August 28, 2007
Earthlink feeling the pinch from the broadband duopoly
On Tuesday, EarthLink announced that it would shed 900 employees. The reason was simple, said Rolla Huff, CEO of the company. EarthLink, which has had four solid quarters of losses and a sinking stock price, needs to return value to its shareholders. And this means eliminating jobs that don’t help the company add subscribers or increase revenue.
Back in the dial up days, independent ISP’s had a fighting chance. The duopoloy was more like an octopoly, and all you had to do to compete was lease phone lines at the same price as anyone else and attach modems to provide last mile access. Broadband is another story, they own exclusive rights to the “last mile”. The “wholesale priced” access to the duopoly’s facilities is in fact priced up to make it virtually impossible to compete with them on price. Earthlink was trying to create their own third pipe via municipal wireless, but it is a long term investment, and full of potential political upheaval like they are currently experiencing in San Francisco. So Earthlink management has had to drop back 10 and punt 900 souls in the hopes of regrouping and finding a way to win in a fixed game. I wish them the best!
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