EarthLink Is Still Piping Up for Access

EarthLink Inc. is one of the oldest Internet service providers in the country, and the most old-fashioned.

Since helping its first customer get online in 1994, the Atlanta-based ISP has displayed a single-minded focus on providing easy access to the Internet. Even as rivals like Time Warner Inc.’s America Online and Microsoft Corp.’s MSN shift their focus to creating flashy Web content, EarthLink prefers to help its 5.3 million subscribers find other people’s sites.

That doesn’t mean the country’s fourth-largest ISP is sitting still. The company is testing technologies to get people online through power lines and long-range wireless signals, and it is planning to take on the telephone companies with a voice over Internet protocol service by early next year.

EarthLink is also hoping to keep its customers happy by leading the fight against spam and online fraud. Although it is much smaller than AOL and MSN, EarthLink has been more aggressive when it comes to combating spam, filing scores of lawsuits and winning multi- million-dollar judgments against junk e-mailers. The company has yet to collect a dime, but it has helped put at least one spammer in jail.

EarthLink Chief Executive Garry Betty recently talked with The Times about Internet access, spam and call center outsourcing at the D2: All Things Digital conference in Carlsbad, Calif.

Question: How are you positioning EarthLink to compete with AOL and MSN?

Answer: We always have been focused on access. AOL, Microsoft, Yahoo -- they’re all destination sites. They want people to stay there -- to eat their hot dogs, drink their drinks, ride their rides -- and that’s how they make money.

We wanted to get people the ability to go on the superhighway and go anywhere you want. When we’re doing a great job, they don’t think about us. We’re just like the telephone.

Q: It sounds like you think of yourself as a phone company of sorts.

A: Increasingly. As you get more and more users using high speed, the ability for a company like EarthLink to aggregate applications on top of that high-speed pipe becomes easier. There’s people using voice over [Internet protocol], but that’s not going to be a mass market until people can use their [Internet] phone systems exactly like [they use normal phones]. That’s going to be sooner than later.

Q: Why do you think people will buy this service from their Internet providers instead of their phone companies?

A: Because the Internet part of that solution is becoming more and more important. I think we’re in a very good position for the users who find value in the things that we’re offering [and] to get them to buy into a larger set of services. It saves them a bunch of money.

Q: So customers will get to decide whether they’re more comfortable having their ISP help them make phone calls, or having their phone company help them use the Internet?

A: I don’t even think you’re going to think about it. We’re going to say, “Hey, I can give you a very cost-efficient package to deliver you other communication services.” Not too many people like their cable company or their telephone company.

Q: EarthLink has been one of the most aggressive ISPs when it comes to suing spammers. Why are you so determined to track them down?

A: Unless you make it [prohibitively expensive] to have some of these guys continue to do what they do, they just thumb their nose at the law.

Without taking the hammer and starting to go after the ones that are the most egregious, you’re stopping short of what our customers would expect from us.

Q: You’ve filed lawsuits against more than 100 spammers and won several injunctions to prevent them from sending more junk e-mail. Has that helped your spam-fighting efforts? Has the federal Can Spam Act helped?

A: No. For about 18 months, I think spam went up about 500%. From 2002 to early 2003 it was just exploding. It started to put real constraints on our back- end infrastructure just to filter the spam from getting to customers. [Since the Can Spam Act went into effect Jan. 1] I think the rate of growth has moderated, although the absolute volume of spam really hasn’t gone down.

Can Spam was great. It gave us a set of federal regulations that are consistent from state to state. But it’s only a U.S. law. Any spammer with a brain would immediately stop doing business here in the U.S. and set up operations offshore and start sending it that way. More and more, that’s what’s happening.

Q: Speaking of moving offshore, you’ve recently closed some of your call centers, including ones in Pasadena and Sacramento, to outsource customer support to India and other countries. Is most of that function going overseas?

A: About 65% of it was offshore, 35% of it was onshore. But frankly, that business is going to be almost exclusively offshore in the next several years. The reality of the economics is you can’t afford to not take advantage of it.

Q: Have customers complained?

A: We always support our customers -- that commitment hasn’t changed at all. We’re just delivering it in a different way.

The support jobs were terribly difficult to man. In Sacramento our turnover was over 80% a year. These are jobs that people didn’t particularly like. [Overseas] we hire college graduates. The turnover is less than 10% a year. After they get through the learning curve, the quality of service we provide is just as good. It also gives us an additional $60 million to $90 million a year in profits that we can then invest in other parts of our business.

Q: I saw a TV commercial last night offering SBC-Yahoo DSL for $26 a month. How long will EarthLink and its competitors be able to charge $21 and more for “premium” dial-up service?

A: Years. The premium dial segment is around 40 million customers today [industrywide]. It’s declining at a rate of 10% to 12% a year.

Q: Are you experimenting with new ways of letting EarthLink customers access the Internet?

A: We’ve done satellite for four years. We also have been the most active in pursuing market trials with [delivering] broadband over power lines. We are in two market trials today, and we’ll probably do two more before year-end.

We are in active discussion with anyone who is interested in delivering high-speed services through wireless technologies. All we’re waiting for is for somebody to start the build-out, and we’ll be there waiting to fill up those pipes.

Q: You said dial-up is still a big part of your business, but it sounds like you’re doing everything you can to move away from that.

A: No question. Because the customer experience is better.