Full Description

EarthLink, Inc. (EarthLink), incorporated in 1999, is an Internet service provider (ISP), providing nationwide Internet access and related value-added services to individual and business customers. The Company's primary service offerings are dial-up and Internet access services and related value-added services, such as search, advertising and ancillary services. In addition, through its wholly owned subsidiary, New Edge Networks (New Edge), the Company build and manages private Internet protocol (IP)based wide area networks for businesses and communications carriers. The Company operates in two segments: Consumer Services and Business Services. The Consumer Services segment provides Internet access and related value-added services to individual customers. These services include dial-up and Internet access and voice services. The Business Services segment provides integrated communications services, Internet access and related value-added services to businesses and communications carriers. These services include managed private IP-based wide area networks, Internet access and Web hosting, among others. In August 2008, Virgin Mobile USA, Inc. (Virgin Mobile) acquired HELIO and EarthLink's equity and debt investments in HELIO were exchanged for limited partnership units of Virgin Mobile.

Consumer Services

This segment consists of Narrowband Access, Broadband Access, voice-over-Internet Protocol (VoIP), and Advertising and Other Value-Added Services. Narrowband Access includes Dial-up Internet Access and Value Dial-up Internet Access. The Company’s dial-up access is a subscription-based service that provides customers with access to the Internet and variety of content, features, services, applications, tools and around-the-clock customer support. Such features include antivirus and firewall protection, acceleration tools and privacy and safety tools. Revenues primarily consist of monthly fees charged to customers for dial-up Internet access. EarthLink provides value-priced Internet access services through its PeoplePC Online offering. The value dial-up access is a subscription-based service that provides customers Internet access with limited functionality and support services. Revenues primarily consist of monthly fees charged to customers for dial-up Internet access.

EarthLink provides access services via digital subscriber line (DSL), cable and offer different speeds of service ranging from 1.5 megabits per second to eight megabits per second. Availability for these services depends on the telephone or cable service provider. The Company’s high-speed access service includes the same features and benefits included with the dial-up access service. Broadband access revenues consist of monthly fees charged for high-speed access services, including activation fees, early termination fees, equipment fees associated with the sale of modems and other access devices to its subscribers, and shipping and handling fees.

EarthLink DSL and Home Phone Service is a bundle offer that includes EarthLink high-speed Internet access at speeds up to eight megabits per second and home phone service. It combines the last mile of traditional telephone copper wiring with the features of VoIP by taking advantage of DSL Access Multiplexer technology. EarthLink offers subscription-based service under various plans that include features, such as voicemail, call waiting, caller ID, call forwarding and E911 service. At December 31, 2008, the Company offered this service in 12 markets in the United States covering approximately 12 million households. Revenues primarily consist of monthly fees charged to customers for VoIP service plans.

EarthLink offers services, which are incremental to its Internet access services. Its value-added services portfolio includes products for protection, communication and performance, such as security, Web acceleration, Internet call waiting, mail storage and home networking, among others. It offers free and fee-based value-added services to both subscribers and non-subscribers. EarthLink generates advertising revenues through paid placements for searches, powered by the Google search engine, fees generated through revenue sharing arrangements with online partners whose products and services can be accessed through the Company’s properties, commissions received from partners for the sale of partners' services to its subscribers, and sales of advertising on its various Web properties.

Business Services

This segment consists of Private IP-Based Networks, Secure Public Networks, Internet Access, Wholesale Services, Web Hosting and Other Services. Through New Edge, the Company provides private IP-based networks for small and medium-sized businesses. Revenues consist of fees charged for managed IP-based networks, installation fees, termination fees, fees for equipment and regulatory surcharges billed to customers. Through New Edge, the Company provides hosted virtual private networks (VPN) and computer engineering (CPE) based VPNs. Revenues consist of monthly fees charged for VPNs; installation fees, termination fees, fees for equipment and regulatory surcharges billed to customers. It provides dial-up Internet access for business customers. Revenues primarily consist of monthly fees charged to customers for Internet access, installation fees and usage fees.

The Company through New Edge, provides network services to communications carriers, which bundle New Edge services with their own to provide solutions to the end customer. Revenues consist of monthly recurring fees, termination fees, fees for equipment and usage fees. EarthLink leases server space and provide Web hosting services to companies and individuals wishing to have an Internet or electronic commerce presence. These services include domain names, storage, mailboxes, software tools to build Websites, e-commerce applications and around-the-clock customer support. Revenues primarily consist of monthly fees charged to customers for Web hosting packages. The Company’s other services include installation programs, managed network services, remote access and disaster recovery.

The Company competes with AOL, Microsoft Network (MSN), AT&T Inc. (AT&T), Qwest Corporation (Qwest), Verizon Communications Inc. (Verizon), Time Warner Cable, Comcast, Cox Communications, Inc., United Online, Yahoo!, Google, Covad, XO Holdings, Level 3 Communications, Inc. (Level 3), Megapath, Sprint Nextel, Time Warner Cable and Charter Communications, Inc.