Earthlink 2001 Annual Report Download - page 5

related services. The acquisition gives us additional capability to deliver Internet services through home devices other than personal computers.
The acquisition also extends the reach of our products and services to new segments of Internet users, including consumers who are new to the
Internet or are not interested in purchasing personal computers, and those seeking alternate ways to access email and personalized Internet
content within their homes.
We believe that as the ISP market continues to evolve, customers will place greater emphasis on ISP performance, network coverage,
reliability and support. As a result, smaller ISPs may be unable to remain competitive on a national or regional basis and may choose to sell
their businesses. We intend to continue to evaluate these and other acquisition opportunities as they become available and make disciplined
acquisitions where they are attractive.
Leverage the scale of our large customer base and existing infrastructure.
We focus on leveraging our national footprint by continuing to migrate customers to lower cost telecommunications networks, utilizing
volume discounts and managing our network to increase its efficiency. We will also continue to manage our operating expenses and attempt to
increase them more slowly than revenues, leveraging our infrastructure as we grow our customer base and revenues. Finally, we will remain
focused on maximizing and increasing our marketing effectiveness and utilizing the most cost effective channels.
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Key Business Areas
We continue to pursue four key business areas:
Narrowband access
Narrowband access revenues consist of monthly fees charged to customers for dial-up Internet access. Narrowband access revenues also
include monthly service fees, any associated equipment revenues for the Internet appliance and wireless access services provided as part of the
Company's "EarthLink Everywhere" initiative and equipment fees. We had approximately 4.2 million narrowband customers at December 31,
2001. Narrowband revenues were $999.3 million in 2001, which represented 80% of total revenues for the year.
Broadband access
Broadband access revenues consist of fees charged for high-speed, high-capacity access services including DSL, cable, satellite, fixed
wireless, and dedicated circuit services, installation fees, termination fees and fees for equipment. We expect broadband access to drive further
growth across our national footprint and across a wide variety of access methods. During 2001, we added 256,000 net new broadband
subscribers to end the year at 471,000 broadband subscribers. Late in the third quarter of 2001, we began providing service over the Time
Warner cable network and entered several new markets each week during the fourth quarter. At December 31, 2001, we were in 20 Time
Warner cable markets covering 15 million households across the United States. We will continue to expand our broadband service so that most
(if not all) of our dial-up customers will have the option to upgrade to an EarthLink broadband service rather than use a competing provider.
During 2001, approximately 62,000 of our broadband customers upgraded from our dial-up service. In addition, we added a static IP address
telecommuting service and our home network product to leverage the value and revenue potential of our retail DSL offering. EarthLink's
broadband revenues were $167.9 million or 14% of total revenues in 2001.
Web hosting
We lease server space and provide web hosting services to companies and individuals wishing to have a web or electronic commerce
presence. Our web hosting revenues were $59.3 million in 2001, which represented 5% of total revenues for the year. The number of web sites
hosted remained constant as we hosted approximately 169,000 Web sites at December 31, 2000 and 2001, respectively.
Content, commerce and advertising
We generate content, commerce and advertising revenues by leveraging the value of our customer base and user traffic. The principal
component of our strategy is our Premier Partnership Program, through which we offer and sell promotional packages that provide advertisers
with access to the multiple points of contact we have with our customers. The Premier Partnership Program focuses on third parties having a
natural affinity to and benefit for our customer base. The program generates revenues through (1) sales of online ads; (2) fees generated
through revenue sharing arrangements with online retailers who are accessed through our properties; and (3) payments for placing links from
our properties to third-party content. We also sell advertising and content space on our various online properties, such as the Personal Start
Page™ and our online magazine eLink, and through our news magazine, bLink. We generally charge transaction fees on electronic commerce
activities we facilitate. Our content, commerce and advertising revenues were $18.5 million or 1% of total revenues in 2001.
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