Earthlink 2004 Annual Report Download - page 20

so in the future. Users or third parties may assert claims of liability against us as a result of any failure by us to prevent these activities.
Although we use security measures, there can be no assurance that the measures we take will be successfully implemented or will be effective
in preventing these activities. Further, the security measures of our third-party network providers, our outsourced customer support service
providers and our other vendors may be inadequate. These activities may subject us to legal claims, may adversely impact our reputation, and
may interfere with our ability to provide our services, all of which could have a material adverse effect on our business, financial position and
results of operations.
Natural disaster or other catastrophic event. Our operations and services depend on the extent to which our computer equipment and
the computer equipment of our third-party network providers are protected against damage from fire, flood, earthquakes, power loss,
telecommunications failures, break-ins, acts of war or terrorism and similar events.
We have three technology centers at various locations in the
U.S. which contain a significant portion of our computer and electronic equipment. These technology centers host and manage Internet content,
email, web hosting and authentication applications and services. Despite precautions taken by us and our third-party network providers, over
which we have no control, a natural disaster or other unanticipated problem that impacts one of our locations or our third-party providers’
networks could cause interruptions in the services that we provide. Such interruptions in our services could have a material adverse effect on
our ability to provide Internet services to our subscribers and, in turn, on our business, financial condition and results of operations.
Network infrastructure . The success of our business depends on the capacity, reliability and security of our network infrastructure,
including that of our third-party telecommunications providers’
networks. We may be required to expand and improve our infrastructure and/or
purchase additional capacity from third-party providers to meet the needs of an increasing number of subscribers and to accommodate the
expanding amount and type of information our customers communicate over the Internet. Such expansion and improvement may require
substantial financial, operational and managerial resources. We may not be able to expand or improve our network infrastructure, including
acquiring additional capacity from our third-party providers, to meet additional demand or changing subscriber requirements on a timely basis
and at a commercially reasonable cost, or at all.
We may experience increases in our telecommunications usage that exceed our available telecommunications capacity. As a result, users
may be unable to register or log on to use our services, may experience a general slow-down in their Internet connection or may be
disconnected from their sessions. Inaccessibility, interruptions or other limitations on the ability of customers to access our services due to
excessive user demand, or any failure of our network to handle user traffic, could have a material adverse effect on our reputation which could
cause an increase in churn and would adversely impact our revenues. While our objective is to maintain excess capacity, our failure to expand
or enhance our network infrastructure, including our ability to procure excess capacity from third-party telecommunications providers, on a
timely basis or to adapt it to an expanding subscriber base or changing subscriber requirements could materially adversely affect our business,
financial condition and results of operations.
We may not be able to protect our proprietary technologies or successfully defend infringement claims and may be required to enter
licensing arrangements on unfavorable terms.
We regard our trademarks, service marks, copyrights, patents, trade secrets, proprietary technologies and similar intellectual property as
critical to our success. We rely on trademark, copyright and patent law, trade secret protection, and confidentiality agreements with our
employees, customers, partners and others to protect our proprietary rights. The efforts we have taken to protect our proprietary rights may not
be sufficient or effective. Third parties may infringe or misappropriate our copyrights, trademarks, patents and similar proprietary rights. If we
are unable to protect our proprietary rights from unauthorized use, our brand image may be harmed and our business may suffer.
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