Cogeco 2013 Annual Report Download - page 25

24 COGECO CABLE INC. 2013 Management's discussion and analysis (“MD&A”)
operated under either temporary operating agreements or de facto extensions of the expired agreements while negotiating renewal terms with
the local franchising authorities. Atlantic Broadband may be unable to comply with all significant provisions of its franchise agreements. Additionally,
although historically Atlantic Broadband has renewed its franchises without incurring significant costs, Atlantic Broadband may be unable to renew,
or to renew as favorably, its franchises in the future. A termination of and/or a sustained failure to renew a franchise could adversely affect Atlantic
Broadband’s business in the affected geographic area.
Atlantic Broadband’s cable systems operate under non-exclusive franchises granted by local franchising authorities. Consequently, local
franchising authorities can grant additional franchises to competitors in the same geographic area. In some cases municipal utilities may legally
compete with Atlantic Broadband without obtaining a franchise from the local franchising authority.
Our digital television, HSI and telephony services network may be vulnerable to widespread disruption.
In Canada, we provide our digital television, HSI and telephony services through a network of four major headends and several minor headends
in our cable network. Although we have a backup system for retransmission through another headend or a mobile headend if one of our headends
fails, there may be a delay in transferring to another headend, which could be potentially significant. In the United States, we provide our digital
television, HSI and telephony services through five major headends and several minor ones, and there is no retransmission system in place.
Despite several available emergency backup or replacement sites, a failure in our headends could prevent us from delivering some of our services
through a portion of our network until we have implemented backup solutions or resolved the failure, which may result in significant customer
dissatisfaction, loss of revenue and potential civil litigation, depending on the severity of the outage condition.
We may need to support increasing costs in securing access to support structures needed for our cable network.
We require access to the support structures of and telephone utilities and to municipal rights of way to deploy our cable network.
Where access to the structures of telephone utilities in our Canadian footprint cannot be secured, we may apply to the CRTC to obtain a right of
access under the Telecommunications Act (Canada). We have entered into comprehensive support structure access agreements with all of the
major companies and all of the major telecommunications companies in our service territory. If we are unable to generate sufficient
funds or obtain additional financing on acceptable terms in order to support the costs associated with securing such access, we may not be able
to implement our business strategies and our businesses, financial condition, results of operations, reputation and prospects could be materially
adversely affected.
We could be adversely impacted by our customers’ switch from landline telephony to mobile telephony.
The recent trend towards mobile substitution or “cord-cutting” (when users cancel their landline telephony services and opt for mobile telephony
services only) is largely the result of the increasing mobile penetration rate in North America and the various unlimited offers launched by mobile
operators. We do not currently offer mobile services and, therefore, further migration towards mobile solutions could have a material adverse
effect on our businesses, financial condition, prospects and results of operations due to that migration.
We depend on a limited number of service suppliers for certain of our cable services. A failure in supply could materially
adversely affect our cable services businesses, financial condition and results of operations.
In Canada and the United States, we depend on a long-term agreement with TELUS Communications Corporation and IDT, respectively, for the
provision of our telephone services to our residential and business customers.
In Canada and the United States, we depend on suppliers and providers, such as Motorola, Pace and Cisco, for certain specialized
services, hardware and equipment that are critical to our operations. These materials and services include set-top boxes; telephony; cable and
telephony modems; servers and routers; cable; telephony switches; inter-city links; support structures; software; the “backbone”
telecommunications network for our Internet access and telephony services; and construction services for expansion and upgrades of our cable
and telephony networks. These services and equipment are available from a limited number of suppliers.
We also depend on a limited number of third parties to provide, certain programming and billing services. We may not be able to enter into or
renew agreements with programming suppliers on terms satisfactory to us or at all. In addition, we depend on plant construction
contractors in areas of new homes growth.
If no supplier can provide us with the equipment or services that we require or that comply with evolving Internet and telecommunications standards
or that are compatible with our other equipment and software, our cable services businesses, financial condition and results of operations could
be materially adversely affected. In addition, if we are unable to obtain critical equipment, software, services or other items on a timely basis and
at an acceptable cost, our ability to offer our products and services and roll out our advanced services may be delayed, and our businesses,
financial condition and results of operations could be materially adversely affected.
We depend on power utility suppliers for certain of our enterprise services. A failure to supply could materially adversely
affect our enterprise services businesses, financial condition and results of operations.
We depend on power utility suppliers in the geographical areas in which we operate. In Quebec and Ontario, areas in which our Canadian data
centres are concentrated, we depend on and Ontario Hydro for power utilities. In other locations through which our data centres
run, we are also dependent on local power utility suppliers. Prolonged power outages could prevent us from delivering some of our services
throughout our network until our power utility suppliers have resolved the failure, which may result in significant customer dissatisfaction, loss of
revenue and potential civil litigation.