EarthLink's marketing campaign targets residents, businesses, tourists
Will EarthLink recoup its $13.5 million investment to build out Philadelphia’s Wi-Fi network?
Will EarthLink recoup this investment? According to Thomas Cooper, general manager at EarthLink Municipal Networks in Philadelphia, the company is counting on signing up as many residential and business customers as possible.
“We have several interesting strategies to get us on the right path and to hit our penetration targets. There’s going to be a large push for us in the Philadelphia marketplace this summer,” Cooper says.
Cooper adds that the marketing message “revolves around how the service is used at home, but the added value is that it can be taken with you. It has mobile value. It can be used in almost all public and private spaces in the city.”
Customers can sample the service without having to sign a long-term contract. EarthLink is offering a one-hour pass for $3.95, a one-day pass for $7.95 and a three-day pass for $17.95. One month of service is $19.99. The one- and three-day passes will target tourists and occasional visitors to the city from the suburbs.
According to Gartner analyst Phil Redman, the value of mobility may be limited to a small number of customers. “I don’t think that’s going to be enough differentiation,” Redman says. “Not everyone cares about mobility in these markets. You also need to look at PC and notebook penetration in many inner cities, and that is rather low — so basically EarthLink and incumbents are going after the same market with similar pricing.”
Redman adds, “I think generally cities that target specific areas and zones for wireless coverage will be successful, and if they look at it more for adoption by small- and medium-size businesses, individuals and the municipal workforce at a low-price point, that it will be successful.”
For Esme Voz, founder of MuniWireless, the question is more about what cities will use it for, beyond Internet access.
“If they spend money on the network, or get a provider like EarthLink to spend money, and all they use it for is Internet access, it’s a waste of everyone’s money. If they use it to save money on telecommunications, make the municipal workforce more efficient and deliver better services to residents through the Wi-Fi network, then it’s not a waste of time and money.”
In terms of EarthLink’s long-term goals, Cooper says, “We would like to see 40% to 45% of the residential homes become customers, and the rest be government, business and occasional use.”
EarthLink will have to compete against incumbents Verizon and Comcast for that broadband dollar, however. Less then half of the 600,000 households in the city have Internet access, so there’s plenty of growth potential. And EarthLink’s $20 Wi-Fi service is less expensive than Comcast Cable, at $33 per month, and Verizon’s DSL service, at about $34 per month.
Verizon is fighting back with a promotional offer of 768Kbps service for $14.99 a month for the first year, or 3Mbps service for $19.99 a month for the first six months.
“That’s the good thing about it,” Voz says. “The cities are using municipal Wi-Fi to create a more competitive market, and if this happens, then the cities have achieved their goal. The United States has a broadband duopoly, and that is driving cities to create a more competitive atmosphere.”
Another possible revenue source for EarthLink is the wholesale or reseller channel. Under the terms of its agreement with the city, EarthLink is required to provide the Wi-Fi network as an access layer for other service providers. Reseller or wholesale agreements have been signed with DirectTV, PeoplePC, Vonage and Drexel University.
In June, EarthLink also signed an agreement with GetConnected, a commerce-engine provider that will let merchants sell directly from a kiosk or cash register and activate EarthLink Wi-Fi orders at the point of sale.
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