Juno 2013 Annual Report Download - page 10

Table of Contents
 Our Internet access services consist of dial-up, mobile broadband and, to a much lesser extent, DSL services. Our dial-
up Internet access services are provided on both a free and pay basis, with the free services subject to hourly and other limitations. Basic pay dial-up
Internet access services include Internet access and an email account. In addition, we offer accelerated dial-up Internet access services which can
significantly reduce the time required for certain web pages to load during Internet browsing when compared to our basic dial-up Internet access
services. Our accelerated dial-up Internet access services are also bundled with additional benefits, including antivirus software and enhanced email
storage, although we also offer each of these features and certain other value-added features as stand-alone pay services. Our dial-up Internet access
services are available in more than 12,600 cities across the U.S. and Canada. We also generate revenues from the resale of telecommunications to third
parties. Our Internet access services have typically experienced a higher rate of new member registrations during the quarter ending March 31 when
compared to other quarters, though there can be no assurance that these seasonal trends will continue in the future.
In 2012, we began offering our mobile broadband service as part of a wholesale agreement with Clearwire. In January 2014, we expanded the
coverage area to include the Sprint 3G network. We offer consumers the option to access the service by purchasing either a NetZero USB modem to
connect a single device such as a PC or a Mac® computer, or a NetZero personal hotspot that can connect up to eight Wi-Fi enabled devices
simultaneously. NetZero USB modem and NetZero hotspot customers are able to connect to our mobile broadband service using a variety of devices,
including a PC, Mac® computer, iPad® mobile digital device, and other tablets, netbooks and smartphones. Our mobile broadband service is generally
available for use in the home, at the office or on the go by customers across the U.S.
—The U.S. market for consumer Internet access services has evolved significantly, primarily due to increased availability and
consumer adoption of high-speed, or broadband, connections. As a result, the percentage of Americans who access the Internet via dial-up has declined
each year since 2002, according to Pew Internet & American Life Project. We anticipate that such percentage will continue to decline.
Broadband Internet access services are now available to most of the U.S. population at competitive prices, although market pricing varies based on
the geographic region and speed of the broadband service, among other factors. Broadband continues to have a much lower penetration rate in rural
areas when compared to urban and suburban areas and, according to an estimate released by the Federal Communications Commission in August 2012,
19 million Americans lack access to fixed broadband service, including 14.5 million Americans who lack access to the service in rural areas. Many
broadband providers, including cable companies such as Comcast and local exchange carriers such as AT&T, market broadband Internet access
offerings that are "bundled" with telephone, entertainment or other services, which generally results in lower prices than stand-alone services. At the
same time, the maturity of the dial-up Internet access market has led the largest dial-up service providers in the U.S., including AOL, EarthLink,
NetZero, and Juno, to significantly reduce marketing spending and operate their dial-up Internet access businesses primarily for profitability and cash
flows.
There are numerous dial-up Internet access providers in the U.S., although a small number of national providers account for a significant majority
of the U.S. dial-up market. AOL, EarthLink and our Internet access businesses, NetZero and Juno, on a combined basis reported approximately
3.3 million dial-up Internet access pay accounts at December 31, 2013. As the industry has matured, the average tenure of dial-up Internet access pay
accounts has increased significantly, which has generally resulted in a reduction in subscriber churn since longer tenured pay accounts, on average,
exhibit greater retention characteristics than newer pay accounts.
—We compete with numerous providers of broadband services, as well as other dial-up Internet access providers. Our principal
competitors for broadband services include, among others, local
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