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As EarthLink launches a new wireless partnership this week, the nations second biggest Internet service provider is testing its newfound freedom.
Two months after renegotiating the exclusive relationship it had with Sprint, EarthLink is cutting new deals, while realizing that the ties that bind it to Sprint are still strong.
In 1998, Sprint purchased 27 percent of EarthLink and secured the right to buy the rest of the company before anyone else could try. In February, Sprint gave up its rights of first refusal along with board seats and sharing in EarthLinks operational revenue and losses.
But as EarthLink prepares to move into wireless services, its executives realize how useful Sprint can still be. “We are getting ready to launch a service with Motorola T900 products, and . . . Sprint is one of the better positioned wireless network operators in the U.S., and we would like to work with them,” said Lance Weatherby, EarthLink Everywhere executive vice president.
EarthLinks Everywhere strategy includes the Motorola service to let customers retrieve e-mail on pagers. That comes on top of earlier deals with Research in Motion to make EarthLink e-mail available on pagers, and a data deal with Metricoms Ricochet modem service.
Under the new deal, EarthLink can now resell hardware made by other wireless vendors. By the same token, Sprint can use other online service providers — its Sprint PCS unit has a deal in place with AOL Time Warner, for example.
“They [EarthLink] are just one of the access avenues for us,” said Mark Bonavia, director of corporate communications at Sprint.
In addition to wireless deals, EarthLinks long-term strategy involves making its services available in homes on devices that are networked together.
EarthLink officials said one of the biggest drivers for a change in the relationship was friction over how Sprint employees were getting compensated — or not — for referring business to EarthLink.
“We wanted to find a way to work with the business units that gave them what they were looking for,” said Bill Heys, executive vice president of sales at EarthLink.
Apparently, another thing Sprint was looking for was a way to make its bottom line look healthier. While a board member of EarthLink, Sprint had to account for its portion of the ISPs losses.
Going forward, EarthLink executives hope to continue wholesaling Internet services to Sprint in exchange for long-distance service and bundled offerings. The executives believe these ties make Sprint more, not less, EarthLinks big phone company brother.