Earthlink 2003 Annual Report Download - page 22

We have historically had wholesale relationships with Sprint and Charter. Our contract with Sprint to provide wholesale broadband
services is not exclusive and has annual windows for termination and renegotiation. While we anticipate maintaining a relationship with Sprint
by extending or otherwise entering into a new contract, the nature of our relationships with our Sprint wholesale broadband subscribers may
change and the number of customers served and/or the average revenue per subscriber in any new contract may be less than current levels.
Nonetheless, we cannot be certain of renewal or non
-termination of our contracts with Sprint and our other channel partners.
Our contract with Charter to provide wholesale broadband services expired in July 2003. In July 2003, we signed a new agreement with
Charter pursuant to which we intend to transition from providing wholesale broadband services to Charter in certain markets to offering a
premium, add-on Internet service to Charter subscribers in these markets for a smaller monthly fee. The premium Internet service would
include functionality available in our current retail narrowband and broadband service offerings such as Pop-Up Blocker and spamBlocker.
During the transition period, we will continue providing wholesale broadband services to Charter at a nominal rate. Due to the reduction in
revenue per subscriber during the transition period under this arrangement, we excluded approximately 152,000 Charter wholesale broadband
subscribers from our total paying subscriber count as of the third quarter of 2003. We have subsequently included approximately 22,000
Charter customers who have subscribed as of December 31,
24
2003 to the premium, add-on Internet service in our gross organic subscriber additions and in our total paying subscriber count.
The availability of and charges for last mile access with these and other last mile broadband network providers at the expiration of current
terms cannot be assured and may reflect legislative or regulatory as well as competitive and business factors. Our business could be materially,
adversely affected if we are unable to renew or extend contracts with our current broadband network providers on acceptable terms, renew or
extend current contracts with broadband network providers at all, acquire similar broadband network capacity from competing ISPs, or
otherwise extend our broadband footprint.
We purchase broadband access from ILECS; competitive local exchange carriers ("CLECS"); and cable providers. Please refer to
"Regulatory Environment" in the Business section of this 10-K for further discussion of the regulatory environment and discussion regarding
our contracts with broadband access providers.
Web hosting revenues
We earn web hosting revenues by leasing server space and providing web services to individuals and businesses wishing to present a web
or e-commerce presence on the Internet. Web hosting revenues decreased 6% from $53.2 million during the year ended December 31, 2002 to
$49.9 million during the year ended December 31, 2003 due to decreases in average web hosting accounts and average monthly revenue per
account.
Average web hosting accounts declined 4% from 173,000 during the year ended December 31, 2002 to 166,000 during the year ended
December 31, 2003. Average monthly revenue per account declined 2% from $25.61 during the year ended December 31, 2002 to $25.01
during the year ended December 31, 2003, reflecting the continued migration to lower price points to be competitive in the market for web
hosting services.
Content, commerce and advertising revenues
Content, commerce and advertising revenues consist of revenues from our partnerships, which are promotional arrangements with
advertisers, retailers, service providers and content providers. We earn these revenues by paid placements for searches; delivering traffic to our
partners in the form of subscribers, page views or e-commerce revenues; advertising our partners' products and services in our various online
properties and electronic publications, including the Personal Start Page™; and referring our customers to our partners' products and services.
Content, commerce and advertising revenues increased $10.1 million, or 64%, from $15.8 million during the year ended December 31,
2002 to $25.9 million during the year ended December 31, 2003 due primarily to increased search advertising revenues.
Cost of revenues
Telecommunications service and equipment costs are the primary component of EarthLink's cost of revenues and consist of
telecommunications fees, set-up fees and network equipment costs incurred to provide our Internet access services. Telecommunications
service and equipment costs also include the cost of Internet appliances sold, including wireless devices and personal computers.
Telecommunications service and equipment costs decreased 5% from $544.0 million during the year ended December 31, 2002 to
Subsidiaries of BellSouth Corporation
March
2006
Verizon Communications Inc.
October
2006
Time Warner Cable
December
2006