Bringing Service Home
ISP ventures into home networking service
By Karen Brown
from the April 16, 2001 issue of Broadband Week
EarthLink Inc. is rushing in where so far most other broadband Internet access providers fear to tread: home networking.
In one of the first forays by a major ISP or broadband access provider into the service, the second-biggest U.S. ISP has forged a deal with home gateway provider 2Wire Inc. to offer EarthLink Home Networking, a feature enabling DSL subscribers to connect multiple computers plus other peripherals to a single broadband connection.
2Wire will supply its HomePortal residential gateways, while EarthLink will handle the network management, sales and tech support.
John Ellis, EarthLink's director of broadband products, says his company's move beyond just the connection is part of the ISP's broadband growth strategy. "We see home networking as kind of the first killer app of broadband," he says. "We also see this as a real opportunity to add value to the product over time through additional services and other applications, and really kind of helping EarthLink extend itself into a new foray of services."
Ellis says the service will be expanded to other broadband platforms as they become available.
Home networking has been scrutinized for some time by the major broadband access platform providers as a potentially lucrative add-on that might help boost subscribership by allowing users to distribute broadband connectivity easily throughout their homes or small offices.
But other than some relatively small forays--2Wire had a partnership deal with now-bankrupt DSL provider Flashcom Inc., for instance--major service providers have been slow to roll out formal networking programs. One reason is the potential costs for customer service that might be created by adding another element to the infrastructure between their connection and the user.
These and other issues still are being explored by Cable Television Laboratories Inc. through its CableHome project aimed at standardized interfaces between networking schemes and the cable network.
EarthLink is offering the service to its DSL subscribers, which now total about 215,000, for $9.95 monthly. Customers must pay a $149.95 hookup fee for the wired version--usable via Ethernet or Home Phoneline Networking--and $299.95 for the wireless version, based on so-called 802.11 wireless LAN technology, of the 2Wire gateway. Those opting for the wireline product also must buy $49 HPNA adaptors for each additional PC, while wireless customers have to purchase a $149 wireless adapter card for each computer.
That price tag may seem high, but Roy Johnson, vice president of marketing and business development for 2Wire, points to research that 60 percent of broadband users have more than one computer. Because they are already paying more for a high-speed connection, technology that helps them use it more fully will be attractive, he says.
"That's real, and we've done a lot of research trying to understand where the inflection points are in demand, and I think that what we're finding is this $149 to $199 price where we have our non-wireless product works very well," Johnson says "That's low enough that people say, 'Yeah, that makes sense to me.'"
2Wire's gateways can serve DSL and other broadband connections. The HomePortal 1000 has a built-in DSL modem, while the HomePortal 100 has an Ethernet uplink connecting to a cable, satellite or wireless modem.
EarthLink will be responsible for all technical support, but that is not a great stretch from what the ISP is doing now, according to Ellis. EarthLink technicians already deal routinely with computer issues outside of the ISP connection, even though the company previously did not formally support home networking technology.
"In fact we pride ourselves on our customer service ... we really view it as our core competency," Ellis says. "We see EarthLink being in a prime space as a lot of the products and technologies converge. If you think about all of these different consumer electronics converging, there is going to come a time where everything is interconnected, and consumers are not going to want to be forced to call a lot of different companies to solve their problems."
The service will focus for now on linking multiple computers, but EarthLink is working with 2Wire on the priority list of future services, Ellis says. First on that list will be utilities such as anti-virus programs, possibly added by the end of this year. Next will likely be telephony applications, and well down the road are entertainment services including video-on-demand, Ellis says.
Entertainment is "one of the areas that got a lot of buzz in the media, but there are certainly challenges as some of the providers out there have seen," he cautions. "So that's one of those areas that we will be watching very closely and looking at market leaders to see who we can work with to roll out. But we're not going to jump into this if there is not enough demand to warrant it or if the challenges are contrary to some of our fiscal responsibility."
Overall, EarthLink's home networking strategy appears to be sound, according to Joe Laszlo, an analyst for Jupiter Research.
"This is something we have considered very important for broadband providers for some time--is to use enhanced applications as a way to drive more revenues," he says. "Improve the value to the consumer, but also get more revenues and hopefully increase broadband's margins, because most companies despite charging $40 to $50 a month for access aren't making terribly large profits off of broadband access alone."
But he cautions that further service adds will have to be eyed carefully.
"I think EarthLink does potentially stand to see some further benefit from their being able to offer those kinds of applications to consumers when they come to fruition," Laszlo says. "But again I would hope their revenues from that are not built into the business plan for the next couple of years, but rather as you look further into the future."
|
