AT&T Wireless 2015 Annual Report Download - page 39

AT&T INC. | 37
video subscription to access mobile programming, an
increasing number of customers are also using mobile
devices as the sole means of viewing video and an
increasing number of non-traditional video providers are
developing content and technologies to satisfy that demand.
In order to remain competitive, we continue to deploy the
sophisticated wired and wireless networks, including
satellites, as well as research other new technologies. If the
new technologies we have adopted or on which we have
focused our research efforts fail to be cost-effective and
accepted by customers, our ability to remain competitive
could be materially adversely affected.
Changes to federal, state and foreign government
regulations and decisions in regulatory proceedings
could further increase our operating costs and/or
alter customer perceptions of our operations,
which could materially adversely affect us.
Our subsidiaries providing wired services are subject to
significant federal and state regulation while many of our
competitors are not. In addition, our subsidiaries and affiliates
operating outside the United States are also subject to
the jurisdiction of national and supranational regulatory
authorities in the market where service is provided.
Our wireless and satellite video subsidiaries are regulated
to varying degrees by the FCC and some state and local
agencies. Adverse regulations and rulings by the FCC
relating to broadband and satellite video issues could
impede our ability to manage our networks and recover
costs and lessen incentives to invest in our networks.
The development of new technologies, such as IP-based
services, also has created or potentially could create
conflicting regulation between the FCC and various state
and local authorities, which may involve lengthy litigation
to resolve and may result in outcomes unfavorable to us.
In addition, increased public focus on a variety of issues
related to our operations, such as privacy issues, government
requests or orders for customer data, and potential global
climate changes, have led to proposals at state, federal
and foreign government levels to change or increase
regulation on our operations. Should customers decide
that our competitors operate in a more customer-friendly
environment, we could be materially adversely affected.
Continuing growth in our wireless services will depend
on continuing access to adequate spectrum, deployment
of new technology and offering attractive services
to customers.
The wireless industry is undergoing rapid and significant
technological changes and a dramatic increase in usage,
in particular demand for and usage of data, video and
other non-voice services. We must continually invest in
our wireless network in order to continually improve our
wireless service to meet this increasing demand and remain
competitive. Improvements in our service depend on many
factors, including continued access to and deployment
of adequate spectrum. We must maintain and expand
rates are worse than those previously assumed, our costs
will increase.
The Financial Accounting Standards Board requires
companies to recognize the funded status of defined benefit
pension and postretirement plans as an asset or liability in
our statement of financial position and to recognize changes
in that funded status in the year in which the changes
occur. We have elected to reflect the annual adjustments
to the funded status in our consolidated statement of
income. Therefore, an increase in our costs or adverse
market conditions will have a negative effect on our
operating results.
Adverse changes in global financial markets could limit
our ability and our larger customers’ ability to access
capital or increase the cost of capital needed to fund
business operations.
While the global financial markets were generally stable
during 2015, a continuing uncertainty surrounding global
growth rates has resulted in increasing volatility in the credit,
currency, equity and fixed income markets. Volatility in some
areas, such as in emerging markets, may affect companies’
access to the credit markets, leading to higher borrowing
costs for companies or, in some cases, the inability of these
companies to fund their ongoing operations. In addition,
we contract with large financial institutions to support
our own treasury operations, including contracts to hedge
our exposure on interest rates and foreign exchange and
the funding of credit lines and other short-term debt
obligations, including commercial paper. These financial
institutions also face stricter capital-related and other
regulations in the United States and Europe, as well as
ongoing legal and financial issues concerning their loan
portfolios, which may hamper their ability to provide credit
or raise the cost of providing such credit. A company’s cost
of borrowing is also affected by evaluations given by various
credit rating agencies and these agencies have been applying
tighter credit standards when evaluating a company’s debt
levels and future growth prospects. While we have been
successful in continuing to access the credit and fixed
income markets when needed, adverse changes in the
financial markets could render us either unable to access
these markets or able to access these markets only at
higher interest costs and with restrictive financial or other
conditions, severely affecting our business operations.
Changes in available technology could increase
competition and our capital costs.
The communications and digital entertainment industry
has experienced rapid changes in the past several years.
The development of wireless, cable and IP technologies
has significantly increased the commercial viability of
alternatives to traditional wired service and enhanced
the capabilities of wireless networks. In addition, our
customers continue to increase demand for services that
can be accessed on mobile devices, especially video
services. While our customers can use their traditional