Time Warner Cable 2010 Annual Report Download - page 34

Regulation may limit TWC’s ability to make required investments or adopt business models that are needed to continue
to provide robust high-speed data service.
The rising popularity of bandwidth-intensive Internet-based services increases the demand for and usage of TWC’s
high-speed data service. Examples of such services include the delivery of video via streaming technology and by
download, peer-to-peer file sharing services and gaming services. TWC will need flexibility to develop pricing and
business models that will allow it to respond to such changing consumer uses and demands and, if necessary, to invest
more capital than currently expected to increase the bandwidth capacity of its systems. TWC’s ability to do these things
could be restricted by legislative or regulatory efforts to impose so-called “net neutrality” requirements on cable
operators. See “—Risks Related to Government Regulation—‘Net neutrality’ legislation or regulation could limit TWC’s
ability to operate its high-speed data business profitably and to manage its broadband facilities efficiently.”
TWC relies on network and information systems and other technology, and a disruption or failure of such networks,
systems or technology as a result of computer viruses, “cyber attacks,” misappropriation of data or other malfeasance,
as well as outages, natural disasters, accidental releases of information or similar events, may disrupt TWC’s business.
Because network and information systems and other technologies are critical to TWC’s operating activities, network
or information system shutdowns caused by events such as computer hacking, dissemination of computer viruses, worms
and other destructive or disruptive software, “cyber attacks” and other malicious activity, as well as power outages, natural
disasters, terrorist attacks and similar events, pose increasing risks. Such an event could have an adverse impact on TWC
and its customers, including degradation of service, service disruption, excessive call volume to call centers and damage
to TWC’s plant, equipment and data. Such an event also could result in large expenditures necessary to repair or replace
such networks or information systems or to protect them from similar events in the future. Significant incidents could
result in a disruption of TWC’s operations, customer dissatisfaction, or a loss of customers or revenues.
Furthermore, TWC’s operating activities could be subject to risks caused by misappropriation, misuse, leakage,
falsification and accidental release or loss of information maintained in TWC’s information technology systems and
networks, including customer, personnel and vendor data. TWC could be exposed to significant costs if such risks were to
materialize, and such events could damage the reputation and credibility of TWC and its business and have a negative
impact on its revenues. TWC also could be required to expend significant capital and other resources to remedy any such
security breach. As a result of the increasing awareness concerning the importance of safeguarding personal information,
the potential misuse of such information and legislation that has been adopted or is being considered regarding the
protection, privacy and security of personal information, information-related risks are increasing, particularly for
businesses like TWC’s that handle a large amount of personal customer data.
TWC’s business may be adversely affected if TWC cannot continue to license or enforce the intellectual property rights
on which its business depends.
TWC relies on patent, copyright, trademark and trade secret laws and licenses and other agreements with its
employees, customers, suppliers and other parties, to establish and maintain its intellectual property rights in technology
and the products and services used in TWC’s operations. However, any of TWC’s intellectual property rights could be
challenged or invalidated, or such intellectual property rights may not be sufficient to permit TWC to take advantage of
current industry trends or otherwise to provide competitive advantages, which could result in costly redesign efforts,
discontinuance of certain product or service offerings or other competitive harm. Claims of intellectual property
infringement could require TWC to enter into royalty or licensing agreements on unfavorable terms, incur
substantial monetary liability or be enjoined preliminarily or permanently from further use of the intellectual
property in question, which could require TWC to change its business practices or offerings and limit its ability to
compete effectively. Even claims without merit can be time-consuming and costly to defend and may divert
management’s attention and resources away from TWC’s businesses. Also, because of the rapid pace of
technological change, TWC relies on technologies developed or licensed by third parties, and TWC may not be able
to obtain or continue to obtain licenses from these third parties on reasonable terms, if at all.
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