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Windstream Dumps Its EarthLink ISP Business

Windstream announced this week it was ditching EarthLink, the internet service provider it acquired in 2017 that has been around since the days of dial-up, in a $330 million cash deal.

Trive Capital of Dallas, Tex., is the new owner of the consumer-facing ISP, which today primarily serves customers over some cable broadband and DSL providers.

EarthLink launched in 1994, when almost everyone accessed online services over dial-up telephone modem connections using providers like AOL, CompuServe, Prodigy, and MSN. EarthLink rode the Dot.Com boom and secured funding to build its own multi-city, dial-in access network, allowing customers to reach the service over local, toll-free access numbers. This allowed EarthLink to be among the first ISPs in the country to offer unlimited, flat rate access for $19.95 a month at a time when some other providers charged in excess of $12 an hour during the business day to use their services.

EarthLink grew to become America’s second largest ISP, reaching 4.4 million subscribers in mid-2001 — still dwarfed by 25 million AOL customers, but well-respected for its wide-reaching availability over more than 1,700 local dial-in numbers around the country. But 2001 was as good as it would get at EarthLink.

The newly inaugurated administration of George W. Bush and its deregulatory-minded FCC Chairman Michael Powell quickly threatened to derail EarthLink’s success.

As EarthLink’s balance sheet increasingly exposed the high wholesale cost of the company’s growing number of DSL and cable internet customers, executives calmed Wall Street with predictions that EarthLink’s wholesale costs would drop as networks matured and the costs to deploy DSL and cable internet declined. The phone and cable industry had other ideas.

Under intense lobbying by the Baby Bell phone companies, the FCC voted in 2003 to eliminate a requirement that forced phone companies to allow competitors fair and reasonable access to dial-up infrastructure and networks. The cable industry had never lived under similar guaranteed access rules, a point frequently made by telephone company lobbyists seeking to repeal the guaranteed “unbundled” access requirements. Lobbyists (and industry funded researchers) also claimed that by allowing competitors open access to their networks, it created a hostile climate for investors, deterring phone companies from moving forward on plans to scrap existing copper wire networks and invest in nationwide fiber to the home service instead.

Both the FCC (and later the courts) found the industry’s argument compelling. EarthLink protested the move was anti-competitive and could give the phone and cable company an effective duopoly in the business of selling internet access. Others argued the industry’s commitments to build out fiber networks came with no guarantees. FCC Commissioner Michael Copps warned that Americans would pay the price for the FCC’s unbundling decision:

I am troubled that we are undermining competition, particularly in the broadband market, by limiting — on a nationwide basis in all markets for all customers – competitors’ access to broadband loop facilities whenever an incumbent deploys a mixed fiber/copper loop. That means that as incumbents deploy fiber anywhere in their loop plant — a step carriers have been taking in any event over the past years to reduce operating expenses — they are relieved of the unbundling obligations that Congress imposed to ensure adequate competition in the local market.

[…] I fear that this decision may well result in higher prices for consumers and put us on the road to re-monopolization of the local broadband market.

Blinky, EarthLink’s mascot, was featured in instructional videos introducing customers to “the World Wide Web” and how to buy books on Amazon.com

In the end, the industry got what it wanted during the Bush Administration, and was also able to effectively wiggle out of its prior commitments to scrap copper networks in favor of fiber optics. Phone companies were also able to raise wholesale prices on providers like EarthLink. In 2002, EarthLink paid about $35 per month to phone companies for each subscriber’s DSL connection, for which the ISP charged customers $49 a month. Financial reports quickly showed EarthLink started losing money on each DSL customer, because it could keep only about $14 a month for itself. The cable industry was slightly more forgiving, if companies voluntarily allowed EarthLink on their emerging cable broadband networks. In general, cable operators charged EarthLink $30 a month for each connection, which gave EarthLink about the same revenue it earned from its dial-up business.

An even bigger threat to EarthLink’s future came when phone and cable companies got into the business of selling internet access as well, usually undercutting the prices of competitors like EarthLink with promotional rates and bundled service discounts.

EarthLink’s subscriber numbers dropped quickly as DSL and cable internet became more prevalent, and customers defected to their providers’ own internet access plans. Attempts by EarthLink to diversify its business by offering security software, web hosting, email, and other services had limited success in the residential marketplace.

By the mid-2010s, EarthLink primarily existed as a little-known alternative for some cable broadband customers and DSL users. But beyond initial promotional pricing, there was no compelling reason for a customer to sign up, given there was usually little or no difference between the prices charged by EarthLink and those charged by the phone or cable company for its own service. EarthLink’s competitors, including AOL and MSN, also saw subscriber numbers start to drop for similar reasons, especially when their customers dropped dial-up access in favor of broadband connections. This was strong evidence that companies that do not own their own networks were now at a strong competitive disadvantage, held captive by unregulated wholesale pricing and no incentive for phone or cable companies to treat them fairly.

In 2017, Windstream paid $1.1 billion for EarthLink, primarily to consolidate fiber-optic network assets and improve its business services segment. After more than a year, Windstream realized EarthLink’s residential ISP service had little relevance to them.

“People paid $5 to $10 a month for email,” Windstream spokesman Chris King told Bloomberg News. “It was not a strategic asset for us.”

With subscriber numbers still dropping to around 600,000 today, Windstream decided the time was right to sell.

“This transaction enables us to divest a non-core segment and focus exclusively on our two largest business units. In addition, it improves our credit profile and metrics in 2019 and beyond,” said Tony Thomas, president and CEO of Windstream.

An EarthLink television ad from 2004. (1:00)

Charter Raises Earthlink’s Legacy Grandfathered Broadband Rates

Phillip Dampier March 27, 2018 Charter Spectrum, Earthlink 10 Comments

Charter Communications is raising rates for its dwindling number of Earthlink customers still subscribed to Earthlink’s legacy internet plans in an effort to avoid Spectrum’s entry-level $65 internet service.

Charter has started to notify customers grandfathered on an Earthlink plan that they are going to be gradually stepping rates up, starting with a $5 increase. Stop the Cap! reader Christopher Rzatkiewicz shared a copy of the bad news on his recent Spectrum bill.

Charter Communications terminated its agreement allowing Earthlink to sell its service over its cable broadband network after completing its merger deal with Time Warner Cable and Bright House Networks. That left an undetermined number of Earthlink customers paying $41.95 a month for Standard Earthlink 15/1 Mbps service, considerably cheaper than Time Warner Cable’s identical, $59.99 15/1 Mbps plan.

This last loophole allowed some customers to avoid switching to Spectrum’s more costly $65 entry-level 100/10 Mbps plan (200 Mbps in select areas). But now Spectrum is gradually taking away Earthlink’s price advantage. The new rate is $46.95 a month, and is likely to continue increasing in similar increments at least twice a year, until its price reaches about $60.

To help convince customers still holding on to older service plans to switch to Spectrum plans and pricing, Charter will continue raising rates on older legacy plans from Time Warner Cable, Bright House, and Earthlink to remove any price advantages those plans may have originally had. That will allow Charter to eventually claim its plans are always cheaper and better.

Charter Communications/Spectrum Standard Broadband Plans

  • $46.95 Earthlink Standard¹ (15/1 Mbps)
  • $59.99 Time Warner Cable Standard² (15/1 Mbps)
  • $44.99 Spectrum Standard New Customer 1-Year Promotion³ (100/10 Mbps⁴)
  • $65 Spectrum Standard for Existing Customers (100/10 Mbps⁴)

¹ Earthlink service is no longer available to Charter/Spectrum customers. If you cancel your grandfathered Earthlink plan, you cannot return to this plan in the future.
² Time Warner Cable internet service is grandfathered and no longer available to new customers. If you switch to a Spectrum plan, you cannot return to a Time Warner Cable plan.
³ To qualify as a new customer, either cancel service in your name and enroll as a new customer under another household member’s name or cancel existing service and wait 30 days to re-qualify as a new customer.
⁴ This plan offers 200 Mbps download speed in select areas.

Earthlink from Charter/Spectrum is Dead: No New Customers Allowed

Phillip Dampier December 27, 2017 Charter Spectrum, Competition, Consumer News, Earthlink 35 Comments

Charter Communications has ended more than a decade-long relationship between Earthlink and Time Warner Cable by quietly pulling the plug on Earthlink’s cable broadband service.

As far back as November, Spectrum customer service agents have begun turning down customer requests to enroll in the alternative broadband service distributed by Spectrum/Time Warner Cable’s network and charged to monthly cable bills. With the exception of e-mail service, Earthlink over Time Warner Cable (and later Spectrum) was indistinguishable from cable company internet service and traveled over the same network. But customers used to enjoy significant savings by bouncing between new customer promotions from Earthlink and the cable company. Charter officials first closed that loophole by forbidding Earthlink from extending promotional pricing to existing Spectrum or Time Warner Cable broadband customers. Charter has since stopped enrolling new customers altogether.

Existing Earthlink customers can keep their service until further notice. Most are enrolled in 15-20 Mbps slower speed tiers originally identical to those offered by Time Warner Cable, but pay less than Spectrum’s standard $65 standalone broadband pricing.

“Spectrum now has absolutely no reasonable competition in the N.Y. Capitol District,” complains Stop the Cap! reader Jan Pedersen, who reported Spectrum told him Earthlink was no longer an option.

Earthlink does still resell AT&T DSL service in AT&T landline markets.

Earthlink Kills New Customer Promotion for Existing Charter/Spectrum Customers

Phillip Dampier March 20, 2017 Charter Spectrum, Competition, Consumer News, Data Caps, Earthlink Comments Off on Earthlink Kills New Customer Promotion for Existing Charter/Spectrum Customers

Nine years after Earthlink began promoting its $29.99 six-month offer for alternative broadband service for Time Warner Cable customers, the completion of Charter Communication’s takeover of Time Warner Cable has eliminated a clever way for customers to get broadband rate relief.

For almost a decade, savvy broadband-only Time Warner Cable customers have been able to bounce between new customer promotions at Time Warner Cable and Earthlink. When a year-long promotion with Time Warner Cable ended, a customer could switch seamlessly to Earthlink for six months and pay just $29.99 a month — charged to their Time Warner Cable bill. When the Earthlink promotion ended, customers were entitled to enroll as a new Time Warner Cable broadband customer and pay a lower rate for up to one year. After that, back to Earthlink.

No more.

Charter Communications closed that loophole this month and now prohibits existing Charter/Spectrum customers from getting promotional rates from Earthlink.

Once Charter customers end a broadband-only new customer promotion, currently $44.95 a month for one year, the rate jumps to $64.99… and stays there indefinitely.

The new restrictions appear in fine print on Earthlink’s website:

Charter Communications eliminated lower-cost broadband options for its customers, but claims its single remaining advertised offer (60Mbps in non-Maxx areas, 100Mbps in former TWC Maxx cities) offers a greater value because it is faster than Time Warner Cable’s Standard Internet 15Mbps plan and ends Time Warner’s practice of charging a $10 modem rental fee.

But it also costs more than earlier promotions at Earthlink ($29.99) and Time Warner Cable ($34.95).

Charter has junked Earthlink’s former promotion for Time Warner Cable customers.

“My broadband bill is now double what it used to be because I cannot switch to a broadband promotion with Charter as my Earthlink promotion ends this month,” reports Jim Deneck, a former Time Warner Cable customer in South Carolina. “I was paying $30 a month and now Spectrum wants to charge me $65 a month. The modem fee savings is irrelevant to me because I bought my modem years ago.”

Charter/Spectrum customers hoping for a better promotion from Earthlink are now also out of luck.

“After Spectrum pricing took effect in my area, my bill went up $30 a month,” writes Stop the Cap! reader Gennifer in Maine. “I was hoping to switch back to Earthlink but after placing an order with Earthlink, a representative from Charter/Spectrum called me and denied my request. It’s false competition. Since when is it okay to sign up with one company and then get a call from another telling me I am not allowed to take my business elsewhere. It’s monopoly abuse!”

Earthlink is entirely dependent on Charter Communications allowing them to resell service over Charter’s cable lines. Earthlink has been cautious not to outcompete either Charter or its predecessor Time Warner Cable, and charges roughly the same rates as a customer would get direct from either cable operator. The only benefit of the arrangement for customers was the ability to bounce between new customer promotions to pay the new customer rate indefinitely, but Charter has made sure that practice stops.

Gennifer did manage to ultimately outwit Charter, but at the cost of time and inconvenience.

“I called Spectrum and canceled my service and we signed up as a new customer under my husband’s name,” Gennifer writes. “Unfortunately, Charter won’t process an order at an address with existing service so you have to cancel and turn in equipment first and then place an order under a different name to qualify for a promotion. They really don’t want to give their customers a break or a discount. I wish we had other options.”

Charter Spectrum Raising Broadband Prices $5; $64.99/Mo for Entry-Level 60Mbps Plan

Customers in Florida and Texas received this notice with his latest cable bill. (Image courtesy: Nucleartx)

The “consumer benefits” of Charter Communications’ acquisition of Time Warner Cable and Bright House Networks just keep on coming as the company has begun hiking the cost of its broadband plans by $5 a month:

Important Billing Update: At Spectrum, we continue to enhance our services, offer more of the best entertainment choices and deliver the best value. We are committed to offering you products and services we are sure you will enjoy.

Effective with your next billing statement, pricing will be adjusted for:

  • Internet Service from $59.99 to $64.99.

If you are currently on a discounted rate, you will not realize an increase until the end of your promotional period.

The rate increase means Charter/Spectrum’s nationally available, entry-level broadband plan will now cost customers $64.99 a month. The company is also hiking rates on its Ultra tier (300Mbps in former Time Warner Cable Maxx markets, 100Mbps in most other markets) by $5 to $104.99.

Customers signed up to Spectrum’s base 60Mbps internet plan may be able to threaten their way to a lower price by contacting customer service and informing them you plan to switch to Earthlink, which is offering lower-speed plans as low as $29.99 a month for six months. Charter Spectrum has given many complaining customers a 12-month retention plan priced at $39.99 or $44.95 a month for 60Mbps.

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  • Patricia Garcia: What gets me is that despite the state aid for and requirement to expand, they have refused to expand to our home or the rest of the road which has 15...
  • Doug: Time to walk away.. The cable operators know that customers like to buy by price, not necessarily amount. There is a reason why a "one pound" coffee...
  • Tim: Comcast needs to drop the $11.99 from my contract since I am no longer getting Cinemax. Hitz is garbage. I watch the original programming on Cinemax w...
  • Dona Pruitt: I am appalled at Comcast for doing this to it's customers, especially all of the older customers. I have been with Comcast since 2005. All of you are ...
  • Willie C Branagan: iI am continually repulsed by the fact that (WEAK) New York State's Attorney General keeps providing Spectrum with extensions. They are not going to ...
  • Damien Thomas: I disagree...I recently moved back here to Rochester (my hometown) from portland Oregon- my first time out west- and they have comcast which has Xfini...
  • Nona: I would like to lodge a complaint against Spectrum Assist in North Carolina. I called on July 1, 2019 and had my sister approved based on a flier th...
  • Charles Nemitz: I ordered spectrum internet online and was given a price. My first bill had a 9.99 one time charge for self install. I pay you to self install? Somebo...
  • Paul Houle: Funny but I noticed that FTR was doing some work on the lines between my house and the CO. When I took a closer look I saw that they ran a fiber opti...
  • Phillip Dampier: I would definitely suggest people who do not like this change call, complain, and threaten to cancel Comcast unless they offer you a better deal. This...
  • Amy: It's such a scam. According to Comcast data we were using 1.5TB month, Even though we have unlimited phones through Verizon. I refused to pay and now...
  • Renee Myers: Grandfathereing people out of Cinemax is not right at all. Reduce my bill, dont give me a garbage channel that has anything worth watching!...

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