Cincinnati Bell 2006 Annual Report Download - page 123

Future declines in the fair value of our wireless licenses could result in future impairment charges.
The market values of wireless licenses have varied dramatically over the last several years, and may vary
significantly in the future. In particular, valuation swings could occur if:
•Consolidation in the wireless industry allows or requires carriers to sell significant portions of their
wireless spectrum holdings;
•A sudden large sale of spectrum by one or more wireless providers occurs; or
•Market prices decline as a result of the sales prices in recent and upcoming FCC auctions.
In addition, the price of wireless licenses could decline as a result of the FCC’s pursuit of policies designed
to increase the number of wireless licenses available in each of the Company’s markets. For example, the FCC
auctioned an additional 90 MHz of spectrum in the 1700 MHz to 2100 MHz band in the Advanced Wireless
Services spectrum auction in 2006 and has announced the auctions of additional spectrum in the bands currently
used by wireless providers. If the market value of wireless licenses were to decline significantly, the value of our
wireless licenses could be subject to non-cash impairment charges.
The Company reviews potential impairments to indefinite-lived intangible assets, including wireless
licenses and trademarks, annually and when there is evidence that events or changes in circumstances indicate
that an impairment condition may exist. A significant impairment loss, most likely resulting from reduced cash
flow, could have a material adverse effect on the Company’s operating income and on the carrying value of the
wireless licenses on the balance sheet.
Failure to anticipate the needs for and introduce new products and services or to compete with new
technologies may compromise the Company’s success in the telecommunications industry.
The Company’s success depends, in part, on being able to anticipate the needs of current and future
enterprise, carrier, and residential customers. The Company seeks to meet these needs through new product
introductions, service quality, and technological superiority. The Company has implemented GSM technology
for wireless communications and works with vendors to ensure the newest handsets and accessories are available
to its customers. New products and services are important to the Company’s success as its industry is
technologically driven, such that new technologies can offer alternatives to the Company’s existing services. The
development of new technologies could accelerate the Company’s loss of access lines and have a material
adverse effect on the Company’s business, financial condition, results of operations, and cash flows.
Terrorist attacks and other acts of violence or war may effect the financial markets and the Company’s
business, financial condition, results of operations, and cash flows.
Terrorist attacks may negatively effect the Company’s operations and financial condition. There can be no
assurance that there will not be further terrorist attacks against the United States of America, U.S. businesses or
armed conflict involving the United States of America. Further terrorist attacks or other acts of violence or war
may directly impact the Company’s physical facilities or those of its customers and vendors. These events could
cause consumer confidence and spending to decrease or result in increased volatility in the United States and
world financial markets and economy. They could result in an economic recession in the United States or abroad.
Any of these occurrences could have a material adverse impact on the Company’s business, financial condition,
results of operations, and cash flows.
The Company could incur significant costs resulting from complying with, or potential violations of,
environmental, health, and human safety laws.
The Company’s operations are subject to laws and regulations relating to the protection of the environment,
health, and human safety, including those governing the management and disposal of, and exposure to, hazardous
materials and the cleanup of contamination, and the emission of radio frequency. While the Company believes its
operations are in substantial compliance with environmental, health, and human safety laws and regulations, as
an owner or operator of property, and in connection with the current and historical use of hazardous materials and
other operations at our sites, the Company could incur significant costs resulting from complying with or
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