Tucows 2013 Annual Report Download - page 23

Ting offers its wireless services on a postpaid basis. The success of its postpaid offerings depends on its ability to
manage its credit risk while attracting new customers with profitable usage patterns. Ting has a short operating history and
there can be no assurance that it will be able to manage its credit risk or generate sufficient revenue to cover its postpaid-
related expenses, including losses arising from its customers’ failure to make payments when due. Ting manages credit risk
exposure using techniques that are designed to set terms and limits for the credit risk it accepts. The techniques it uses may
not accurately predict future defaults due to, among other things, inaccurate assumptions or fraud. Ting’s ability to manage
credit risk may also be adversely affected by legal or regulatory changes, competitors’ actions, consumer behavior, and
inadequate collections staffing or techniques. While Ting continually seeks to improve its assumptions and controls, its
failure to manage its credit risks appropriately may materially adversely affect its profitability and ability to grow.
Ting may be limited in its ability to grow its business and customer base unless it can continue to obtain network capacity
at favorable rates and meet the growing demands on its business systems and processes.
To further expand our MVNO business, we must continue to obtain wireless network capacity at favorable rates and
terms, provide adequate customer service and acquire and market a sufficient quantity and mix of handsets and related
accessories. Our operating performance and ability to attract new customers may be adversely affected if we are unable to
meet the increasing demands for our services in a timely and efficient manner, while adequately addressing the growing
demands on our customer service, billing, and other back- office functions. Any change in our ability, or the ability of third
parties with whom we contract, to provide these services also could adversely affect our operations and financial
performance.
As an MVNO, Ting is dependent on Sprint for its wireless network and any disruptions to such network may adversely
affect its business and financial results.
We are dependent on Sprint’s physical network. As an MVNO, we do not own spectrum or own or operate a
physical network. Sprint is our exclusive wireless network provider. To be successful, we will need to continue to provide
our customers with reliable service over the nationwide Sprint wireless communication network. We rely on Sprint and its
third-party affiliates to maintain their wireless facilities and government authorizations and to comply with government
policies and regulations. If Sprint or its third-party affiliates fail to do so, we may incur substantial losses. Delays or failure to
add network capacity, or increased costs of adding capacity or operating the network, could limit our ability to increase our
customer base, limit our ability to increase our revenues, or cause a deterioration of our operating margin. Some of the risks
related to the nationwide Sprint wireless communication network and infrastructure include: major equipment failures,
breaches of network or information technology security that affect Sprint’s wireless networks, including transport facilities,
communications switches, routers, microwave links, cell sites or other equipment or third-party owned local and long-
distance networks on which we rely, power surges or outages, software defects and disruptions beyond Sprint’s control, such
as natural disasters and acts of terrorism, among others. The Master Services Agreement “MSA” with Sprint does not contain
any contractual indemnification provisions relating to network outages or other disruptions. Any impact on the nationwide
Sprint wireless communication network could disrupt Ting’s operations, require significant resources, result in a loss of
subscribers or impair our ability to attract new subscribers, which in turn could have a material adverse effect on our
business, results of operations and financial condition.
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We are dependent on technology used by Sprint. Wireless communications technology is evolving rapidly. A
significant change in current wireless network technologies or the emergence of alternative technologies could reduce
significantly our ability to offer a full range of data services, as compared to our competitors. If Sprint fails to keep up with
these changes, we may lose customers or may not be able to attract new customers.
If the Sprint Master Services Agreement is terminated, we may be unable to obtain the wireless services necessary
to operate our business. The initial term for our Master Services Agreement with Sprint expires in 2016. After the initial term
expires, the Agreement will renew for successive 1-year terms until either party provides the other party 120 days advance
notice of its intention not to renew. Sprint, however, may terminate the Master Services Agreement prior to the expiration of
its term due to various reasons specified in the Master Services Agreement, including:
●
breach of the agreement by us; or
●
the occurrence of any Change of Control Event.
In case of either the expiration or termination of the Sprint Master Services Agreement, we may be unable to reach a
further agreement with Sprint and its third-party affiliates or with an alternate wireless communications provider to obtain the