8x8 2016 Annual Report Download - page 30

For example:
TheFCChasadoptednetworkneutralityrules.In March, 2015, the FCC adopted new network neutrality rules that would prevent Internet service
providers from blocking, degrading and engaging in other practices that would impair or otherwise interfere with services like ours. Several parties
appealed the FCC's network neutrality order. We cannot predict the outcome of the appeal but interference with our service or higher charges for using our
service could cause us to lose existing customers, impair our ability to attract new customers, and harm our revenue and growth. These problems could also
arise in international markets. Most foreign countries have not adopted formal net neutrality rules like those adopted by the FCC.
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.
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.
TheFCCadoptedrulesconcerning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.
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.
TheremayberiskassociatedwithourabilitytocomplywithFCCrulesconcerningdisabilitiesaccessrequirementsandtheFCC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. It is possible that
we, like other providers in the communications marketplace, may be subject to fines or other enforcement actions if we are found not to be in compliance
with the FCC's accessibility requirements.
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. It is possible that we, like other providers in the
communications marketplace, may be subject to fines or other enforcement actions if we are found not to be in compliance with the FCC's 7-1-1
abbreviated dialing requirements.
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. Regardless of our reliance on a third party for compliance, it is possible that we, like other providers in the
communications marketplace, may be subject to fines or other enforcement actions if we are found not to be in compliance with the FCC's 7-1-1
abbreviated dialing requirements.
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