EarthLink's 2 percent solution

Internet service provider touts plans for new telephony services and hybrid cell phones as it digs in for a long phone fight.

Internet service provider EarthLink later this year will test Wi-Fi cell phones and a high-speed Internet package that includes unlimited local telephone service, the company said this week.

The tests are the latest indication that EarthLink is trying to capture a significantly larger portion of the U.S. telephone service market.

While the company has been offering broadband telephony for several years, the new high-speed package would establish it as the latest major ISP brand to offer, on a large scale, VoIP, or voice over Internet Protocol, which is software that allows an Internet connection to double as a phone line. EarthLink will have strong competition from cable operators such as Vonage and other broadband phone service providers such as AT&T CallVantage, 8x8 and Primus.

EarthLink expects that the makeover of its Internet telephony services will yield a half billion dollars in telephone revenue by 2009, and ultimately will serve 2 percent of all U.S. homes, EarthLink executives said during an interview on Thursday. EarthLink doesn't share its phone subscriber tallies or revenues, but the projected tallies are considered a significant improvement over the company's current customer base for phone service.

EarthLink's telephone future also may eventually be less reliant on New Jersey-based Net phone provider Vonage, whose VoIP service EarthLink now resells under the EarthLink brand. EarthLink later this year plans to launch a telephone-and-broadband service bundle using local phone lines, which EarthLink leases. The bundle, which will cost about $70 a month, won't require the Vonage service to resell.

EarthLink executives added that the company plans to test a cell phone that will accept Wi-Fi transmission; they have a short range but can be used as part of the very fast wireless data networks commonly found in transportation hubs, retail outlets, offices and homes. The goal is to begin selling the phones as part of a new service package that would include unlimited local and long-distance calls via VoIP. The cell phones will be provided by SK-EarthLink, a joint venture between EarthLink and South Korean cell phone operator SK Telecom.

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