Tucows 2013 Annual Report Download - page 28

international, federal, state and local levels are currently reviewing the appropriate treatment of companies engaged in
Internet commerce. New or revised international, federal, state or local tax regulations may subject us or our customers to
additional sales, income and other taxes. We cannot predict the effect of current attempts to impose sales, income or other
taxes on commerce over the Internet on Tucows or on our customers. New or revised taxes and, in particular, sales taxes,
would likely increase the cost of doing business online and decrease the attractiveness of advertising and selling goods and
services over the Internet. New taxes could also create significant increases in internal costs necessary to capture data, and
collect and remit taxes. Any of these events could have an adverse effect on our business and results of operations.
We may be accused of intellectual property infringement of the technology we have employed to support both our back
end platform and the products and services we offer to and through our resellers and may be sued for damages caused by
actual use of the platforms or products and services and we may be required to pay substantial damage awards.
We seek to ensure that we have licensed or otherwise secured the necessary rights to use and offer for use all
intellectual property relating to our platforms and the services we offer resellers through the platforms. Despite our efforts,
we may be sued by third parties claiming rights in and to the technology we employ or by third parties who claim to have
suffered as a result of any use, or inability to use, the platforms, products and services. If we are sued, defense of any such
claims may require the resources of both our time and money. If a third-party is successful in its assertions, we may be
required to pay damages that may have a material impact on our financial resources.
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Ting may lose customers if it fails to keep up with rapid technological change occurring in the wireless industry.
The wireless communications industry is experiencing significant technological change, including ongoing
improvements in the capacity and quality of digital technology, the development and commercial acceptance of wireless
broadband data services, shorter development cycles for new products and enhancements, and changes in consumer
requirements and preferences. These changes may cause uncertainty about future demand for our wireless services and may
affect the prices that we will be able to charge for these services. Rapid changes in technology, moreover, may lead to the
development of wireless communications services or alternative services that consumers prefer over our services. Our
operational performance and financial results may be adversely affected if we are unable to deploy future technologies or
services on a timely basis or at an acceptable cost.
We have entered into agreements with unrelated parties for certain business operations for Ting. Any difficulties
experienced by us in these arrangements could result in additional expense, loss of subscribers and revenue, interruption
of our services or a delay in the roll-out of new technology.
We have entered into agreements with unrelated parties for the day-to-day execution of services, the development
and maintenance of certain systems necessary for the operation of our business, and for network equipment, handsets,
devices, and other equipment. We expect our dependence on key suppliers to continue as more advanced technologies are
developed.
In addition, our ability to subsidize handsets is limited because we do not require long-term contracts that may
produce a more stable revenue stream.
Ting’s reputation and business may be harmed and it may be subject to legal claims if there is loss, disclosure or
misappropriation of or access to our subscribers' or our own information or other breaches of our information security.
We make extensive use of online services and centralized data processing, including through third-party service
providers. The secure maintenance and transmission of customer information is an important element of our operations. Our
information technology and other systems that maintain and transmit customer information, including location or personal
information, or those of service providers, may be compromised by a malicious third-party penetration of our network
security, or that of a third-party service provider, or impacted by advertent or inadvertent actions or inactions by our
employees, or those of a third-party service provider. Cyber-attacks, which include the use of malware, computer viruses and
other means for disruption or unauthorized access, have increased in frequency, scope and potential harm in recent years.
While, to date, we have not been subject to cyber-attacks or other cyber incidents which, individually or in the aggregate,
have been material to our operations or financial condition, the preventive actions we take to reduce the risk of cyber
incidents and protect our information technology and networks may be insufficient to repel a major cyber-attack in the future.
As a result, our subscribers’ information may be lost, disclosed, accessed, used, corrupted, destroyed or taken without the
subscribers’ consent.