Earthlink 2007 Annual Report Download - page 23

Our VoIP business exposes us to certain risks that could cause us to lose customers, expose us to significant liability or otherwise harm our
business.
Our VoIP service depends on growth in the number of VoIP subscribers, which in part depends on wider public acceptance of VoIP
telephony. Potential new subscribers may view VoIP as unattractive relative to traditional telephone services for a number of reasons, including
the perception that the price advantage for VoIP is insufficient to justify the perceived inconvenience.
Our E911 emergency service is different in significant respects from the emergency calling services offered by traditional wireline
telephone companies. Those differences may cause significant delays, or even failures, in callers' receipt of the emergency assistance they need.
If one of our customers experiences a broadband or power outage, or if a network failure were to occur, the customer will not be able to reach an
emergency services provider. Delays or failures in receiving emergency services can be catastrophic. VoIP providers are not currently protected
by legislation, so any resulting liability could be substantial. Any of these factors could cause us to lose revenues, incur greater expenses or cause
our reputation or financial results to suffer.
Our VoIP service, including our E911 service, depends on the proper functioning of facilities and equipment owned and operated by third
parties and is, therefore, beyond our control. Our VoIP service requires our customers to have an operative broadband Internet connection and an
electrical power supply, which are provided by the customer's Internet service provider, which may or may not be us, and electric utility
company, respectively. If our third party service providers fail to maintain these facilities properly, or fail to respond quickly to problems, our
customers may experience service interruptions. Interruptions in our service could cause us to lose customers or cause us to offer substantial
customer credits, which could adversely affect our revenues and profitability. If interruptions adversely affect the perceived reliability of our
service, we may have difficulty attracting new customers and our brand, reputation and growth may be negatively impacted.
We may not be able to sell our municipal wireless broadband assets and that we may incur additional losses related to these operations.
We are currently pursuing the sale of our municipal wireless broadband assets. After thorough review and analysis of our municipal
wireless operations, we decided that it was no longer consistent with the objective of maximizing shareholder value. The decision to eliminate
the operations has resulted in impairment losses recognized during the year ended December 31, 2007. There is no assurance we will be able to
sell these assets. We also may incur further impairment losses and transition, wind-up and legal expenses, any of which could cause our
operating results to decline.
We may not realize the benefits we sought from our investment in the HELIO joint venture.
We have made $210.0 million of cash investments in HELIO, a joint venture with SK Telecom that offers wireless voice and data services
to consumers in the U.S. The financing of HELIO's operations has adversely affected our cash position. In addition, HELIO will require
additional funding in the future and HELIO has incurred losses and we expect HELIO to continue to incur losses. In addition, HELIO may not
be successful in implementing and marketing its wireless voice and data initiatives, and there can be no assurance that these initiatives will be
commercially successful. We cannot assure you HELIO will be able to achieve or maintain adequate market share or revenue or compete
effectively. Our investment in the HELIO joint venture may not provide the economic returns we sought.
The use of our net operating losses and certain other tax attributes could be limited in the future.
As of December 31, 2007, we had approximately $677.6 million of tax net operating losses for federal income tax purposes and
approximately $290.8 million of tax net operating losses for state income tax purposes. The tax net operating losses for state income tax
purposes began to expire in 2006 and the tax
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