Earthlink 2005 Annual Report Download - page 22

directly connected to homes and businesses. We have agreements with several network providers that allow us to use the last mile element of
their network to provide high-speed Internet access services via DSL or cable. The availability of and charges for access with any of our
network providers at the expiration of current terms cannot be assured and may reflect legislative or regulatory as well as competitive and
business factors. We cannot be certain of renewal or non-termination of our contracts. Our results of operations could be materially adversely
affected if we are unable to renew or extend contracts with our current network providers on acceptable terms, renew or extend current
contracts with network providers at all, acquire similar network capacity from other network providers, or otherwise maintain or extend our
footprint.
One of our largest network providers of wholesale broadband access is Covad, a CLEC. Covad has agreements with varying terms with
many of the ILECs; however, if Covad is unable to continue to obtain reasonable line-sharing rates due to recent legal and regulatory
developments or otherwise, its wholesale broadband access services may become uneconomic or it may cease selling wholesale broadband
access services. In either event, we may be able to use other wholesale broadband providers’ networks to continue to provide retail broadband
services. Such events may cause us to incur additional costs, pay increased rates for wholesale broadband access services, cause us to increase
the retail prices of our broadband service offerings and/or may cause us to discontinue providing retail DSL services, any of which would
adversely affect our ability to compete in the market for retail broadband access services.
Newly adopted policies by the FCC reclassified wireline broadband services as information services and eliminated the FCC’s long-
standing non-discriminatory access requirements. While the long-term implications of the FCC’s new policies are not certain, they may
adversely affect our ability to execute our broadband strategy, our ability to sustain or grow our broadband access customer base and revenues,
and our profitability. We will continue our efforts to partner with wholesale broadband providers, including cable providers, ILECs, CLECs
and wireless providers, to expand our broadband footprint and the various technologies we can use in various markets to deliver our broadband
services. However, we can provide no assurance that we will be successful in our efforts.
Each of our telecommunications carriers provides network access to some of our competitors and could choose to grant those competitors
preferential network access or pricing. Many of our telecommunications providers compete with us in the market to provide consumer Internet
access. As a result, any or all of our current telecommunications service providers could discontinue providing us with service at rates
acceptable to us, or at all, which could materially and adversely affect our business, financial position and results of operations.
Our commercial and alliance arrangements may be terminated or may not be as beneficial as anticipated, which could adversely affect our
ability to increase our subscriber base.
A significant number of our subscribers have been generated through strategic alliances, including our marketing relationships with Sprint
and Dell. Generally, our strategic alliances and marketing relationships are not exclusive. In addition, as our agreements expire or otherwise
terminate, we may be unable to renew or replace these agreements on comparable terms, or at all. Our inability to maintain our marketing
relationships or establish new marketing relationships could result in delays and increased costs in adding paying subscribers and adversely
affect our ability to increase or sustain the size of our subscriber base, which could, in turn, have a material adverse effect on us. The number of
customers we are able to add through these marketing relationships is dependent on the marketing efforts of our partners, and a significant
decrease in the number of gross subscriber additions generated through these relationships could adversely affect the size of our customer base
and revenues.
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