Broadband boosts EarthLink business

EarthLink, the nation’s third largest ISP, used strong broadband growth to pile up record third quarter EBITDA of $22.4 million, an increase of $1.5 million in third quarter 2001, the company said today.

“EarthLink experienced the strongest quarter broadband growth ever,” adding 77,000 broadband subs to bring the total to 681,000, said Gary Betty, the ISP’s CEO. Cable represented half the retail growth.

The company is also looking for ways to segment and differentiate its services in the market, “increasing our broadband service options and footprint for both cable and DSL,” he continued. EarthLink now offers tiered 384 kbps DSL for $39.95 per month.

For the quarter, EarthLink reported a net loss of $30.1 million or 20 cents a share, compared to a loss of $84.4 million in the quarter a year ago. Revenue grew to $340.7 million.

The broadband growth came, in part, at the expense of narrowband, which suffered a 5% third quarter decline, Betty said.

“EarthLink continues to believe that the narrowband market will be significant in terms of customers, revenues and profits for years to come and we continue to look for ways to cost-effectively maintain this segment,” he said.

The company is concurrently working to improve its profit margins in broadband through more aggressive deals with DSL vendors and by improving control over its backbone.

“We signaled last quarter that we had negotiated new deals with the major ILECs that provided better profitability,” Betty pointed out.

Part of those agreements included a deal between EarthLink and SBC that opened 53 new midsized markets to EarthLink’s DSL offerings, adding the potential for 13 million DSL households. EarthLink will start to market in that space late in the fourth quarter.

In cable, the company launched high-speed access across AT&T Broadband networks in Seattle in July and just recently launched in Boston.

“This should allow us to continue to grow our broadband customers and help lower our overall churn rate,” Betty said.