8x8 2014 Annual Report Download - page 27

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4
Reform of federal and state Universal Service Fund programs could increase the cost of our service to our customers diminishing or
eliminating our pricing advantage . The FCC and a number of states are considering reform or other modifications to Universal Service
Fund programs. Should the FCC or certain states adopt new contribution mechanisms or otherwise modify contribution obligations that
increase our contribution burden, we will either need to raise the amount we currently collect from our customers to cover this obligation
or absorb the costs, which would reduce our profit margins. Furthermore, the FCC has ruled that states can require us to contribute to
state Universal Service Fund programs. A number of states already require us to contribute, while others are actively considering
extending their programs to include the services we provide. We currently pass-through Universal Service Fund contributions to our
customers, which may result in our services becoming less competitive as compared to those provided by others.
4
We may become subject to state regulation for certain service offerings . Certain states take the position that offerings by VoIP
providers, like us, are intrastate and therefore subject to state regulation. These states argue that if the beginning and end points of
communications are known, and if some of these communications occur entirely within the boundaries of a state, the state can regulate
that offering. We believe that the FCC has preempted states from regulating VoIP services like ours in the same manner as providers of
traditional telecommunications services. We cannot predict how this issue will be resolved or its impact on our business at this time.
4
The FCC and Congress are investigating call completion rates to rural areas of the United States . It is possible that we, like other
providers in the communications marketplace, may be subject to fines or other enforcement actions should the FCC determine that our
call completion rates to rural areas are, or have been, unacceptable.
4
The FCC may require providers like us to comply with regulations related to how we present bills to customers . The adoption of such
obligations may require us to revise our bills and may increase our costs of providing service which could either result in price increases
or reduce our profitability.
4
The FCC adopted rules concerning disabilities access requirements that may expand disabilities access requirements to additional
services we offer . We cannot predict whether we will be subject to additional accessibility requirements or whether any of our service
offerings that are not currently subject to disabilities access requirements will be subject to such obligations.
4
There may be risks associated with our ability to comply with requirements of the Telecommunications Relay Service . The FCC
requires providers of interconnected VoIP services to comply with certain regulations pertaining to people with disabilities and to
contribute to the Telecommunications Relay Services fund. We are also required to offer 7-1-1 abbreviated dialing for access to relay
services.
4
There may be risks associated with our ability to comply with the requirements of federal law enforcement agencies . The FCC
requires all interconnected VoIP providers to comply with the Communications Assistance for Law Enforcement Act, or CALEA. The
FCC allows VoIP providers to comply with CALEA through the use of a service provided by a trusted third party with the ability to
extract call content and call-identifying information from a VoIP provider's network.
4
The FCC may require us to deploy an E-911 service that automatically determines the location of our customers .
On June 1, 2007, the
FCC released a Notice of Proposed Rulemaking, or the VoIP E-911 order, in which it tentatively concluded that all interconnected VoIP
providers that allow customers to use their service in more than one location (nomadic VoIP service providers, such as us), must utilize
an automatic location technology that meets the same accuracy standards which apply to providers of commercial mobile radio services
(mobile phone service providers) Since then, the FCC has been conducting proceedings and inquiries concerning the implementation of
such a rule. The outcome of these proceedings cannot be determined at this time and we may or may not be able to comply with any such
obligations that may be adopted. At present, we currently have no means to automatically identify the physical location of one of our
customers on the Internet. We cannot guarantee that emergency calling service consistent with the VoIP E-911 order will be available to
all of our customers, especially those accessing our services from outside of the United States. The FCC's current VoIP E-911 order or
follow-on orders or clarifications or their impact on our customers due to service price increases or other factors could have a material
adverse effect on our business, financial condition or operating results.
23