you know, data, very fast rates, but there's more latency or lag than you would have with other solutions. Earth Link even secured in agreement with the leading I s P in the United States, America Online.

That agreement would allow earth Link to use Time Warner cable lines to offer up high speed k Internet service to customers, because at this point there was the infamous America Online Time Warner merger, one of the mergers that at one point was pointed at as being one of the worst big tech mergers of all time. The year was two thousand, and earth Link was looking to put

behind it a history of struggling to be profitable. Earth Link hannot really made a profit yet they were bringing in a lot of revenue, but again they were spending a lot in acquisitions and efforts to grow and stay ahead of the competition, as well as to make moves and diversifying beyond dial up. And this was likely a necessity as the period between two thousands saw thousands of local and regional I s p s, like around ten

thousand of these suckers. But they started to consolidate or they were getting swept up in various acquisitions, and there was a general move of consolidation in the industry, and earth Link was one of the bigger fish gobbling up smaller fish in the I s P pond as it were sky Dayton. Meanwhile, the founder of earth Link, who had remained chairman but who had stepped down as CEO,

founded another venture called Bongo. This company also focused on providing internet service, but through WiFi, and rather than building out infrastructure, Bongo would partner with companies that had already built out WiFi networks, much as earth Link had partnered with other I s p s or network systems back in the day. Earth Link would be an investor in Boingo,

but the two ventures wouldn't be intertwined too much. In the early two thousand's, earth Link would feel the squeeze as more households made the transition from dial up to DSL, cable or satellite service. While earth Link had partnerships with companies that provided these services, the fact was that earth Link itself didn't own any of that infrastructure, and the Telecommunications Act of six meant that phone and cable companies

could also serve as Internet service providers. So earth Link was looking at a couple of major threats to its business. There was a migration away from premium dial up internet service that was its bread and butter. And there was the rise of the mega I s p s that owned much of the broadband infrastructure. In fact, some of them were major parts of the backbone of the Internet.

So while earth Link would start to post some profitable quarters largely due to a combination of cost cutting and diversifying into broadband, analysts were already worrying that the company was going to go from a big fish to bait in that I s P pond. I'll explain more when we come back from this quick break. A lot happened in the two thousand's, even if I can't remember most

of it. We saw the dot com bubble burst, which had a major ripple beyond just the dot com companies themselves and affected related businesses, including the I s P business. We saw the move to broadband that meant that earth Link was going to lose subscribers even as it was adding more broadband services or partnering with other companies that did the same. In two thousand five, while earth Link

would add some broadband customers. The balance was out of whack when it compared against the loss of dial up customers. Earth Link would lose seventy three thousand customers in two thousand five as a whole. And then a decision by the US Federal Communications Commission, or FCC, really hit earth Link hard. The decision gave telecommunications companies the right to stop leasing lines to third party DSL providers at wholesale prices,

you know, like earth Link. So previously these companies were compelled, they were regulated to offer those wholesale lease rates to third party I s p s. That's how earth Link built much of its business, at least those lines from these bigger companies at a lower rate and then resold them to customers at a higher rate. That was just the basics of the business. But the FCC decision and a subsequent decision by the U s Supreme Court the upheld It meant that the telecom companies were under no

obligation to continue doing this. They didn't have to offer those lower prices top third party I s p s. In the short term, the telecom companies were agreeing to continue to lease lines to I s p s. So even though they weren't compelled to, they continue to do it because these I s p s were really big customers.

But since the telecom companies were themselves starting to become I s p s, the writing was on the wall, right because the ideas, yeah, I'll continue to lease this to you at a lower rate, but meanwhile, I'm building out my own Internet service provider business, and once it gets big enough where I don't need you anymore, I'm gonna cut you off. And then I get a two fur. I get to sell to your customers instead of having you do it, and I get to squeeze you out

of business so I don't have a competitor anymore. Yeah, it was a little nefarious earth Links strategy to combat

this was multifaceted. Part of it was to get into building out its own infrastructure to compete against the cable and telephone companies, but it was way behind on that front, right, Like I mean, after all, let's imagine that you walk into cookie Town, USA, where there are you know, a dozen top level cookie companies there, and you decide you're going to compete, but the cookie companies have already managed to buy up almost all of the ingredients needed to

make cookies, and they have saturated the market with cookies. It would be very hard for you to make any uh in way into that system. Well, earth Link was kind of facing a similar thing, but instead of cookies, while there were cookies. Because it's the Internet, bad analogy, my fault. I'll go sit in the corner. Okay, I'm back. So earth Link also looked to launch its own cell phone business at this time and its own landline business. Essentially was trying to enter a very established and very

competitive market. In two thousand five, earth Link helped launch he e O, which was another company led by you guessed it, Sky Dayton, the founder of earth Link. Helio was a mobile virtual network operator or m v n O, and like earth Link, like Boingo, this was another business that would run services on top of the infrastructure that was owned by other companies and sensing a theme here.

The initiative proved unprofitable for earth Link, which would pull out of the arrangement in two thousand seven, so it was only part of Helio for two years. As for Helio, Virgin Mobile USA would acquire it in two thousand eight and would sunset the brand in interesting little side note here. Sky Dayton has this history of starting up companies and then stepping down a couple of years later. I think

I mentioned in the last episode. He strikes me as the sort of person who really likes to get things moving and then hand that over to somebody else who's better at fostering and growing a company, and then he moves on to start something new again. But another part of earth Link's strategy to kind of fight back against these strikes that were against it was really getting started

around two thousand four. It was the the bid for the opportunity to become the WiFi service provider of municipal customers, so, in other words, to become the municipal WiFi company for cities like Philadelphia. Atlanta was one as well, there were quite a few, and these were cities that were looking to create city wide WiFi service for citizens, the idea being that instead of using wired connections for everybody's Internet connectivity,

maybe you offer a WiFi as well. And part of this strategy would prove to be a lot more thorny than earth Link executives may have anticipated. So the story plays out in much the same way across the different cities. So we're gonna stick with Philadelphia to learn what happened there, but just know that what happened in Philadelphia, uh is very very similar to what happened in other cities across

the United States. The original agreement in Philadelphia would give earth Link access to city utility polls to mount WiFi routers to provide service to people in Philadelphia. And that's a big part of it is that the ability to access those polls is key for something like this, and you don't just magically get it. You have to go through a lot of bureau bureaucracy in order to land

that permission, and it's expensive and time consuming. But this was part of the deal, and the arrangement meant that earth Link was to provide twenty three zones throughout Philadelphia that would be free internet hot spots. So it wasn't that all WiFi was free, but in these twenty three spots around the city, citizens would be able to access

the service free of charge. Now, beyond those zones, you would still have WiFi coverage and citizens would still be able to access the WiFi, but they would have to see subscribed to earth Links service for Wi Fi internet for going a physical connection entirely, so you could, in theory, have a WiFi receiver in your home you pay earth Link,

assuming you're not in one of those free hotspots. You would pay earth Link for the privilege of being able to connect to their network, and you would get your Internet that way. But a couple of big challenges made this way harder than either Philadelphia or earth Link anticipated. First, the marketing strategy was lackluster, and earth Link was not receiving as many subscribers for their service as they had projected, so they weren't getting as much revenue in to help

support the initiative as they had planned for. But just as significant of that was that the company and the city discovered that in order to provide the amount of coverage needed to meet the terms of this agreement, earth Link was going to have to build out way more infrastructure and deploy many more WiFi routers than the initial plan called for. The project went well over budget, became a difficult thing to manage, and the low subscriber responsement

that the whole endeavor was becoming very expensive. Gary Betty, the CEO of earth Link until two thousand seven, had been gung ho on the municipal WiFi initiative, but then he got sick and he passed away in January two seven, and the succeeding CEO of earth Link roll up, p. Huff, decided that it was a long shot to make the programs work from an economical standpoint, and so starting in two thousand seven, earth Link began to extricate itself from

the various deals it had made with the United States cities to be the WiFi provider for municipal WiFi. Earth

Links reversal hurt the company's reputation quite a bit. Cities like San Francisco had banked on earth Link being a WiFi provider, with the ambitious plan to offer free WiFi to all San Francisco residents with a deal that would see the city earth Link and Google were together, but earth Link's announcement that it was selling off its municipal WiFi assets meant that that plan had to be scuttled.

Things got even uglier in two thousand eight when earth Link essentially gave Philadelphia an aulimatum, take the WiFi service off of our hands, or we will shut it down. So, in other words, earth Link was still maintaining and operating that network in Philadelphia. It had stopped building it out, but now it just wanted out completely. In two thousand and eight, earth Link was still depending heavily on a

dwindling base of dial up customers. The company had managed to cut operating expenses largely by laying off the marketing and laying off employees. There was no longer trying to attract new customers, so it was really just trying to hold onto the people it already had. The dial up customer base was getting smaller year over year as more people were making the switch to broadband, but by two

thousand eight that rate of attrition was slowing down. So, in other words, earth Link would continue to lose customers, but the rate of loss was slowing down. So it's like it's like having your annual meeting and saying, hey, good good news, everybody, we lost fewer people than we did last year. It's kind of a hard pep rally.

I guess it's not exactly the business model you want as the cornerstone for your company, but it's what they had in earth Link became embroiled in a multi party debate about the merger between Comcast at NBC Universal earth Link objected to the merger and campaign for the FCC to step in and stop it, or, if not stop it, to bring that idea of compelling companies to lease lines to third party i sp s at wholesale rates back, just as the telecom companies have done until two thou five.

They're saying the cable companies never had to do that, but maybe they should, especially if you're having big content companies merging with provider companies. Ultimately, that plan did not work out in the I s P landscape in the United States. We become increasingly the domain of huge companies that would get even more huger as some of the

biggest mergers in business history would follow. So this is where we see those giant I s p s become truly enormous, and we see competition shrink as a result. Now earth Links still stuck around. It held onto its

customers as fiercely as it could. Revenue and income would fluctuate wildly in the two thousand's, with some years seeing more than a billion dollars in revenue, not not profit, but revenue, and other years seeing that revenue dropped to six million dollars, and then swing back the other way. Sometimes it was the acquisitions that helped earth Link out and gave it a really good year, but sometimes those acquisitions would lead to big pains. And in news broke

that earth Link itself was going to be acquired. Another regional I s P in the United States called Windstream announced it would acquire earth Link for a deal valued that six hundred seventy three million dollars, and it was an all stock deal, and it also included Windstream assuming earth Links four hundred thirty six million dollars of debt, meaning that once you factored the debt into the deal, it was really a one point one billion dollar deal.

Windstream had around one million consumer customers, you know, so non business customers, and earth Link had around six hundred seventy one thousand, according to press releases about the merger. But this was about more than consolidating that small market

of dial up customers. Also, some of those customers were DSL or cable because both earth Link and Windstream would purchase and resell lines on other networks, uh not a whole lot, because it was hard to compete since they couldn't buy those lines or lease those lines at wholesale prices.

They would have to mark up the price to make a profit, and that would just mean that you would as a customer, a personal customer, you would look at the different I S s in your area and you'd say like, well, I could go with a T and T, or I could go with earth Link. But earth Link actually costs more of a T because earth Link had to mark up the price in order to make a profit. Didn't make much sense. So the business customers were a

really big part of this deal. It wasn't so much the consumers as it was the enterprise customers, as were the various tax benefits and other financial wizardry that's beyond my ken. So there are you know, reasons why these Windstream came in to acquire earth Link that are go beyond just we want access to their customers. The deal happened in the winter of Seen, and it led multiple tech websites and magazines to declare earth Link was effectively dead.

But a little less than two years later, in December eighteen, earth Link would burst out of the grave, zombie like and call out for brains, which is my way of saying that Windstream would actually turn around and sell earth Link off again to another party, this one an investment company called Thrive Capital out of Dallas, Texas, and the deal was for a three hundred thirty million dollars in cash. So remember, I mean, that's a lot of money. Don't

get me wrong, it's a princely some. But unless I'm doing my math incorrectly, it means Windstream spent more than six hundred million dollars on a company in stocks and then sold it for three d thirty million dollars less than two years later. And that's not even touching that four hundred thirty six million dollars of debt that earth Link had accrued. So that is that's a yikes. But

earth Link does still exist. According to the company's website, it quote offers internet access, premium email, web hosting, and privacy and data security products and services to customers throughout the United States. Earth Link also has key partner relationships with several of the nation's largest providers, enabling the company to offer products and connectivity services available to millions of households nationwide. End quote, it still offers residential and business

internet access. It has also partnered with companies like Norton to offer data privacy security options, and it all so offers digital marketing solutions to businesses. So it's a company that is pairing other services with Internet service provider services. So it's kind of it's it's sales pitches that yes, you can get I s P connectivity through other companies, but we are also providing these other complementary services to

connecting to the Internet that will make your connection more better. Meanwhile, we have seen crazy consolidation in the I s P market here in the United States. In many areas in the US, residents and businesses might only have maybe two choices in providers. Some are unlucky enough to have no

real choice at all, particularly if you want broadband. There are still smaller third party i sp s here, they do still exist, like earth Link, but these companies often have rates that are pretty much the same as what you're gonna find with the big providers, and they are typically leasing lines off from those big providers anyway, So even though you are subscribing to you know, regional I s P A, they're still using the pipes that are

controlled by the giant, multi multinational, multibillion dollar I s P company Mega Corporation. So a lot of people just say, well, why don't I just go ahead and subscribe with the mega corporation and cut out the middleman. Uh. And a lot of this ties back to the concept of net neutrality. It's a concept that has been battered pretty hard over the recent past. It'll be interesting to see where net neutrality heads next because we have a different administration coming

into the United States. So I'm sure I'll be doing more episodes about net neutrality and talking about its ups and downs. Uh. That's something I'm looking forward to. But we have now come to the close of earth Links story, and I hope that this was interesting to you. I know that I use this story really to talk about a lot of other stuff, like how dial up modems work,

how cable modems work, how DSL works. But that's kind of the way I like to sneak in the tech information is through the context of a bigger story, and all of those elements were incredibly important parts of earth Links story as well. I plan on doing some more episodes about things like the consolidation of the I s P business and how that has affected, uh, the Internet in general and specifically within the United States, because I think that that's that's a really complicated story that we

really need to take a closer look at. It's stuff that just kind of happened over the course of our lives. But when you start unraveling what the implications are, you start to see potential huge problems. So we'll probably do some more episodes about that as well. But those are my thoughts. I'm curious to hear what you guys have to say, especially if you have any ideas for future episodes of tech Stuff, So reach out to me. The

best way is on Twitter. The handle is tech stuff hs W. Let me know if there are any topics you want me to cover. You got any questions about tech, Maybe there's a trend in tech you would like me to talk about. Hit me up and I'll talk to you again really soon. Tech Stuff is an I Heart Radio production. For more podcasts from my Heart Radio, visit the i Heart Radio app, Apple Podcasts, or wherever you listen to your favorite shows.