Earthlink 2011 Annual Report Download - page 33

Table of Contents
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 service
providers on acceptable terms, renew or extend current contracts with our network service providers at all, acquire similar network capacity from
other network providers, or otherwise maintain or extend our footprint. Additionally, each of our network service 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 service
providers compete with us in the market to provide consumer Internet access. As our consumer business continues to decline, our vendors may
not want to continue their relationship with us or do so at current prices. In addition, as our consumer subscribers continue to decline, our value-
added partners may raise their wholesale prices or discontinue their partnering relationship with us. 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 retail
access services, any of which could adversely affect our ability to compete in the market for consumer access services.
We face significant competition in the Internet industry that could reduce our profitability.
We operate in the Internet access industry, which is extremely competitive. We compete directly or indirectly with national
communications companies and local exchange carriers, such as AT&T, CenturyLink, Verizon and Windstream; cable companies providing
broadband access, including Charter Communications, Inc., Comcast Corporation, Cox Communications, Inc. and Time Warner Cable; local and
regional ISPs; established online services companies, such as AOL and the Microsoft Network; free or value-
priced ISPs, such as United
Online, Inc. which provides service under the brands Juno and NetZero; wireless Internet service providers; content companies and email
providers, such as Google and Yahoo!; and satellite and fixed wireless service providers. Competitors for our consumer VoIP services also
include companies that offer VoIP services as their primary business, such as Vonage, and competitors for our advertising services also include
content providers, large web publishers, web search engine and portal companies, Internet advertising providers, content aggregation companies,
social-
networking web sites, and various other companies that facilitate Internet advertising. Competition in the market for Internet access
services is likely to continue to increase. Competition could adversely impact us in several ways, including: decrease pricing of our services;
increase churn of our existing customers; increase operating costs; or decrease the number of subscribers we are able to add.
We believe the primary competitive factors in the Internet access industry are price, speed, features, coverage area and quality of service.
While we believe our Internet access services compete favorably based on some of these factors when compared to some Internet access
providers, we are at a competitive disadvantage relative to some or all of these factors with respect to other of our competitors. Current and
potential competitors include many large companies that have substantially greater market presence and greater financial, technical, marketing
and other resources than we have. Our dial-
up Internet access services do not compete favorably with broadband services with respect to speed,
and dial-
up Internet access services no longer have a significant, if any, price advantage over certain broadband services. Most of the largest
providers of broadband services, such as cable and telecommunications companies, control their own networks and offer a wider variety of
services than we offer, including voice, data and video services. Their ability to bundle services and to offer broadband services at prices below
the price that we can profitably offer comparable services puts us at a competitive disadvantage. In addition, our only significant access to offer
broadband services over cable is through our agreement with Time Warner.
We experience pricing pressures for certain of our consumer access services, particularly our consumer broadband services, due to
competition, volume-
based pricing and other factors. Some providers, including AT&T, have reduced and may continue to reduce the retail price
of their Internet access services to maintain or increase their market share, which could cause us to reduce, or prevent us from raising, our prices.
We may encounter further market pressures to: migrate existing customers to lower-
priced service offerings; restructure service offerings to offer
more value; reduce prices; and respond
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