Rogers 2007 Annual Report Download - page 60

56 ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
• Increase our vulnerability to general adverse economic and
industry conditions;
• Limitourexibilityinplanningfor,orreactingto,changesinour
business and the industry in which we operate;
• Placeusatacompetitivedisadvantagecomparedtosomeofour
competitors that have less financial leverage; and
• Limitourabilitytoobtainadditionalnancingrequiredtofund
working capital and capital expenditures and for other general
corporate purposes.
Our ability to satisfy our obligations and to reduce our total debt
depends on our future operating performance and on economic,
financial, competitive and other factors, many of which are beyond
our control. Our business may not generate sufficient cash flow
and future financings may not be available to provide sufficient net
proceeds to meet these obligations or to successfully execute our
business strategy.
We Are Subject to Various Risks from Competing Technologies.
There are several technologies that may impact the way in which
our services are delivered. These technologies include broadband,
IP-based voice, data and video delivery services; the mass market
deployment of optical fibre technologies to the residential and
business markets; the deployment of broadband wireless access,
and wireless services using radio frequency spectrum to which we
may have limited access. These technologies may result in signifi-
cantly different cost structures for the users of the technologies,
and may consequently affect the long-term viability of certain
of our currently deployed technologies. Some of these new tech-
nologies may allow competitors to enter our markets with similar
products or services that may have lower cost structures. Some
of these competitors may be larger with more access to financial
resources than we have.
We May Fail to Achieve Expected Revenue Growth from New and
Advanced Services.
We expect that a substantial portion of our future revenue growth
will be achieved from new and advanced services. Accordingly, we
have invested and continue to invest significant capital resources in
the development of our networks in order to offer these services.
However, there may not be sufficient consumer demand for these
new and advanced services. Alternatively, we may fail to anticipate
or satisfy demand for certain products and services, or may not be
able to offer or market these new products and services successfully
to subscribers. The failure to attract subscribers to new products and
services, or failure to keep pace with changing consumer preferences
for products and services, would slow revenue growth and have a
material adverse effect on our business and financial condition.
We Are Highly-Dependent Upon our Information Technology
Systems and the Inability to Enhance our Systems or a Security
Breach or Disaster Could Have an Adverse Impact on our
Financial Results and Operations.
The day-to-day operations of our businesses are highly-dependent
on their information technology systems. An inability to enhance
information technology systems to accommodate additional cus-
tomer growth and support new products and services could have an
adverse impact on our ability to acquire new subscribers, manage
subscriber churn, produce accurate and timely subscriber invoices,
generate revenue growth and manage operating expenses, all of
which could adversely impact our financial results and position.
In addition, we use industry standard network and information
technology security, survivability and disaster recovery practices.
A portion of our employees and critical elements of the network
infrastructure and information technology systems are located at
the corporate offices in Toronto, Ontario, and Brampton, Ontario,
as well as an operations facility in Markham, Ontario. In the event
that we cannot access these facilities, as a result of a natural or
manmade disaster or otherwise, operations may be significantly
affected and may result in a condition that is beyond the scope of
our ability to recover without significant service interruption and
commensurate revenue and customer loss.
We Are Subject to General Economic Conditions.
Our businesses are affected by general economic conditions, con-
sumer confidence and spending. A recession or decline in economic
activity or economic uncertainty may erode consumer confidence
and materially reduce discretionary consumer spending. Any reduc-
tion in discretionary spending by consumers or weak economic
conditions may materially negatively affect us through decreased
demand for our products and services including decreased advertis-
ing, decreased revenue and profitability, higher churn and higher
bad debt expense.
Network Failures Could Reduce Revenue and Impact
Customer Service.
The failure of the networks or a component of the networks would,
in some circumstances, result in an indefinite loss of service for our
customers and could adversely impact our financial results and
position. In addition, we rely on business partners to carry certain
of our customers’ traffic. The failure of one of these carriers might
also cause an interruption in service for our customers that would
last until we could reroute the traffic to an alternative carrier.
We Are and Will Continue to Be Involved in Litigation.
In August 2004, a proceeding under the Class Actions Act
(Saskatchewan) was brought against providers of wireless commu-
nications in Canada. Since that time, similar proposed class actions
have also been commenced in Newfoundland and Labrador, New
Brunswick, Nova Scotia, Québec, Ontario, Manitoba, Alberta and
British Columbia. The proceeding involves allegations by wireless
customers of, among other things, breach of contract, misrepre-
sentation, false advertising and unjust enrichment with respect to
the system access fee charged by Wireless to some of its customers.
The plaintiffs seek unquantified damages from the defendants.
Wireless believes it has a good defence to the allegations. The
plaintiffs applied for an order certifying a national class action in
Saskatchewan. In September 2007, the Saskatchewan court granted
the plaintiffs’ application to have the proceeding certified as a class
action. We are applying for leave to appeal this decision to the
Saskatchewan Court of Appeal. In February 2008, the Saskatchewan
Court granted our application to amend the certification order so
as to exclude from the class of plaintiffs any customer bound by