Earthlink 2005 Annual Report Download - page 7

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Service Offerings
Our primary service offerings include narrowband Internet access, including premium and value-priced dial-up access over traditional
telephone lines; high-speed or broadband access via DSL, cable, satellite and dedicated circuits; advertising and other value-added services;
and web hosting. We began offering IP-based voice services during 2005. We derive substantially all revenues from services and related fees,
and such amounts represented 99% of total revenues for the year ended December 31, 2005. The remaining revenues related 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 Internet access; activation fees; early termination
fees; usage fees; equipment revenues associated with selling Internet access devices; and fees charged for the shipping and handling of the
devices and other equipment. We had approximately 3.6 million narrowband subscribers as of December 31, 2005. For the year ended
December 31, 2005, narrowband access revenues were $742.8 million, or 58% of total revenues.
We expect to grow our PeoplePC Online narrowband subscriber base and revenues during 2006, and we expect declines in our premium
narrowband subscriber base and revenues during 2006. We also anticipate continued differentiation of narrowband access and related services,
particularly in the pricing of services and the types of applications and support included in the service offerings, each designed to meet the
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 equipment revenues
associated with the sale of modems and other access devices to our subscribers. We had approximately 1.6 million broadband subscribers as of
December 31, 2005. For the year ended December 31, 2005, broadband access revenues were $441.7 million, or 34% of total revenues.
We expect to grow our broadband access subscriber base and revenues during 2006 as the market for broadband services continues to
increase and as we continue our efforts to expand the variety of access methods we use to deliver broadband services.
Advertising and other value
-added services
We generate advertising and other value-added services revenues by leveraging the value of our customer base and user traffic; through
paid placements for searches, powered by the Google search engine; fees generated through revenue sharing arrangements with online
partners whose products and services can be accessed through our properties; commissions received from partners for the sale of partners’
services to our subscribers; sales of advertising on our various online properties, such as the Personal Start Page; and fees associated with
services which are incremental to our Internet access services, such as mail storage and security. For the year ended December 31, 2005,
advertising and other value-added services revenues were $64.9 million, or 5% of total revenues.
In 2006, we expect to increase our advertising and other value-added services revenues without negatively impacting the customer
experience through overly-intrusive advertising techniques. To do this, we will seek to increase the EarthLink start page utilization, seek
partnerships to increase search traffic and revenues from non-access customers, and offer new services, among other efforts.
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