Earthlink 2014 Annual Report Download - page 40

Table of Contents
Revenues
The following table presents our revenues for the years ended December 31, 2012, 2013 and 2014 :
Our Business Services segment earns revenue by providing a broad range of data, voice and managed services to retail and wholesale business
customers. We present our Business Services revenue in the following three categories: (1) retail services, which includes data, voice and
managed services provided to business customers; (2) wholesale services, which includes the sale of transmission capacity and other services to
other telecommunications carriers and businesses; and (3) other services, which primarily consists of web hosting. Revenues generally consist of
recurring monthly charges for such services; usage fees; installation fees; termination fees; and administrative fees.
Our Consumer Services segment earns revenue by providing nationwide Internet access and related value-
added services to residential
customers. We present our Consumer Services in two categories: (1) access services, which includes dial-up and high-
speed Internet access
services; and (2) value-added services, which includes revenues from ancillary services sold as add-
on features to our Internet access services,
such as security products, premium email only, home networking and email storage; search revenues; and advertising revenues. Revenues
generally consist of recurring monthly charges for such services.
Business Services
The following table presents the primary reasons for the changes in Business Services revenues for the years ended
December 31, 2013 and 2014
compared to the prior years:
______________
35
Year Ended December 31, 2013 vs 2012 2014 vs 2013
2012 2013 2014 $ Change % Change $ Change % Change
(dollars in thousands)
Business Services
Retail services
$
845,664
$
793,940
$
756,747
$
(51,724
)
(6)%
$
(37,193
)
(5
)%
Wholesale services
151,910
151,071
154,109
(839
)
(1)%
3,038
2
%
Other
19,851
19,216
20,075
(635
)
(3)%
859
4
%
Total revenues
1,017,425
964,227
930,931
(53,198
)
(5)%
(33,296
)
(3
)%
Consumer Services
Access services
269,533
231,448
202,008
(38,085
)
(14)%
(29,440
)
(13
)%
Value-added services
48,177
44,931
43,956
(3,246
)
(7)%
(975
)
(2
)%
Total revenues
317,710
276,379
245,964
(41,331
)
(13)%
(30,415
)
(11
)%
Total revenues
$
1,335,135
$
1,240,606
$
1,176,895
$
(94,529
)
(7)%
$
(63,711
)
(5
)%
2013 vs 2012 2014 vs 2013
(in millions)
Due to growth products (a)
$
32.2
$
24.0
Due to acquisitions (b)
8.6
8.3
Due net favorable settlements and reserve adjustments (c)
(8.2
)
9.5
Due to decline in traditional voice and data products (d)
(85.8
)
(75.1
)
Total change in Business Services revenues
$
(53.2
)
$
(33.3
)
(a)
Increase due to sales of growth products, including MPLS, hosted voice and IT services due to an increased emphasis on selling these
products and services.
(b)
Increase due to the inclusion of revenues from our acquisition of CenterBeam, Inc. beginning in July 2013.
(c)
Change due to net favorable settlements and reserve adjustments, primarily related to our billings to other carriers for access to our
network, for which revenue had not been previously recognized. We recognized $9.4 million of favorable adjustments in retail revenues
during 2012, $1.2 million in wholesale revenues during 2013 and $10.7 million primarily in wholesale revenues during 2014.
(d) Decrease due to decline in traditional voice and data products, including traditional voice, lower-
end, single site broadband services and
web hosting. Revenues for these traditional voice and data products have been decreasing due to competition