The deal will affect the Austin, Texas-based customers of the i-opener program and the transition is expected to be completed by April.

by internetnews.com Staff [March 1, 2001]

EarthLink, the nations second largest Internet service provider, agreed to purchase Austin, Texas-based Netpliance Inc.'s i-opener subscriber base late last week.

According to Dan Greenfield, EarthLink vice president of corporate communications, the transition is expected to begin in earnest around mid-March, but EarthLink will be in receipt of the i-opener data base sometime soon. Greenfield expects the transition to be completed by the beginning of April.

Greenfield also said that while EarthLink will supply the Internet access, Netpliance will maintain control of the content, at least for the foreseeable future.

Doing what's best
John McHale, Netpliance chairman and chief executive officer, said the transfer of its i-opener subscriber base to EarthLink is in the best interest of the Net community.

"The agreement will allow both companies to focus on our respective areas of expertise. For Netpliance, that is broadband infrastructure," McHale said. "We are confident that our i-opener subscribers will be very pleased with EarthLink."

Netpliance's i-opener subscribers will be assigned an EarthLink account and e-mail address shortly after the transition takes place, as per the agreement between the two companies.

The number of i-opener subscribers that will be affected by the sale is rumored to be in the neighborhood of 53,000, but EarthLink spokespeople could not confirm that number, and Netpliance's CFO Kit Webster was not available to give an exact number of customers involved in the transaction.

Although financial terms of the deal were not disclosed, the current value of the average dialup subscriber stands at EarthLink is $244. Given current market values, EarthLink might have paid as much as $12.9 million to seal the deal with Netpliance.

Netpliance reduced its staff by 54 percent earlier this month and many of the company's top executives fled the struggling. The company's co-founder, Kent Savage plans to leave Netpliance on March 15 to pursue other interests. Meanwhile, the company has set its sights on expanding broadband services.

Privacy issues
EarthLink launched an ad campaign earlier this month, touting its policy of keeping customer information to itself and not selling subscriber data to outside sources. Les Seagraves, EarthLink chief privacy officer, said its corporate privacy policies would be extended to all i-opener transferees.

"Our policy in these matters is, if we've acquired Netpliance's customers, then they are treated like the rest of our subscribers," Seagraves said.

"Our marketing campaign on the privacy issue is to let the public know that when they sign up with us, we agree not to share their personal information with any outside source, unlike some of our competitors," he added.." It happens every once in a while that a few customers don't want to become a part of a larger ISP—that they prefer doing business with smaller companies, and so they'll decline to remain signed on with us.

"But we don't continue to market to anybody who isn't our customers just because we happen to have their information, and we certainly don't share customer information if a subscriber decides not to join after an acquisition" Seagraves concluded.

David Sobel, general counsel for the Electronic Privacy Information Center in Washington, D.C., a watchdog group for Internet privacy issues, said that it's fairly standard practice for ISPs to market services to subscribers to their services, but in terms of whether or not this occurrence is a violation of customer privacy, the line becomes blurred.

"The question of third-party vs. inside use starts to get clouded a little in these situations," Sobel said. "The real bottom line is for most subscribers is whether they're going to feel like they're constantly having products or services pitched to them, and if the constant pitching is becoming something that annoys them, regardless of the source."

— End