GoAmerica, the wireless service provider, is to sell most of its subscriber base to Earthlink. The two companies will also work together to sell GoAmerica’s Go.Web wireless services platform and Earthlink’s wireless access solutions to their combined client lists.
The partnership reflects GoAmerica’s decision to exit the wireless service provision business and focus on its software platforms and enterprise solutions. Previously GoAmerica purchased network capacity from operators such as AT&T Wireless and resold it to customers under its own brand, packaged with a range of services such as e-mail, web and intranet access. Despite becoming the dominant player in the wireless service provider market, GoAmerica was unable to build sufficient scale to generate a profit.
Under the terms of the agreement, GoAmerica will resell Earthlink’s access services through its own salesforce and distribution channels, Earthlink will provide billing, customer support and network operations for GoAmerica and Earthlink will adopt the Go.Web platform in its next generation wireless service offering.
“Wireless plays an important role in EarthLink’s long term growth strategy,” said Mike Lunsford, executive vice president of EarthLink’s Customer Experience and Everywhere initiatives. “GoAmerica’s pioneering technology and extensive enterprise relationships will let us better scale the breadth and depth of our wireless products and services. This alliance will help us to continue delivering compelling, value-added solutions with best-in-class support across all major wireless network technologies and device platforms.”
“We are thrilled to enter into such a comprehensive strategic relationship with EarthLink,” said Aaron Dobrinsky, CEO of GoAmerica. “EarthLink’s extensive wireless offerings, strong identity and reputation , and their leadership in delivering value-added services make EarthLink an excellent partner for GoAmerica. Together, we can offer a powerful combination of expertise in behind-the-firewall technology and `white glove’ end-user support to both EarthLink customers and the corporate enterprise.”
GoAmerica had been facing a funding crisis. It had already told investors that it would need to raise USD 10 – USD 15 million to fund its business over the next 18 months. This partnership with Earthlink and a change in its business model will negate funding requirements which, in the present economic climate, could easily have forced GoAmerica into bankruptcy. Omnisky and Yada Yada, fellow US wireless service providers, have already succumbed to this fate.
The new business model will see GoAmerica focusing on two primary assets – its software technology and its existing distribution relationships with heavyweights such as Dell, IBM Hewlett Packard and Siebel. 50% of the work force will go, reflecting the outsourcing of its customer support and network operations. In practice, GoAmerica will become Earthlink’s enterprise distribution channel and platform supplier.
The question is why Earthlink has chosen not to make a full acquisition of GoAmerica? PMN’s guess is that this may have provided a case for ‘material change’ in its distribution agreements. Since these are the main prize for Earthlink, particularly the tie-up with IBM, which sent GoAmerica’s shares soaring 140 percent when it was announced, it does not want to do anything to jeopardise them.
Originally published by PMN Mobile Industry Intelligence, the subscription-based analysis and insight platform founded by Marek Pawlowski.