Garry Betty, chairman and CEO of EarthLink, doesn’t attempt to downplay the tough times experienced by Internet companies over the past year. Indeed, “if Hollywood decided to make a movie about the Internet’s recent high-profile failures and even higher-profile mergers, they would call it ‘Four Funerals and a Wedding,’” he quipped.

The reference to Hollywood seems apt. Speaking at a conference earlier this month on “The Internet, e-Strategies and Virtual Communities” sponsored by Wharton’s Reginald H. Jones Center and the IBM/Lotus Institute for Knowledge Management, Betty several times emphasized the still untapped potential of the Internet as a medium for “business, communication, research and entertainment.”

He clearly sees EarthLink – the nation’s third largest Internet Service Provider – playing a major role in that development. To strengthen EarthLink’s position in the highly competitive ISP business, Betty has urged cable companies to provide open access through their broadband capabilities to all interested providers. In his quest to give customers ever faster and better service, he has forged alliances with DSL, fixed wireless, satellite and cable companies. And he has encouraged the industry to come up with its own safeguards against privacy violations rather than wait for legislation from Congress.

It’s a tough business. When Betty joined EarthLink in 1996, the Atlanta-based company had approximately 100,000 subscribers. After a huge growth spurt, and a merger with competitor MindSpring in February 2000, EarthLink now has approximately 4.7 million users (the vast majority of whom use dial-up Internet access). In addition to broadband and wireless, the company also offers such services as web hosting and design, e-commerce and domain registration.

According to news reports, EarthLink – with revenues last year of $987 million and 7,400 employees – lost its number two position this month to Microsoft’s MSN, which claims 5 million users. AOL, with 29 million dial-up members, holds a commanding lead.

During the last year EarthLink’s stock has swung from a high of $22 a share to just under $5 in December. It now hovers around $11 and the company has yet to show a profit (although Betty predicts one by the last quarter of this year). Takeover rumors continue to crop up; recent news reports have cited Microsoft, Disney and Yahoo as possible acquirers.

During his presentation, Betty, however, remained consistently upbeat both about the company and the industry. [First-quarter figures released on April 24 show the company reporting lower losses than expected for the second quarter in a row, while revenues for the quarter grew from $219 million a year ago to $294.9 million as of March 31.] He offered the audience seven truisms for the Internet, starting with the idea that “we are not at the end of the Internet frontier; we’re just at the beginning,” and reminded people that five years ago it was rare to have an e-mail address on someone’s business card. Today, he says, it’s an “indispensable part of business communication … Indeed, the Internet is having a profound impact on the global economy in general.” Betty cited a figure offered by another conference speaker, Mark Hogan, president of General Motors’ eGM. Hogan noted that 70% of the purchasers of a particular GM model are buying it directly off the web.

The best-positioned companies for this new frontier, Betty said, are a combination of clicks and bricks. Brick-and-mortar businesses that bring their customers and marketing expertise to cyberspace are successful, while land-based businesses that stay away from the Net, especially those with a strong focus on customer communication and information “will be leaving a lot of money on the table.”

The second truism is that technology doesn’t matter. “As long as users have an available fast connection, they don’t care about the differences between dial-up, cable, satellite, DSL or tin cans with strings,” said Betty. “Broadband will help us leapfrog into the real potential of the Internet.” Users, he added, “will also be looking for their ISP to accept any technology; they don’t want to have to worry about it.”

Cable access is especially attractive to ISPs because wired TVs are expected to be the most popular platform for new Internet users. This led in November to an agreement between AOL Time Warner and EarthLink in which Time Warner – reportedly to appease government regulators worried over its proposed merger with AOL – will allow EarthLink to provide high-speed Internet access over Time Warner’s cable systems.

Such open access, according to Betty, is both significant and overdue. In response to a question from the audience about the “war between him and the cable companies,” Betty noted that EarthLink has been “probably the most vocal advocate of open access in the marketplace. I think the cable companies have had their heads in the sand, not allowing other people to help bring customers to their infrastructure. If they had done so three years ago, this debate about whether DSL or cable is the more appropriate technology for the user wouldn’t even exist because the cable companies would overwhelmingly have had the lead.”

The deal with AOl Time Warner, he added, “has opened the doors for us with a lot of the other major cable providers. We are undergoing trials with AT&T, and just announced we will do a trial with Comcast in Philadelphia. [Comcast will offer EarthLink’s broadband Internet service over its cable system to a number of Comcast customers this spring.] We are in active discussions with Cox and Charter as well. I think in the next 12 to 15 months open access will become a reality, and I think that is great. Consumers like choices and it will have the effect of lowering the prices and increasing the overall acceptance.” Indeed, EarthLink announced on April 25 that it has agreed to conduct a six-month trial run of its Internet services over Cox Communications’ broadband cable network. The trial will take place later this year in El Dorado, Ark.

Betty’s third truism is to think small, or as he says, “you don’t need to be a Cisco to succeed on the Internet.” He cited the example of Harry Knowles, featured in EarthLink’s current ad campaign, ‘The Real Internet.’ Knowles, a movie lover, began to review films from his Austin, Tex., home using a web site he had created called “The site became so popular,” Betty said, “that soon Knowles was recognized as an entertainment opinion leader, a Hollywood heavyweight, and studio publicists and producers worked to cultivate good movie reviews from him. His web site is now his livelihood.

“That’s the beauty of the Internet,” Betty said. “For less than it costs to run an ad in the yellow pages, a small business today can set up a web store complete with graphics, shopping cart, checkout software, credit card capability, an Internet merchant account and the essential gateway to work with all software. These applications come fully integrated, tested and ready for customers as soon as the business can upload its catalogue, inventory and site content information. The company can be operating within 72 hours of placing that order.”

Truism number four is faster, faster, faster. “Technology has made us an impatient people,” Betty said, especially when it comes to such things as slow dial-up access. He cites a book by James Gleick, entitled Faster: The Acceleration of Just About Everything, in which Gleick notes that for so many business people speed is connectivity. “The state of being connected makes them efficient,” says Betty. “E-mail, cell phones, pagers, PDAs, and high process power PCs are bringing connectivity to a new level.”

Broadband growth, he adds, has been “steady but not spectacular, nothing like the growth rates you saw in the early 1990s for dial-up access. But as price declines and availability increase, broadband will open up even greater opportunities. It is predicted that more than 28 million online U.S. households will use a high speed Internet connection [by 2005].”

In his truism number five, Betty talked about the recent growth and success of virtual communities. He referred to John Hagel, chief strategy officer of 12 Entrepreneuring and another conference speaker, who explains in his book Net Gain: Expanding Markets Through Virtual Communities, how virtual communities are “likely to turn market dynamics upside down by creating what he calls reverse markets, markets in which the customer, armed with more and more information, uses this information to search out vendors offering the best combination of quality and price.”

Intelligent Enterprise magazine, Betty added, observed that vendors “pay attention to communities for one reason; members are already qualified sales leads because of their interest in the subject … Businesses that build trust and loyalty with virtual communities will be the most successful. The customer is truly in control of the Internet marketplace, and the businesses that fight that control, try to subvert it or ignore it are looking for trouble.”

Truism number six is that “communities can’t exist without communications.” As communication and connectivity grow on the Internet, Betty said, “it’s natural that those connecting will find others of similar natures. So communications lead to communities which lead to more communications. But none of this will occur unless the infrastructure exists to facilitate speed.

“As broadband and wireless technologies converge, the concept of connectivity is advancing towards a long-awaited generation of ubiquitous computing, the ability to seamlessly expand the Internet experience, once exclusive to PCs, to an anywhere anytime proposition.

Betty’s last truism is “trust me,” a reference to the sizeable concern over customer privacy that keeps many users away from the Internet. “Much of e-commerce, or any commerce, is about building customer loyalty and trust. And the lack, or perceived lack, of confidentiality in Internet transactions can damage customer relationships faster than poor customer service,” Betty noted.

Spam is just one part of the trust and loyalty issue. “EarthLink sends and receives about 200 million email messages a week,” he said. “On the weekends, about 50% of the messages that come into our data centers are spam. We filter it out to a great extent but it certainly puts a burden on our overhead and provides a lot of unwanted information coming into your mailbox.” Regulation might be necessary to control that, he added.

Betty later talked about some of the challenges EarthLink and other ISPs face in the coming months. One place not to look for EarthLink expansion, at least now, is abroad. “Explosive growth in Internet usage will come overseas,” he said, citing a projected one billion users primarily in Asia and other Third World countries. For EarthLink to start an operation in some of those marketplaces would at this point be “cost prohibitive.”

Concerning the outlook for competition in the ISP marketplace, Betty predicted that the number of ISPs able to be supported by the Internet economy “is quickly going to get to the point where only three to five [providers] are any size at all. The opportunity for somebody to make a transition from a small supplier to a big one is by and large gone. Capital costs are too great; customer acquisition costs are too high, and the inherent growth rate of the market would make it very hard to for someone else to come in at this point except through acquisition.”

He noted that there are still about 4,000-5,000 small regional ISPs which perform an important role and can be very profitable, supporting anywhere from 10,000 customers on down. But it would be difficult, he said, “to go from being a small, very focused company to one that has a national footprint.”