Earthlink 2004 Annual Report Download - page 7

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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 1.4 million broadband subscribers as of
December 31, 2004. For the year ended December 31, 2004, broadband access revenues were $419.4 million, or 30% of total revenues.
We expect growth in our broadband access subscriber base and revenues as the market for broadband services continues to increase and as
we continue our efforts to expand our broadband footprint and the variety of access methods we use to deliver broadband services.
Web hosting
We lease server space and provide web hosting services to companies and individuals wishing to have an Internet or electronic commerce
presence. For the year ended December 31, 2004, web hosting revenues were $47.5 million, or 4% of total revenues. We had approximately
144,000 web hosting accounts as of December 31, 2004.
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
TM
search engine; fees generated through revenue sharing arrangements with online
partners 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. Our advertising and other value-added services revenues were $41.2 million, or 3%
of total revenues, for the year ended December 31, 2004.
Marketing Channels
Our sales and marketing efforts consist of the following programs:
Advertising. We advertise our services in print, billboard, electronic and broadcast media. We utilize various campaigns which may
include national and regional television, radio, print and online ads. Our campaigns may also include sponsorships of various community
programs and sporting events.
Direct Marketing. We promote our services directly to customers in the form of direct mail offers, which generally advertise a free or
discounted trial period to incent consumers to sign-up for our services, and through promotional inserts in packages, periodicals and
newspapers.
Original Equipment Manufacturers.
We have marketing arrangements with a number of leading hardware and software manufacturers to
include our Internet access software pre-installed on or included with their products. Our hardware and software manufacturing partners
include, among numerous others, Dell Inc. (“Dell”), Hewlett Packard and IBM.
Sprint Partnership. We have a relationship with Sprint Corporation (“Sprint”) in which Sprint purchases wholesale narrowband and
broadband services from us for resale and in which Sprint markets our retail services. During the year ended December 31, 2004, our
relationship with Sprint generated more than 10% of our total gross organic subscriber additions.
Retail. We market our products and services through retail outlets such as Best Buy, Fry’s, Circuit City, RadioShack, Staples and
OfficeMax.
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