RealTime IT News

EarthLink Picks up Embattled OmniSky's Assets

Fresh off of being delisted from the NASDAQ exchange at the beginning of the week, wireless service provider OmniSky Corp. said Friday that No. 2 Internet service provider EarthLink will scoop up its 32,000 subscribers and wireless infrastructure. Financial terms were not disclosed.

The deal is the latest is a series of battles being lost by wireless service providers struggling to stay alive in a rough economic climate. Just yesterday, rivals Yada Yada and Arch Wireless shut down filed for Chapter 11 Bankruptcy protection, respectively. MobileStar, which allowed users to enjoy wireless access from commercial locations such as Starbuck's, shut down in October for a while, only to continue kicking until VoiceStream Wireless made a bid to buy its assets. Metricom shut its highly-touted Ricochet service down earlier this year.

San Francisco's OmniSky outlined the details of the agreement in a filing for bankruptcy protection that it plans to submit to the Bankruptcy Court for the Northern District of California. The proposed Section 363 asset purchase would include OmniSky's subscribers, as well as its client software, mobile wireless application platform, browser proxy, mail proxy and all other components required to continue OmniSky's existing service. The deal is pending approval from the court and should ease the necessarily delicate task of moving OmniSky subscribers over to EarthLink's database.

Though OmniSky's downfall is a sure sign of the tightening of the screws in the ISP sector, the larger firms are surviving -- and benefitting nicely. Just as VoiceStream recognized the purchase of MobileStar assets as a coup, the agreement is a win for Atlanta's EarthLink, which seeks to bolster its mobile wireless service offerings onto Palm and PocketPC handhelds.

Lance Weatherby, executive vice president of the ISP's year-old EarthLink Everywhere initiative, was understandably excited about the development.

"Our purchase of OmniSky's subscriber base and key network assets will represent a significant advancement in our company's mobile wireless strategy -- well beyond our projected first-year goals for EarthLink Everywhere," said Weatherby. "Simply put, we aim to be the best Internet service provider on all fronts; and OmniSky's best-of-class wireless product offerings move us a few steps further in that direction."

In a time when ISPs are realizing that more and more users desire Internet access outside the traditional PC-at-home environs, EarthLink is bent on boosting its wireless access support for its 4.8 million subscribers. Launched a year ago this week, EarthLink Everywhere offers wireless e-mail service on the RIM's Blackberry Wireless pager and, in April, the company launched the same service on the Motorola TalkAbout two-way T900. But if this pending deal with OmniSky should reach fruition, it would give the ISP the ability to offer a service platform for arguably the two top handhelds in the business in Palm and PocketPC.

OmniSky's service offers users access to up to six e-mail accounts, including corporate e-mail via Microsoft Outlook as well as POP3 e-mail, the ability to search the Internet and the ability to make e-commerce transactions.