Juno 2014 Annual Report Download - page 25

Table of Contents
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 failures from time to time. For example, a large-scale security breach at a retailer may result in the cancelation and
re-issuance of the affected credit cards by the issuing banks, which would impact our ability to charge our members on their old credit cards and if our
members do not update their credit card information with us, their accounts will terminate. Any change in the degree of credit card failures could have a
material impact on our churn rate. If we experience a higher than expected level of churn, it will make it more difficult for us to increase or maintain the
number of pay accounts, which could adversely affect our business, financial condition, results of operations, and cash flows.
We expect our dial-up and DSL Internet access pay accounts to continue to decline, potentially at an increasing rate. Any growth in the number of
mobile broadband or voice pay accounts may not be sufficient to offset such decline, at least in the near term. As a result, Communications services revenues
and the profitability of this segment may decline. The rate of decline in Communications services revenues has accelerated in some periods and may continue
to accelerate.
Although we have reduced our expenses in order to manage the profitability of our Communications segment, we will not be able to continue making
the same level of expense reductions in the future. Continued declines in Communications revenues, particularly if such declines accelerate, will materially
and adversely impact the profitability of this segment.
Our mobile broadband and voice services may not be commercially successful.
We started offering a mobile broadband service in March 2012 and a voice service in November 2014, both under the NetZero brand. However, there
services may not be accepted by consumers or commercially successful. We have been testing various marketing initiatives, including offering discounts on
our devices, but we cannot assure you that such initiatives will increase the number of accounts. The free version of the mobile broadband service is limited
to a set term and these accounts are automatically terminated upon the expiration of such service term if they do not upgrade to one of the paid subscription
plans. We cannot assure you that we will be successful in upgrading these accounts before they terminate. Some of our competitors have longer operating
histories, greater name and brand recognition, larger user bases, wider coverage areas, and significantly greater financial, technical, sales, and marketing
resources than we do. If our mobile broadband and voice services fail to be commercially successful, such failure could materially and adversely impact our
business, financial condition, results of operations, and cash flows.
Our Internet access business is dependent on the availability of telecommunications services and compatibility with third-party systems and products.
Our Internet access business substantially depends on the availability, capacity, affordability, reliability, and security of our telecommunications
networks. Only a limited number of telecommunications providers offer the network and data services we currently require, and we purchase most of our
telecommunications services from a few providers. Some of our telecommunications services are provided pursuant to short-term agreements that the
providers can terminate or elect not to renew. In addition, some telecommunications providers may cease to offer network services for certain less populated
areas, which would reduce the number of providers from which we may purchase services and may entirely eliminate our ability to purchase services for
certain areas. Currently, our mobile broadband and voice services are entirely dependent upon services acquired from one service provider, and the devices
required by the provider can be used for only such provider's service. If we are unable to maintain, renew or obtain new agreement with the
telecommunications provider on acceptable terms, or the provider discontinues its services, our business, financial condition, results of operations, and cash
flows could be materially and adversely affected. Sprint, which owns Clearwire, has announced that it plans to cease using WiMAX technology
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