8x8 2016 Annual Report Download - page 32

Alleged or actual failure of our solutions to comply with regulations governing outbound dialing, including regulations under the Telephone Consumer
Protection Act of 1991, could harm our business, financial condition, results of operations and cash flows.
The legal and contractual environment surrounding calling consumers and wireless phone numbers is complex and evolving. In the United States, two federal
agencies, the Federal Trade Commission ("FTC") and the FCC, and various states have enacted laws including, at the federal level, the Telephone Consumer
Protection Act of 1991, or TCPA, that restrict the placing of certain telephone calls and texts to residential and wireless telephone subscribers by means of
automatic telephone dialing systems, prerecorded or artificial voice messages and fax machines. These laws require companies to institute processes and
safeguards to comply with these restrictions. Some of these laws can be enforced by the FTC, FCC, State Attorneys General, or private party litigants. In these
types of actions, the plaintiff may seek damages, statutory penalties, costs and/or attorneys' fees.
It is possible that the FTC, FCC, private litigants or others may attempt to hold our customers, or us as a software provider, responsible for alleged violations of
these laws. In the event that litigation is brought, or fines are assessed, against us, we may not successfully enforce or collect upon any contractual indemnities we
may have from our customers. Additionally, any changes to these laws or their interpretation that further restrict calling consumers, any adverse publicity regarding
the alleged or actual failure by companies, including our customers and competitors, to comply with such laws, or any governmental or private enforcement actions
related thereto, could result in the reduced use of our solution by our clients and potential clients, which could harm our business, financial condition, results of
operations and cash flows. We anticipate that these risks will increase as we begin to market and sell our EasyContactNow service (which is currently sold in the
United Kingdom) in the United States.
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.
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