Earthlink 2003 Annual Report Download - page 25

The increase in narrowband revenues was due to an increase in average monthly service revenue per narrowband subscriber from $19.42
to $20.70 during the years ended December 31, 2001 and 2002, respectively. Also contributing to the increase was an increase in equipment-
related revenues from $4.6 million during the year ended December 31, 2001 to $16.8 million during the year ended December 31, 2002, and
the inclusion of $9.1 million of revenues related to the deferred service liability for PeoplePC Membership Customers previously noted.
The effect of the increase in average monthly service revenue per narrowband subscriber was largely offset by a decrease in the average
number of narrowband subscribers during the year ended December 31, 2002 as compared to the year ended December 31, 2001. Average
narrowband subscribers decreased 199,000, or 5%, from 4.3 million during the year ended December 31, 2001 to 4.1 million during the year
ended December 31, 2002.
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The following table summarizes narrowband subscriber activity for the years ended December 31, 2001 and 2002:
Our quarterly average monthly churn rates for narrowband subscribers were 4.0%, 4.0%, 5.4% and 4.9% for the four quarters in the year
ended December 31, 2001 and 4.5%, 4.1%, 4.1% and 4.0% for the four quarters in the year ended December 31, 2002. On December 31, 2002,
we had 4.0 million narrowband subscribers, a decrease of 168,000 from December 31, 2001. This decrease primarily resulted from churn
caused by a price increase effected in July 2001 to traditional EarthLink customers as well as the conversion of acquired subscribers to standard
EarthLink pricing plans, the migration of narrowband subscribers to broadband services, and the continued maturing and ongoing
competitiveness of the market for narrowband Internet access which resulted in fewer new customers from our sales and marketing programs.
Broadband access revenues
Broadband revenues increased $82.7 million, or 49%, from $167.9 million during the year ended December 31, 2001 to $250.6 million
during the year ended December 31, 2002. The increase in broadband revenues was due to an increase in the average number of broadband
subscribers from 355,000 during the year ended December 31, 2001 to 610,000 during the year ended December 31, 2002. The increase in
average subscribers was due to the continued growth in market demand for broadband access via DSL and cable, the introduction of EarthLink
broadband service over the Time Warner Cable system late in 2001, and continued EarthLink marketing efforts to promote broadband services.
2001 2002 Change
% Change
(in thousands, except monthly revenue
per average subscriber amounts)
Service revenues
$
994,681
$
1,011,886
$
17,105
2%
Revenues associated with acquired Membership Customers
(deferred service liability)
—
9,143
9,143
N/A
Equipment and related revenues
4,570
16,800
12,330
276%
Narrowband access revenues
$
999,251
$
1,037,829
$
38,578
39%
Ending subscribers
4,203
4,035
(168
)
-
4%
Average subscribers
4,265
4,066
(199
)
-
5%
Monthly revenue per average subscriber
Service revenues
$
19.42
$
20.70
$
1.28
7%
Total revenues
$
19.54
$
21.27
$
1.73
9%
Year Ended December 31,
2001 2002
(in thousands)
Subscribers at beginning of year
4,306
4,203
Gross organic subscriber additions
1,856
1,607
Acquired subscribers
428
308
Narrowband subscribers converted to our broadband services
(62
)
(98
)
Churn
(2,325
)
(1,985
)
Subscribers at end of year
4,203
4,035