NetZero 2011 Annual Report Download - page 10

Table of Contents
4.5 million dial-up Internet access pay accounts at December 31, 2011. As the industry has matured, the average tenure of dial-
up Internet access
pay accounts has increased significantly, which has generally resulted in a reduction in subscriber churn since longer tenured pay accounts, on
average, exhibit greater retention characteristics than new pay accounts.
In 2012, we intend to begin selling 4G mobile broadband under the NetZero brand as part of a wholesale agreement with Clearwire, a
leading provider of 4G mobile broadband in the U.S. The dynamics and drivers of this market are substantially different from the dial-
up Internet
access market in which NetZero and Juno have historically operated. We plan to offer consumers the option to access the service by purchasing
either a NetZero USB modem to connect a single device such as a PC or a Mac® computer, or purchasing a NetZero personal hotspot that can
connect up to eight Wi-Fi enabled devices simultaneously. Both NetZero USB modem and NetZero hotspot customers will be able to connect to
the NetZero 4G mobile broadband service within the Clearwire coverage area using a PC, Mac® computer, iPad® mobile digital device, other
tablets, netbooks, and smartphones. The NetZero 4G mobile broadband service will be generally available for use in the home, at the office or on
the go by customers across the U.S. within the Clearwire coverage area.
Segment Services
FTD
FTD is a leading provider of floral, gift and related products and services to consumers and retail florists, as well as to other retail locations
offering floral, gift and related products and services, in the U.S., Canada, the U.K., and the Republic of Ireland. The business uses the highly
recognized FTD and Interflora brands, both supported by the Mercury Man logo. FTD is a floral and gift mass marketer, which we refer to as
FTD's consumer business, and a provider of floral network services, which we refer to as FTD's floral network business. These businesses are
complementary, as the majority of floral orders generated by the consumer business are fulfilled and hand-delivered by the members of the FTD
floral network, with the remaining orders delivered via direct shipment from third-party suppliers. FTD does not currently own or operate any
retail locations. For additional information regarding our FTD segment, see Note 2—"Segment Information" of the Notes to the Consolidated
Financial Statements, which appears in Part II, Item 8 of this Annual Report on Form 10-K.
Consumer Business. FTD is a leading marketer of flowers and gift items to consumers. FTD operates in the U.S. and Canada, primarily
through the www.ftd.com and www.ftd.ca websites and the 1-800-SEND-FTD telephone number, and in the U.K. and the Republic of Ireland,
through the www.interflora.co.uk and www.interflora.ie websites and various telephone numbers. FTD also operates mobile websites for these
same markets that are optimized for mobile phones with Internet connections. While floral arrangements and plants are FTD's primary offerings,
FTD also markets and sells gift items, including jewelry, chocolates, stuffed animals, wine, fruit, bath and beauty products, and other gift
baskets.
Consumers place orders at FTD's websites and, to a much lesser extent, over the telephone. Internet orders represented 89.0% of consumer
order volume during the year ended December 31, 2011. Orders are transmitted to floral network members or third-
party suppliers for processing
and delivery. The majority of consumer orders are hand-delivered by FTD's floral network members, who provide same-day and future delivery.
The other consumer orders are fulfilled and shipped directly to the consumer in an elegant gift box by third parties, who provide next-day and
future delivery.
Consumers typically pay for floral and gift orders before FTD pays its floral network members or third-party suppliers to fulfill and deliver
them. In general, FTD does not maintain significant physical inventory and generally does not bear the cost of warehousing and distribution
facilities because its floral network members and third-party suppliers maintain substantially all floral and gift physical inventory and facilities
and therefore bear the cost of warehousing and distribution.
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