Earthlink 2009 Annual Report Download - page 18

Table of Contents
parties upon which we rely. Any interruption in the services provided by our vendors or by third parties could adversely affect our business,
financial position, results of operations and cash flows.
We may not be able to execute our business strategy for our Business Services segment, which could adversely impact our results of
operations and cash flows.
Revenues for our Business Services segment, which primarily consist of New Edge revenues, have been declining due to economic and
competitive pressures. This decline in revenue impacts our ability to leverage our fixed cost network infrastructure. New Edge has a network and
cost structure designed to support a larger revenue stream. We are continuing to evaluate ways to create more scale in our New Edge business,
and are closely managing operating costs and expenses. However, to achieve and sustain operating profitability in our business services segment,
we must generate revenue growth, align our cost structure with revenue trends and otherwise manage this business efficiently. In addition, in
order to generate revenue growth, we could incur significant upfront costs to acquire new customers. There can be no assurance that we will be
able to reduce our operating expenses commensurate with the revenue decline or create more scale in this business. The inability to reduce
operating expenses or create scale could have an adverse impact on our business, financial condition, results of operations and cash flows.
Our commercial and alliance arrangements may not be renewed or may not generate expected benefits, which could adversely affect our
results of operations.
A significant number of our new subscribers have been generated through strategic alliances, including through our marketing alliance with
Time Warner Cable and Bright House Networks. Generally, our strategic alliances and marketing relationships are not exclusive and may have a
short term. In addition, as our agreements expire or otherwise terminate we may be unable to renew or replace these agreements on comparable
terms, or at all. Our inability to maintain our marketing relationships or establish new marketing relationships could result in delays and
increased costs in adding paying subscribers and adversely affect our ability to add new customers, which could, in turn, have a material adverse
effect on us. The number of customers we are able to add through these marketing relationships is dependent on the marketing efforts of our
partners, and there is no commitment for these partners to provide us with new customers. A significant decrease in the number of gross
subscriber additions generated through these relationships could adversely affect the size of our customer base and revenues.
Our business is dependent on the availability of third-party telecommunications service providers.
Our business depends on the capacity, affordability, reliability and security of third-
party telecommunications service providers. Only a
small number of providers offer the network services we require, and the majority of our telecommunications services are currently purchased
from a limited number of telecommunications service providers. Our principal provider for narrowband services is Level 3. Our largest providers
of broadband connectivity are AT&T, Comcast, Covad, Qwest, Time Warner Cable and Verizon. We also purchase narrowband services from
certain regional and local providers. Telecommunications service providers have merged and may continue to merge, which would reduce the
number of suppliers from which we could purchase telecommunications services.
We cannot be certain of renewal or non-
termination of our contracts or that legislative or regulatory factors will not affect our contracts.
Our results of operations could be materially adversely affected if we are unable to renew or extend contracts with our current network providers
on acceptable terms, renew or extend current contracts with our network providers at all, acquire similar network capacity from other network
providers, or otherwise maintain or extend our footprint. Additionally, each of our network providers sells network access to some of our
competitors and could choose to grant those competitors preferential network access or pricing. Many of our network providers compete with us
in the market to provide consumer Internet access. Such events may cause us to incur additional costs, pay increased rates for wholesale access
services, increase the retail prices of our service offerings and/or discontinue providing
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