Wednesday, August 01, 2007

ELN Shifting Strategy

Dial-up, BPL, DSL, cable, software, hosting, CLEC, reseller, MVNO, and muni network builder. You look at that list and can't find a winner. It's cash cow (dial-up) is sliding.

For the quarter, revenue from the consumer services segment decreased to $264.1 million, or 7.9 percent. Contributing to this change was a 10.2 percent decline to $231.7 million in our access services driven by declines in premium narrowband and broadband services, partially offset by growth in our value narrowband and voice access services. [source] During the second quarter of 2007, EarthLink's overall subscribers declined by 177,000 net subscribers (excluding the previously announced removal of 753,000 Embarq subscribers) compared to the first quarter of 2007. This was primarily due to a decline in consumer premium and value narrowband access subscribers partially offset by growth in voice and municipal Wi-Fi subscribers. [source]

How about the varying parts that make up EarthLink?

  1. Helio, its MVNO, is still bleeding. Just over 100,000 users, but another ELN & SK had to kick in another $100M each?! (A thousand per sub?) With Amp'ed's BK, you have to wonder how loud that clock is counting down.
  2. BPL. Cable. Enough said.
  3. Dial-up is shrinking (see above). And Wi-Fi customers aren't making up the difference.
  4. Software. Apparently, security software sales, like anti-malware, are helping a little bit.
  5. Hosting is probably inching up as well. (It is every where else). And Citrix helps.
  6. Closing US support centers and moving them to India saved some money -- but probably cost ELN quite a few subscribers.
  7. New Edge Networks is the business CLEC ELN bought in April 2006. "For the second quarter, revenue from the business services segment increased to $48.1 million, or 6.0 percent, primarily due to New Edge Networks." [source]
  8. ELN is a Reseller of Covad ADSL2+ and line-powered Voice. (I'll get to that later, but reselling VoIP and DSL is not a big money maker - ask any ISP).
  9. ILEC DSL can be exemplified by the dissolution of the ELN-Embarq DSL program. How much money can you extract from Naked DSL for $15 in VZ region ?
  10. VoIP is tricky as we have seen with Vonage and SunRocket, but it is unlikely that ELN (or any other provider) will amass the subscriber numbers that SunRocket has. And acquiring the cheapo customers of SunRocket at $19.95 for Unlimited TrueVoice is not a revenue generating idea, IMO.
  11. That leaves Muni Wi-Fi. ELN was gangbusting in the last year, signing up every town and city it could. Now ELN is re-thinking that strategy. No kidding. Show me one network win here. Phillie? Not yet. San Fran has been a mess that ELN seems to be stepping away from. ELN needs a new stance. The new CEO, Rolla Huff, has called Time-out on Muni projects. St. Pete, Arlington, Austin, Milipitas, Anaheim, Houston, Corpus Christi, and more. Too much money out; not enough coming in. [Toronto is a nice example of the muni progression]. And obstacles like light poles, City Councils, and other hurdles increase expenses.

From what I hear, people are coming and going out of ELN - employees and vendors - so turmoil reigns. Apparently, one lesson for businesses: Have a Succession Plan in place, even if your CEO is just in his 40's. I think Gary Betty had the vision and was juggling all the balls. His death sent a shockwave that knocked over the other jugglers.

Here's some Ideas from RAD-INFO:

  1. The Nokia N device marketing move was nice, but there wasn't enough buzz about it - and the devices were not easily found to be purchased. It has to be stupid easy for the consumer.
  2. Take a page from Skype. On there are over 50 hardware items for Skype. There should be the same for every Muni Wi-Fi city - lots of wi-fi devices with apps loaded that take advantage of ubiquious wi-fi / mobility. (TrueVoice soft phone?)
  3. Bundling: Is ELN utilizing the Retail Channel to push bundles? VoIP should be bundled with all broadband that ELN offers - cable and DSL and TrueVoice. How about Redundant and Mobile Packages? Does ELN have a deal to sell DTV or DISH?
  4. Helio + Covad + New Edge = FMC .... Take full advantage of the synergies between the cellular and fixed line / broadband assets.
  5. ELN should also be retailing Helio with Naked DSL or cable access. Maybe VoIP too. (Where is Helio for sale?)
  6. Helio + Muni = dual-mode phone = Differentiation
  7. Adzilla and Bare Fruit should be adding revenue on every network, like it is for this ELN cable modem subscriber: "Earthlink's DNS redirection is annoying enough that I have static alternate servers listed before theirs. (If I type it wrong, I want my browser to act like I'm dumb, instead of the ISP subjecting me to their best guess and a bunch of adverts.)"
  8. Ad supported Muni Wi-Fi is even something Microsoft is jumping on with Jiwire and MetroFi.
  9. Start looking at ASP services.
  10. Hire Peter at RAD-INFO, Inc. to manage the implementation of these ideas for you.

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