Earthlink 2003 Annual Report Download - page 5

Deliver the highest quality, user
- controlled experience on the Internet
We continue to focus significant resources on attracting and retaining subscribers by providing them with fast and reliable access to the
Internet through a variety of platforms and services, including broadband, premium-priced narrowband, value-priced narrowband and wireless
Internet access services. We are focused on deploying products and services that enhance customers' Internet experiences, such as
spamBlocker, Pop-Up Blocker
SM
, EarthLink Spyware Blocker
SM
, TotalAccess® 2004 with Parental Controls (including the EarthLink Kid
Patrol Browser), web browsing acceleration-related applications for value-priced and premium narrowband subscribers and email-by-phone. In
addition, we provide a customizable Personal Start Page™ that lets subscribers create their own launch point to the Internet. As a result,
subscribers can search, organize, shop and communicate—via email, chat or Instant Messaging—all from one convenient location. We are
devoted to delivering innovative products, services and applications that customers can use to enhance their Internet experience and believe
customer adoption of these innovative tools improves customer loyalty and reduces churn.
Improve operating margins to fund growth
We are intensely focused on delivering our services more cost effectively by capitalizing on the continuing decline in telecommunications
costs, leveraging the benefits of scale throughout our business, reducing and more efficiently handling the number of calls to our contact
centers, exploring cost effective outsourcing opportunities and streamlining our internal processes and operations. We leverage our national
footprint by continuing to migrate customers to lower cost telecommunications networks, utilizing volume discounts and managing the network
to increase its efficiency. We are also focused on improving our marketing effectiveness and utilizing cost effective distribution channels.
In January 2003, we closed four contact center facilities to reduce overall costs. In January 2004, we announced a plan to further
restructure our contact center operations and rely on outsourced contact center service providers. Under the plan, we will close contact center
operations in Harrisburg, Pennsylvania; Roseville, California; San Jose, California; and Pasadena, California and reduce our contact center
operations in Atlanta, Georgia by the end of the first quarter of 2004. We will continue to manage operating expenses, leveraging our
infrastructure as we continue our efforts to grow our customer base and revenues.
Emphasize customer service, fostering increased customer loyalty and lower churn
We have always been committed to delivering high-quality customer service and technical support and have been recognized by several
industry publications and groups as a leader in providing excellent customer service. We believe that a high level of customer satisfaction
allows us to compete more effectively. We focus on the customer relationship in an effort to increase loyalty and reduce churn.
2
Service Offerings
Our primary service offerings include narrowband Internet access, including premium and value-priced dial-up access over traditional
telephone lines and wireless access through a variety of handheld and laptop devices; high-speed or broadband access via DSL, cable modem,
satellite and dedicated circuits; web hosting; and advertising and related marketing services. We derive substantially all revenues from services
and related fees, and such amounts represented more than 97% of total revenues for the year ended December 31, 2003. The remaining
revenues relate to sales of equipment and devices used by our customers to access our services.
Narrowband access
Narrowband access revenues consist of monthly fees charged to customers for dial-up and wireless Internet access; installation fees; early
termination fees; equipment revenues associated with selling personal computers, handheld devices and other Internet access devices; and fees
charged for the shipping and handling of the devices and other equipment. We had approximately 4.0 million narrowband subscribers at
December 31, 2003. Narrowband access revenues were $965.0 million, or 69% of total revenues, for the year ended December 31, 2003.
We anticipate value-priced narrowband access to contribute significantly to future subscriber and revenue growth; however, we expect
modest declines in our premium-priced narrowband subscriber base and revenues. We also anticipate continued differentiation of narrowband
access and related services in pricing and service offerings designed to meet the unique needs of customers.
Broadband access
Broadband access revenues consist of monthly fees charged for high-speed, high-capacity access services including DSL, cable, satellite
and dedicated circuit services; installation fees; early termination fees; reactivation fees; shipping and handling fees; and proceeds from the sale
of modems and other access devices to our subscribers. We had approximately 1.1 million broadband subscribers at December 31, 2003. For
the year ended December 31, 2003, broadband access revenues were $361.1 million, or 26% of total revenues.
We expect broadband access to contribute significantly to future subscriber and revenue growth as the market for broadband services