Subscriber Values: December 2002

ISP-Planet Staff [December 23, 2002]

EarthLink (NASDAQ: ELNK) said its subscribers consist of 681,000 broadband (in several access technologies), 3,976,000 narrowband, and 173,000 webhosting accounts. We do not count webhosting customers in our subscriber numbers. The stock spiked briefly in early December, falling back when Sky Dayton announced plans to sell some shares.

EarthLink revealed that it does not yet count the 500,000 subscribers it acquired when it purchased PeoplePC because they were prepaid accounts and EarthLink is not yet earning revenue from them. EarthLink acquired 56,000 subscribers (by purchasing small ISPs) in the three months ending September 30, 2002, but did not name the ISPs it purchased.

United Online (NASDAQ: UNTD) rose rapidly after it signed an agreement with Level 3 (NASDAQ: LVLT). The company said that although the most common monthly price paid by its users is $9.95, its pricing plans range from $1.95 per month to $29.95 per month.

The stock of AOL (NYSE: AOL) fell. AOL partially revealed the prices its customers are paying. An obtuse note read, "82 percent were on standard unlimited pricing plans (including 11 percent under various free trial, member service, and retention programs), 13 percent were on lower priced plans, including Bring Your Own Access ("BYOA"), bulk employee programs with strategic partners, and limited usage plans (weighted average monthly rate of approximately $11.45), and the remaining 5 percent were on OEM bundled plans." This means that at least 29 percent of the company's subscribers are paying less than full price or even nothing at all.

Internet America (OTCBB: GEEK) admitted that its subscriber base is shrinking as it cuts costs and slows expansion. The stock rose, however, because the company reported positive net income of $572,000 for the three months ending Septmeber 30, 2002.

Subscriber numbers are from ISP-Planet's list of Top U.S. ISPs and from company reports. We do not count webhosting customers in our subscriber numbers. Market capitalization data is as of market close, Thursday, December 19, 2002, as reported on the Wall Street Research Network.

OmniSky, a mobile wireless ISP, was in Chapter 11 when it was acquired by EarthLink in January, 2002. At its peak, OmniSky was valued at $1.6 billion. Forbes estimates that in 2001, EarthLink paid about $150 per subscriber for 36 other ISPs with a total subscriber count of 304,000, a total of $46 million. If Forbes' estimates are correct, the average size of the acquired ISPs would be 8,500 subscribers. This data suggests that EarthLink pays the same price for dialup as it does mobile wireless subscribers.

Go America's (NASDAQ: GOAM) stock fell very sharply. The company revealed that it is exiting the CDPD business and that its subscriber count fell.

Motient (OTCBB: MNCPE) stock rose sharply. The company is re-examining pre-bankruptcy accounting and cannot file up-to-date financial accounts.

RCN (NASDAQ: RCNC) rose as the company focused on cost cutting and sold a suburban cable franchise. Subscribership decreased slightly.

Our new CLEC listings require close examination. We are comparing a wide variety of companies, including Covad, and we welcome your comments. We have temporarily taken off the list FASTNET becuase it t did not update its public subscriber numbers this quarter. GT Group Telecom has been purchased by 360networks and the combined entity will not be added to our list because it is not a CLEC.

Little Rock, Ark.-based Alltel Corp. (NYSE: AT) left the list because it has completed its plan to exit the CLEC business. The company issued a statement that said, "In evaluating its existing CLEC operations, the Company determined that a business model that relied heavily on interconnection with other carriers had limited potential for profitably acquiring market share. Accordingly, in January 2002, the Company announced its plans to exit its CLEC operations in seven states representing less than 20 percent of ALLTEL's CLEC access lines."

At last count, Charlotte, NC-based US LEC (NASDAQ:CLEC) provided services to 7,500 enterprise customers comprising 208,188 voice and 40,147 data channels, as well as 30,131 ISP clients. US LEC now serves about 10,000 enterprise customers, but did not provide further details.

New Haven, Conn.-based DSL.net (NASDAQ:DSLN) completed its purchase of Network Access Solutions on November 27, 2002. On September 30, 2002, the company served approximately 22,135 installed broadband subscriber lines.

Pittsford, NY-based Mpower Communications (OTCBB:MPOW ) provides SDSL and T-1 services over 407,123 access lines through 15 switches and nearly 600 COs.

Monroe, La.-based Century Tel (NYSE: CTL) and its subsidiaries operated 2.4 million telephone access lines and had 584,400 long distance customers as of September 30, 2002. DSL appears to be insignificant for the company, but is growing.

Reston, Va.-based Talk America Holdings, Inc., more familiarly known as Talk.com (NASDAQ: TALK), grew its customer base to 276,000 and the stock rose. The company leases all facilities from ILECs. Although Talk.com does have debt, most of it is not due until 2007 or later.

Santa Clara, Calif.-based Covad Communications Group (OTC BB: COVD) is cutting costs. Covad admitted that it is recognizing revenues for two customers "on a cash basis" which probably means the company expects them to go bankrupt. Those two customers, which were not named, represent 9.0 percent of Covad's lines. Covad is making no special provision for WorldCom lines. It is also examining its depreciation accounting, and mis-categorized about $9 million of equipment. Covad also serves 55,000 dialup customers, but we have not counted them in our subscriber values.

Anchorage, Alaska-based General Communications (CGI) (NASDAQ: GNCMA) won a lawsuit against the ACS Group (below). "This order is a major victory for consumers and local telephone competition in Alaska. The Commission has clearly found that ACS has been discriminating against GCI and its customers in both quality and timing of service. Moreover, the Commission found that ACS was unfairly holding up service to GCI customers when those customers required a new line to be installed," said Dana Tindall, GCI senior vice president. "No longer will consumers who wish to switch to a competitive local telephone provider be held hostage to the illegal actions of the incumbent provider." The stock rose. The company serves 87,100 long distance subscribers, 134,600 cable TV subscribers, 33,000 cable Internet subscribers, and 100,000 access lines (with about 2,500 installs pending)."

Anchorage, Alaska-based Alaska Communications Systems Group (The ACS Group) (NASDAQ: ALSK) is a diversified, facilities-based telecommunications provider in Alaska. The stock continues to fall on concerns about the company's debt load. The ACS Group currently operates 327,161 access lines, connects 82,000 cellular and 67,000 long distance customers, as well as 47,000 "Internet" subscribers (combined dialup and DSL). Not counted are 12,000 advertisers served through the company's directories.

When the company last reported detailed numbers, FASTNET (NASDAQ:FSST) provided services to 2,164 enterprise customers, 26,276 SOHO customers, and 7,014 webhosting customers. The company closed several acquisitions recently and has not updated its numbers, so we have temporarily taken the company off our list.

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