8x8 2015 Annual Report Download - page 30

Our emergency and E
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911 calling services are different from those offered by traditional wireline telephone companies and may expose
us to significant liability. There may be risks associated with limitations associated with E-911 emergency dialing with the 8x8 service.
Both our emergency calling service and our E-911 calling service are different, in significant respects, from the emergency calling services
offered by traditional wireline telephone companies. In each case, the differences may cause significant delays, or even failures, in callers'
receipt of the emergency assistance they need.
The FCC may determine that our nomadic emergency calling service does not satisfy the requirements of its VoIP E-911 order because, in some
instances, our nomadic emergency calling service requires that we route an emergency call to a national emergency call center instead of
connecting our customers directly to a local public-safety answering point through a dedicated connection and through the appropriate selective
router.
Delays our customers may encounter when making emergency services calls and any inability of the answering point to automatically recognize
the caller's location or telephone number can result in life threatening consequences. Customers may, in the future, attempt to hold us responsible
for any loss, damage, personal injury or death suffered as a result of any failure of our E-
911 services. In July 2008, the President signed into law
the New and Emerging Technologies 911 Improvement Act of 2008. The law provides public safety entities, interconnected VoIP providers and
others involved in handling 911 calls the same liability protections when handling 911 calls from interconnected VoIP users as from mobile or
wired telephone service users. The applicability of the liability protections to our national call center service is unclear at the present time. Also,
we may be exposed to liability for 911 calls made prior to the adoption of this new law although we are unaware of any such liability.
Increased energy costs, power outages, and limited availability of electrical resources may adversely affect our operating results.
Our data centers are susceptible to increased costs of power and to electrical power outages. Our customer contracts do not contain provisions
that would allow us to pass on any increased costs of energy to our customers, which could affect our operating margins. Any increases in the
price of our services to recoup these costs could not be implemented until the end of a customer contract term. Further, power requirements at
our data centers are increasing as a result of the increasing power demands of today's servers. Increases in our power costs could impact our
operating results and financial condition. Since we rely on third parties to provide our data centers with power sufficient to meet our needs, our
data centers could have a limited or inadequate amount of electrical resources necessary to meet our customer requirements. We attempt to limit
exposure to system downtime due to power outages by using backup generators and power supplies. However, these protections may not limit
our exposure to power shortages or outages entirely. Any system downtime resulting from insufficient power resources or power outages could
damage our reputation and lead us to lose current and potential customers, which would harm our operating results and financial condition.
Decreasing telecommunications rates and increasing regulatory charges may diminish or eliminate our competitive pricing advantage
versus legacy providers.
Decreasing telecommunications rates may diminish or eliminate the competitive pricing advantage of our services, while increased regulation
and the imposition of additional regulatory funding obligations at the federal, state and local level could require us to either increase the retail
price for our services, thus making us less competitive, or absorb such costs, thus decreasing our profit margins. International and domestic
telecommunications rates have decreased significantly over the last few years in most of the markets in which we operate, and we anticipate
these rates will continue to decline in all of the markets in which we do business or expect to do business. Users who select our services to take
advantage of the current pricing differential between traditional telecommunications rates and our rates may switch to traditional
telecommunications carriers if such pricing differentials diminish or disappear, however, and we will be unable to use such pricing differentials
to attract new customers in the future. Continued rate decreases would require us to lower our rates to remain competitive and would reduce or
possibly eliminate any gross profit from our services. In addition, we may lose subscribers for our services.
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