What if Google Bought Earthlink?

Some time ago it occurred to me that Google might buy an ISP. It made sense to me then as a potential channel to small businesses. But now it makes even more sense from a variety of perspectives.

Let’s step back for a minute. Google has recently been pushing to open up Internet access and build direct ISP-like relationships with consumers:

• WiMax (with Sprint)
• Wireless spectrum
• White space broadcast spectrum
• Muni Wifi (to a much lesser degree)

All these efforts can be seen as Google’s attempt to ensure its relationship with consumers isn’t disrupted and/or that it becomes even more ubiquitous.

So what if Google were to buy Earthlink? Its market cap is a modest $800 million and change, it has strong cash flow and a range of valuable capabilities and assets (like 50% of MVNO Helio). However, its new growth initiatives (e.g., VoIP and muni Wifi) have not met expectations to date.

What would Earthlink bring at a relatively modest price:

• A big pool of consumers and small business customers (think alternative sales channel)
• A wireless carrier in Helio
• A telco business (VoIP), which Google is heading toward becoming anyway (think more services to enterprises)
• A ISP business with national reach (and that would offer precise location information for ad targeting)
• Infrastructure to build out muni Wifi if that takes off

Some of the costs of these initiatives Google could subsidize with its other revenues and it wouldn’t be under the same pressure as Earthlink is as a stand-alone company. But it could also be a profitable business unit that would help Google achieve some of its objectives on a now wide range of fronts.

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