Earthlink 2014 Annual Report Download - page 26

Table of Contents
Privacy concerns relating to our business could damage our reputation and deter current and potential users from using our services.
Concerns about our practices with regard to the collection, use, disclosure or security of personal information or other privacy-
related matters,
even if unfounded, could damage our reputation and operating results. We strive to comply with all applicable data protection laws and
regulations, as well as our own posted privacy policies. However, any failure or perceived failure to comply with these laws, regulations or
policies may result in proceedings or actions against us by government entities or others, which could have an adverse effect on our business.
Federal and state governments have adopted consumer protection laws and undertaken enforcement actions to address advertising and user
privacy. Our services and business practices, or changes to our services and business practices could subject us to investigation or enforcement
actions if we fail to adequately comply with applicable consumer protection laws. Existing and future federal and state laws and regulations also
may affect the manner in which we are required to protect confidential customer data and other information, which could increase the cost of our
operations and our potential liability if the security of our confidential customer data is breached.
Interruption or failure of our network, information systems or other technologies could impair our ability to provide our services, which
could damage our reputation and harm our operating results.
Our success depends on our ability to provide reliable service. Many of our products are supported by our data centers. Our network, data
centers, central offices, corporate headquarters and those of our third-
party service providers are vulnerable to damage or interruption from fires,
earthquakes, hurricanes, tornados, floods and other natural disasters, terrorist attacks, power loss, capacity limitations, telecommunications
failures, software and hardware defects or malfunctions, break ins, sabotage and vandalism, human error and other disruptions that are beyond
our control. Some of our systems are not fully redundant, and our disaster recovery or business continuity planning may not be adequate. We
have experienced interruptions in service in the past due to factors such as vulnerabilities in equipment, configuration, design and operating
procedures. We also experience interruptions due to cable damage, theft of our equipment, power outages, inclement weather and service failures
of our third-
party service providers. We may experience service interruptions or system failures in the future. We continue to invest capital to
enhance, expand and increase the reliability of our network, but these capital expenditures may not achieve the results we expect. The occurrence
of any disruption or system failure or other significant disruption to business continuity may result in a loss of business, increase expenses,
damage our reputation for providing reliable service, subject us to additional regulatory scrutiny or expose us to litigation and possible financial
losses, any of which could adversely affect our business, results of operations and cash flows.
Our business depends on effective business support systems and processes.
Our business depends on our ability to maintain and develop effective business support systems. Business support systems are needed for
quoting, accepting and inputting customer orders for services; provisioning, installing and delivering services; providing customers with direct
access to our information systems so that they can manage the services that they purchase from us, generally through on-
line customer portals;
and billing for services. To effectively manage our information technology infrastructure, we will need to continue to maintain our data, billing
and other operational and financial systems, procedures and controls, which can be costly. We have experienced system failures from time to
time, and any interruption in the availability of our business support systems, in particular our billing systems, could result in an immediate, and
possibly substantial, loss of revenues. Our ability to maintain, expand and update our information technology infrastructure in response to
acquisitions, growth and changing needs is important to the continued implementation of our business strategy. In addition, as our consumer
business continues to decline, we are more dependent on fewer individuals to maintain our internal consumer business support systems. Our
inability to maintain, expand or upgrade our technology infrastructure could have adverse consequences, which could include the delayed
implementation of new service offerings, service or billing interruptions and the diversion of development resources.
If we, or other industry participants, are unable to successfully defend against disputes or legal actions, we could face substantial liabilities
or suffer harm to our financial and operational prospects.
We are currently a party to various disputes, litigation or other legal proceedings arising from normal business activities, including regulatory
audits, trademark and patent infringement, billing disputes, rights of access, tax, consumer protection, employment and tort. The result of any
current or future disputes, litigation or other legal proceedings is inherently unpredictable. Defending against disputes, litigation or other legal
proceedings may involve significant expense and diversion of management's attention and resources from other matters. Due to the inherent
uncertainties of litigation, we may not prevail in these actions. In addition, our ongoing operations may subject us to litigation risks and costs in
the future. Both the costs of defending lawsuits and any settlements or judgments against us could adversely affect our results of operations and
cash flows.
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