Cincinnati Bell 2009 Annual Report Download - page 85

adequacy of the Company’s facilities, including the adequacy of carrier connections. As a result, the sale of data
center space has a long sales cycle. Furthermore, the Company may expend significant time and resources in
pursuing a particular sale or customer that may not result in revenue. Delays in the length of the data center sales
cycle may have a material adverse effect on the Technology Solutions segment and results of its operations.
The Company’s failure to meet performance standards under its agreements could result in customers
terminating their relationships with the Company or customers being entitled to receive financial
compensation, which could lead to reduced revenues and/or increased costs.
The Company’s agreements with its customers contain various requirements regarding performance and
levels of service. If the Company fails to provide the levels of service or performance required by its agreements,
customers may be able to receive service credits for their accounts and other financial compensation, and also
may be able to terminate their relationship with the Company. In addition, any inability to meet service level
commitments or other performance standards could reduce the confidence of customers and could consequently
impair the Company’s ability to obtain and retain customers, which would adversely affect both the Company’s
ability to generate revenues and operating results.
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 and expenses 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 CBT’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 CBT’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 could result in a
cessation of CBW’s operations and consequently lower operating results and cash flows for the Company.
From time to time, different regulatory agencies conduct audits to ensure that the Company is in compliance
with the respective regulations. The Company could be subject to fines and penalties if found to be out of
compliance with these regulations, and these fines and penalties could be material to the Company’s financial
statements.
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. Assurances cannot 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.
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Form 10-K