AT&T Wireless 2011 Annual Report Download - page 57

AT&T Inc. 55
Unfavorable litigation or governmental investigation
results could require us to pay significant amounts or
lead to onerous operating procedures.
We are subject to a number of lawsuits both in the
United States and in foreign countries, including, at any
particular time, claims relating to antitrust; patent
infringement; wage and hour; personal injury; and our
advertising, sales and billing and collection practices.
We also spend substantial resources complying with
various government standards, which may entail related
investigations. As we deploy newer technologies, especially
in the wireless area, we also face current and potential
litigation relating to alleged adverse health effects on
customers or employees who use such technologies including,
for example, wireless handsets. We may incur significant
expenses defending such suits or government charges and
may be required to pay amounts or otherwise change our
operations in ways that could materially adversely affect our
operations or financial results.
A majority of our workforce is represented by labor unions.
Absent the successful negotiation of agreements
scheduled to expire during 2012, we could experience
lengthy work stoppages.
A majority of our employees are represented by labor unions
as of year-end 2011. Labor contracts covering many of the
employees will expire during 2012. We experienced a work
stoppage in 2004 when the contracts involving our wireline
employees expired, and we may experience additional work
stoppages in 2012. A work stoppage could adversely affect
our business operations, including a loss of revenue and
strained relationships with customers, and we cannot predict
the length of any such strike. We cannot predict the new
contract provisions or the impact of any new contract on
our financial condition.
Equipment failures, natural disasters, computer hacking
and terrorist attacks may materially adversely affect
our operations.
Major equipment failures or natural disasters, including severe
weather, computer hacking, terrorist acts or other breaches
of network or IT security that affect our wireline and wireless
networks, including telephone switching offices, microwave
links, third-party owned local and long-distance networks
on which we rely, our cell sites or other equipment, or our
customer account support and information systems, could
have a material adverse effect on our operations. While we
have insurance coverage for some of these events, our
inability to operate our wireline, wireless or customer-related
support systems, even for a limited time period, may result
in significant expenses, potential legal liability, a loss of
customers or impair our ability to attract new customers,
which could have a material adverse effect on our business,
results of operations and financial condition.
The continued success of our U-verse services initiative
will depend on the development of attractive and
profitable service offerings; the extent to which regulatory,
franchise fees and build-out requirements apply to this
initiative; and the availability and reliability of the various
technologies required to provide such offerings.
Telecommunications technology has shifted from the
traditional circuit- and wire-based technology to IP-based
technology. IP-based technology can transport voice and
data, as well as video, from both wired and wireless networks.
IP-based networks also potentially cost less to operate than
traditional networks. Our competitors, many of which are
newer companies, are deploying this IP-based technology.
In order to continue to offer attractive and competitively
priced services, we have deployed a new broadband
network to offer IP-based voice, data and video services.
Should regulatory requirements change, our deployment could
be limited to only those geographical areas where regulation
is not burdensome. In addition, should the delivery of services
expected to be deployed on our network be delayed due
to technological or regulatory constraints, performance of
suppliers, or other reasons, or the cost of providing such
services becomes higher than expected, customers may
decide to purchase services from our competitors, which
would adversely affect our revenues and margins, and such
effects could be material.