Juno 2013 Annual Report Download - page 28

Table of Contents
percentage of pay accounts under a discounted pricing plan and any increases in the level of the discounts will likely result in a decrease in subscription
revenues and ARPU, in particular, if such increases continue. Although these discounted pricing plans, by their terms, renew at the then-current
standard pricing for such subscription term upon the expiration of the initial term, there are no assurances as to the number of pay accounts that will
renew at the then-current standard pricing or at all. We intend to continue offering discounted pricing plans in the future, and there are no assurances that
the volume or level of the discounts offered during a period will not be higher than anticipated. Our continued use of discounted pricing plans has
resulted in our becoming dependent on offering such plans in order to obtain new pay accounts and retain existing pay accounts and may result in our
having to reduce our standard pricing, which would adversely impact our financial results.
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Our business will suffer if we are unable to compete successfully.
We compete with numerous providers of broadband, mobile broadband and DSL services, as well as other dial-up Internet access providers. Our
principal competitors for our mobile broadband and DSL services include, among others, local exchange carriers, wireless and satellite service
providers, and cable service providers. These competitors include established providers such as AT&T, Verizon, Sprint and T-Mobile. Our principal
dial-up Internet access competitors include established online service and content providers, such as AOL and MSN, and independent national Internet
service providers, such as EarthLink and its PeoplePC subsidiary. Dial-up Internet access services do not compete favorably with broadband services
with respect to connection speed and do not have a significant, if any, price advantage over certain broadband services. Many broadband providers,
including cable companies and local exchange carriers, bundle their offerings with telephone, entertainment or other services, which may result in lower
prices than standalone services. In addition, there are a number of mobile virtual network operators, some of which focus on pricing as their main
selling point. Certain portions of the U.S., primarily rural areas, currently have limited or no access to broadband services. However, the U.S.
government has indicated its intention to facilitate the provision of broadband services to such areas. Such expansion of the availability of broadband
services will increase the competition for Internet access subscribers in such areas and will likely adversely affect our business. In addition to
competition from broadband, mobile broadband and DSL providers, competition among dial-up Internet access service providers is intense and neither
our pricing nor our features provides us with a significant competitive advantage, if any, over certain of our dial-up Internet access competitors. We
expect that competition, particularly with respect to price, for broadband, mobile broadband and DSL services, as well as dial-up Internet access
services, will continue.
Revenues and profitability of our Communications segment may continue to decline.
Most of our Communications segment revenues and profits come from our dial-up Internet access services. Our dial-up Internet access pay
accounts and revenues have been declining and are expected to continue to decline due to the continued maturation of the market for dial-up Internet
access. Consumers continue to migrate to broadband access, primarily due to the faster connection and download speeds provided by broadband access.
Advanced applications such as online gaming, music downloads and videos require greater bandwidth for optimal performance, which adds to the
demand for broadband access. The pricing for basic broadband services has been declining as well, making it a more viable option for consumers. In
addition, the popularity of accessing the Internet through tablets and mobile devices has been growing and may accelerate the migration of consumers
away from dial-up Internet access. The number of dial-up Internet access pay accounts has been adversely impacted by both a decrease in the number of
new pay accounts signing up for our services, as well as the impact of subscribers canceling their accounts, which we refer to as "churn." Churn has
increased from time to time and may increase in the future. We also experience an increase in the percentage of credit card
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