Cogeco 2014 Annual Report Download - page 46

MD&A COGECO CABLE INC. 2014 45
We depend on a limited number of third party service suppliers and on third-party Internet providers for certain of our cable services.
A failure in supply could materially adversely affect our cable services businesses, financial condition and results of operations.
In Canada and the United States, we depend on a long-term agreement with TELUS and Integrated DNA Technologies, Inc. ("IDT"), respectively,
for the provision of our telephone services to our residential and business customers.
In Canada and the United States, we depend on suppliers and providers, such as TiVo, Arris, Pace and Cisco, for certain specialized
services, hardware and equipment that are critical to our operations. These materials and services include set-top boxes; cable and telephony
modems; servers and routers; cable; telephony switches; inter-city links; support structures; software; the “backbone”
telecommunications network for our Internet access and telephony services; and construction services for expansion and upgrades of our cable
and telephony networks. These services and equipment are available from a limited number of suppliers.
As we expand the TiVo service in our American and Canadian footprint, we will rely increasingly on TiVo to provide both the customer premise
equipment ("CPE"), as well as guide and user interface software to enable our customers to seamlessly access programming content. Currently
TiVo is our sole provider of this hardware and software. While Pace is now building a TiVo compatible hardware platform, we have not tested
nor integrated with its solution. A failure by TiVo in its ability to deliver product could result in a meaningful impact until an alternate solution from
Pace could be implemented. If no supplier can provide us with the equipment or services that we require or that comply with evolving Internet
and telecommunications standards or that are compatible with our other equipment and software, our cable services businesses, financial condition
and results of operations could be materially adversely affected. In addition, if we are unable to obtain critical equipment, software, services or
other items on a timely basis and at an acceptable cost, our ability to offer our products and services and roll out our advanced services may be
delayed, and our businesses, financial condition and results of operations could be materially adversely affected.
We depend on third party power utility suppliers for certain of our enterprise data services. A failure to supply could materially adversely
affect our enterprise data services businesses, financial condition and results of operations.
We depend on power utility suppliers in the geographical areas in which our data centres are located. Prolonged power outages could prevent
us from delivering some of our services throughout our network until our power utility suppliers have resolved the failure, which may result in
significant customer dissatisfaction, loss of revenue and potential civil litigation.
In addition, Peer 1 Hosting depends on third-party Internet providers with regards to the purchase of bandwidth. A failure by the Internet providers
in their ability to provide the service or the inability from Peer 1 Hosting to acquire additional network capacity and maintain direct connections
to multiple IP backbone networks in order to meet future customer demand could materially adversely affect our financial condition and operating
results.
We are dependent upon our information technology systems and those of certain third parties. The inability to enhance our systems,
or to protect them from a security breach or natural disaster, could have an adverse impact on our financial condition and results of
operations.
The day-to-day operation of our businesses is highly dependent on information technology systems, including those provided by certain
suppliers. Electronic communications increasingly rely on advanced security technology, terminal devices, control systems and software to ensure
conditional access, appropriate billing and service integrity. Security and business systems technology is provided worldwide by a small pool of
global suppliers on a proprietary basis. We depend on the effectiveness of such technology for many of our services. To the extent these providers
are unable to offer technological solutions in a cost-effective and timely manner, we may be unable to effectively prevent or respond to security
breaches.
An inability to maintain and enhance our existing information technology systems or obtain new systems to accommodate additional customer
growth or to support new products and services could also have an adverse impact on our ability to acquire new customers, retain existing
customers, produce accurate and timely billing, generate revenue growth and manage operating expenses, or comply with regulatory requirements,
all of which could adversely impact our financial results and position. In addition, although we have disaster recovery and businesses continuity
plans, the occurrence of natural disasters, quarantine, power failures, terrorist acts, intrusion, computer hacking or other data corruption, a security
breach or disaster or a violation of our Internet sites security could have a material adverse effect on our reputation, businesses, prospects,
financial condition, results of operations and competitiveness of our service offerings. Moreover, we have very limited insurance coverage against
the loss of data, hacking or malicious interference with our electronic communications and systems, or against losses resulting from natural
disasters affecting the cable and fibre networks.
Further, as IP based traffic continues to grow very rapidly over our networks and new technology, systems, software and equipment are deployed
more quickly in order to manage this increased traffic, there is an increased risk of unexpected technical problems, service interruptions and
mean time to restoration and increased threats from malware, hacking or other intrusions.
A breach of our IT security, loss of customer data or system disruption could adversely affect our business and reputation.
Our business is dependent on our payroll, transaction, financial, accounting and other data processing systems. We rely on these systems to
process, on a daily basis, a large number of transactions. Any security breach in our business processes and/or systems has the potential to
impact our customer information, which could result in the potential loss of business. If any of these systems fail to operate properly or become
disabled, we could potentially lose control of customer data and we could suffer financial loss, a disruption of our businesses, liability to clients,
regulatory intervention or damage to our reputation.
In addition, any issue of data privacy as it relates to unauthorized access to, or loss of, customer and/or employee information could result in the
potential loss of business, damage to our market reputation, litigation and regulatory investigation and penalties. Our continued investment in
the security of our IT systems, continued efforts to improve the controls within our IT systems, business processes improvements, and the
enhancements to our culture of information security may not successfully prevent attempts to breach our security or unauthorized access to
confidential, sensitive or proprietary information. In addition, in the event of a catastrophic occurrence, either natural or man-made, our ability to
protect our infrastructure, including client data, and maintain ongoing operations could be significantly impaired. Our business continuity and
disaster recovery plans and strategies may not be successful in mitigating the effects of a catastrophic occurrence. If our security is breached,