Virgin Media 2006 Annual Report Download - page 36

of our programming in order to attract advertising revenue, BSkyB has considerable power to renegotiate the fees that we charge for
our programs. In addition, the TV advertising market has faced steady declines over the last few years. Our failure to generate
sufficient subscriber fees or advertising revenue will cause our content segment revenue and cash flow to decline.
We depend on equipment and service suppliers that may discontinue their products or seek to charge us prices that are not
competitive, either of which may adversely affect our business and profitability.
We have important relationships with several suppliers of hardware, software and services that we use to operate our network and
systems and outsource various customer services. In many cases, we have made substantial investments in the equipment or software
of a particular supplier, making it difficult for us in the short−term to change supply and maintenance relationships in the event that
our initial supplier refuses to offer us favorable prices or ceases to produce equipment or provide the support that our network and
systems require. If equipment or service suppliers were to discontinue their products or seek to charge us prices that are not
competitive, our business and profitability could be materially adversely affected.
Furthermore, we rely upon outside contractors to install our equipment in customers’ homes. Delays caused by these contractors,
or quality issues concerning these contractors, could cause our customers to become dissatisfied and could produce additional churn or
discourage potential new customers.
The integration of our billing systems may have an adverse effect on our customer service, customer acquisitions, customer churn
rate and operating costs.
As a result of our growth through acquisitions, we inherited numerous billing and customer service systems. We are in the
process of migrating all of our consumer cable and business customers to one central billing system. If we are not successful with this
process, we might not be able to achieve the expected cost savings associated with the new system. It is possible that billing errors and
other customer service disruptions could occur during further integration processes, potentially resulting in increased customer churn
or adverse effects on customer service, customer acquisitions, collections, and the costs of maintaining our billing systems going
forward.
Regulation of the markets in which we provide our services has been changing rapidly; unpredictable changes in U.K. and EU
regulations affecting the conduct of our business, including price regulations, may have an adverse impact on our ability to set
prices, enter new markets or control our costs.
Our principal business activities have historically been regulated and supervised by various governmental bodies in the U.K. and
by the regulatory initiatives of the European Commission. Regulatory changes have recently occurred, and may in the future occur, at
the U.K. or EU level with respect to licensing requirements, price regulation, environmental regulation, accounting practices,
interconnection arrangements, mobile termination rates, roaming regulation, number portability, carrier pre−selection, the ability to
provide digital services, ownership of media companies, programming, local loop unbundling, data protection, the provision of open
access by U.K. cable operators to other telecommunications operators, the adoption of uniform digital technology standards or the
bundling of services. Regulatory changes relating to our activities and those of our competitors, such as changes relating to third party
access to cable networks, the costs of interconnection with other networks or the prices of competing products and services, could
adversely affect our ability to set prices, enter new markets or control costs.
We are subject to tax in more than one tax jurisdiction and our structure poses various tax risks.
We are subject to taxation in the U.S. and the U.K. Our effective tax rate and tax liability will be affected by a number of factors
in addition to our operating results, including the amount of taxable
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Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007