Earthlink 2003 Annual Report Download - page 19

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Year Ended December 31, 2003 Compared to Year Ended December 31, 2002
Narrowband access revenues
Narrowband access revenues primarily consist of monthly fees charged to customers for dial-up and wireless Internet access and
equipment revenues associated with selling personal computers, handheld devices and other Internet devices. The following table identifies
financial and non-financial data associated with our narrowband access revenues for the years ended December 31, 2002 and 2003:
Narrowband revenues decreased $72.8 million, or 7%, from $1,037.8 million during the year ended December 31, 2002 to $965.0 million
during the year ended December 31, 2003. The decrease reflects a decrease in the average number of narrowband subscribers and average
monthly narrowband access service revenue per subscriber. These decreases were partially offset by revenues associated with the PeoplePC
deferred service liability for acquired PeoplePC Membership Customers (discussed below), from $9.1 million during the year ended
December 31, 2002 to $14.0 million during the year ended December 31, 2003. Revenues associated with the PeoplePC deferred service
liability will decline to $1.8 million in 2004 as the number of acquired, prepaid Membership Customers declines, as described later. The
decreases were also offset by an increase in equipment-related revenues, from $16.8 million during the year ended December 31, 2002 to
$22.3 million during the year ended December 31, 2003. We expect our equipment-related revenues will decline in future periods as a result of
our decisions to cease active marketing of MailStation products and services and to discontinue the sale of personal computers bundled with
prepaid, value-priced narrowband Internet access services (Membership Packages).
Average narrowband subscribers decreased 136,000, or 3%, from 4.1 million during the year ended December 31, 2002 to 3.9 million
during the year ended December 31, 2003, including an increase in average PeoplePC subscribers of 192,000 from 24,000 to 216,000 during
the years ended December 31, 2002 and 2003, respectively. As of December 31, 2003, we had 4.0 million narrowband subscribers, a decrease
of 51,000 from December 31, 2002. Total narrowband subscribers at December 31, 2003 includes 424,000 PeoplePC subscribers, an increase
of 356,000 from December 31, 2002. These decreases in total narrowband subscribers resulted from the migration of narrowband subscribers to
broadband services, and the continued maturing and ongoing competitiveness of the market for narrowband Internet access. The number of
narrowband subscribers we are able to add may decline and/or the number of customers who discontinue the use of our service (churn) may
increase as the market continues to mature or if competition becomes more intense.
Average monthly narrowband access service revenue per subscriber decreased 5% from $20.70 to $19.70 during the years ended
December 31, 2002 and 2003, respectively, due to increased promotional
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pricing for our premium service offerings and a shift in customer mix from premium narrowband to value-priced access services, which were
generally priced at $10.95 per month during 2003.
Year Ended December 31,
% Change
2002 2003 Change
(in thousands, except monthly revenue
per average subscriber amounts)
Service revenues
$
1,011,886
$
928,738
$
(83,148
)
-
8
%
Revenues associated with acquired Membership
Customers (deferred service liability)
9,143
13,951
4,808
53
%
Equipment and related revenues
16,800
22,336
5,536
33
%
Narrowband access revenues
$
1,037,829
$
965,025
$
(72,804
)
-
7
%
Ending subscribers
4,035
3,984
(51
)
-
1
%
Average subscribers
4,066
3,930
(136
)
-
3
%
Monthly revenue per average subscriber
Service revenues
$
20.70
$
19.70
$
(1.00
)
-
5
%
Total revenues
$
21.27
$
20.46
$
(0.81
)
-
4
%