Cincinnati Bell 2008 Annual Report Download - page 113

permitted to retain their wireless phone numbers when changing to another wireless carrier within the same
geographic area. The Company generally does not enter into long-term contracts with its wireless subscribers,
and therefore, this portability could have a significant adverse affect on the Company. The Company also
believes that these wireless competitors, and in particular, companies that offer unlimited wireless service plans
for a flat monthly fee, are a cause of CBT’s access line loss.
The Technology Solutions segment competes against numerous other information technology consulting,
web-hosting, data center and computer system integration companies, many of which are larger, national in
scope, and better financed. This market is rapidly evolving, highly competitive and likely to be characterized by
over-capacity and industry consolidation. Other competitors may consolidate with one another or acquire
software application vendors or technology providers, enabling them to more effectively compete with
Technology Solutions. The Company believes that many of the participants in this market must grow rapidly and
achieve a significant presence to compete effectively. This consolidation could affect prices and other
competitive factors in ways that could impede the Technology Solutions segment’s ability to compete
successfully in the market.
The effect of the foregoing competition on any of the Company’s segments could have a material adverse
impact on its businesses, financial condition, results of operations, and cash flows.
Maintaining the Company’s networks and data centers requires significant capital expenditures, and its
inability or failure to maintain its networks and data centers would have a material impact on its market share
and ability to generate revenue.
During the year ended December 31, 2008, capital expenditures totaled $230.9 million, which included
$103.6 million of capital expenditures related to new data center facilities, the 3G wireless network overlay, and
fiber network construction. The Company expects to spend similar amounts of total capital in 2009.
The Company currently operates ten data centers, including those acquired through the purchase of GramTel
in December 2007, and any further data center expansion will involve significant capital expenditures for data
center construction. In order to provide guaranteed levels of service to our data center customers, the network
infrastructure must be protected against damage from human error, natural disasters, unexpected equipment
failure, power loss or telecommunications failures, terrorism, sabotage, or other intentional acts of vandalism.
The Company’s disaster recovery plan may not address all of the problems that may be encountered in the event
of a disaster or other unanticipated problem, which may result in disruption of service to data center customers.
The Company may also incur significant additional capital expenditures as a result of unanticipated
developments, regulatory changes, and other events that impact the business. If the Company is unable or fails to
adequately maintain or expand its networks to meet customer needs, there could be a material adverse impact on
the Company’s market share and its ability to generate revenue.
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 and transmitting sites which may not be
available or be available only on less than favorable terms.
CBW uses spectrum licensed to the Company for its GSM network. In 2006 and in early 2008, the Company
acquired additional spectrum licenses, primarily for its current operating territory and Indianapolis. Introduction
of new wireless products and services, as well as maintenance of the existing wireless business, may require
CBW to obtain additional spectrum either to supplement or to replace the existing spectrum. Furthermore, the
Company’s network depends on the deployment of radio frequency equipment on towers and on buildings. The
Company both owns and leases space on these towers and buildings and typically leases underlying land. There
can be no assurance that spectrum or the appropriate transmitting locations will be available to CBW or will be
available on commercially favorable terms. Failure to obtain or retain any needed spectrum or transmitting
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.
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Form 10-K