Cincinnati Bell 2005 Annual Report Download - page 62

Maintenance of CBW’s wireless network, growth in the wireless business, or the addition of new wireless
products and services may require CBW to obtain additional spectrum, which may not be available or be
available only on less than favorable terms.
The TDMA wireless network currently operates on spectrum licensed to CBW by the FCC. For its GSM
network, CBW uses spectrum licensed to the Company and to Cingular. Introduction of new wireless products
and services, as well as maintenance of the existing wireless business, may require CBW to obtain additional
spectrum in the Cincinnati or Dayton markets, either to supplement or to replace the existing spectrum.
Furthermore, the Company network depends upon the deployment of radio frequency equipment on towers and
atop of buildings. The Company both owns and leases spaces on these towers and buildings and typically leases
underlying land. There can be no assurance that spectrum or the appropriate radio frequency equipment locations
will be available to CBW or will be available on commercially favorable terms. Failure to obtain or to retain any
needed spectrum or radio equipment locations could have a materially adverse impact on the wireless business as
a whole, the quality of the wireless networks, and the ability to offer new competitive products and services.
The regulation of the Company’s businesses by federal and state authorities may, among other things, place
the Company at a competitive disadvantage, restrict its ability to price its products and services, and threaten
its operating licenses.
Several of the Company’s subsidiaries are subject to regulatory oversight of varying degrees at both the
state and federal levels, which may differ from the regulatory scrutiny faced by the Company’s competitors. A
significant portion of CBT’s revenue is derived from pricing plans that require regulatory overview and approval.
Different interpretations by regulatory bodies may result in adjustments to revenue in future periods. In recent
years, these regulated pricing plans have required CBT to decrease or fix the rates it charges for some services
while its competition has typically been able to set rates for its services with limited restriction. In the future,
regulatory initiatives that would put CBT at a competitive disadvantage or mandate lower rates for its services
could result in lower profitability and cash flow for the Company. In addition, different regulatory interpretations
of existing regulations or guidelines may affect the Company’s revenues in future periods.
At the federal level, CBT is subject to the Telecommunications Act of 1996, including the rules
subsequently adopted by the FCC to implement the 1996 Act, which has impacted Cincinnati Bell Telephone’s
in-territory local exchange operations in the form of greater competition. At the state level, CBT conducts local
exchange operations in portions of Ohio, Kentucky, and Indiana, and, consequently, is subject to regulation by
the Public Utilities Commissions in those states. Various regulatory decisions or initiatives at the federal or state
level may from time to time have a negative impact on Cincinnati Bell Telephone’s ability to compete in territory
or upon its out-of-territory subsidiary’s ability to compete in its markets.
CBW’s FCC licenses to provide wireless services are subject to renewal and revocation. Although the FCC
has routinely renewed wireless licenses in the past, the Company cannot be assured that challenges will not be
brought against those licenses in the future. Revocation or non-renewal of CBW’s licenses would result in lower
operating results and cash flow for the Company.
There are currently many regulatory actions under way and being contemplated by federal and state
authorities regarding issues that could result in significant changes to the business conditions in the
telecommunications industry. No assurance can be given that changes in current or future regulations adopted by
the FCC or state regulators, or other legislative, administrative, or judicial initiatives relating to the
telecommunications industry, will not have a material adverse effect on the Company’s business, financial
condition, results of operations, and cash flows.
Failure to anticipate the needs for and introduce new products and services or to compete with new
technologies may compromise the Company’s success in the telecommunications industry.
The Company’s success depends, in part, on being able to anticipate the needs of current and future
enterprise, carrier, and residential customers. The Company seeks to meet these needs through new product
introductions, service quality, and technological superiority. The Company has implemented GSM technology
for wireless communications and works with vendors to ensure the newest handsets and accessories are available
to its customers. New products and services are important to the Company’s success as its industry is
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