Earthlink 2007 Annual Report Download - page 21

Tax. The Internet Tax Non-Discrimination Act places a moratorium on taxes on Internet access and multiple, discriminatory taxes on
electronic commerce. Certain states have enacted various taxes on Internet access and electronic commerce, and selected states' taxes are being
contested on a variety of bases. If these state tax laws are not successfully contested, or if future state and federal laws imposing taxes or other
regulations on Internet access and electronic commerce are adopted, our cost of providing Internet access services could be increased and our
business could be adversely affected.
Consumer protection. Consumer protection laws and enforcement actions regarding advertising and user privacy, are becoming more
prevalent. The Federal Trade Commission ("FTC") and some state Attorney General offices have conducted investigations into the privacy
practices of companies that collect information about individuals on the Internet. The FTC and various state agencies as well as individuals have
investigated and asserted claims against, or instituted inquiries into, Internet service providers in connection with marketing, billing, customer
retention, cancellation and disclosure practices. Although we believe that we comply with applicable consumer protection laws, we cannot assure
you that our services and business practices, or changes to our services and business practices, will not subject us to material liability.
VoIP.
The current regulatory environment for VoIP services remains unclear, as the decision whether VoIP is an "information service" or
"telecommunications service" is still pending. Classifying VoIP as a telecommunications service could require us to obtain a telecommunications
license, comply with numerous legacy telephone regulations, and possibly subject the VoIP traffic to inter-carrier access charges, which could
result in increased costs. In addition, several state regulatory agencies are seeking jurisdiction over VoIP services. If successful, carrier access
charges could be imposed on us, which could also result in increased costs. Such regulations could result in substantial costs depending on the
technical changes required to accommodate the requirements, and any increased costs could erode our pricing advantage over competing forms
of communication and may adversely affect our business.
CLEC regulation. New Edge, our wholly-owned subsidiary, is a CLEC that is subject to both state and federal telecommunications
regulation. As such, New Edge relies on certain regulatory rights of CLECs to provide services to business and enterprise customers, including
rights to last-mile unbundled network elements of incumbent local exchange carriers (or ILECs) and rights to collocate New Edge equipment at
ILEC facilities. New Edge also must contribute to state and federal universal service funds. In addition, New Edge makes use of the special
access services and DSL services of ILECs and other CLECs in order to provision New Edge services to its customers.
Other laws and regulations. Our business also is subject to a variety of other U.S. laws and regulations that could subject us to liabilities,
claims or other remedies, such as laws relating to bulk email or "spam," access to various types of content by minors, anti-spyware initiatives,
encryption, data protection, data retention, security breaches and consumer protection. Compliance with these laws and regulations is complex
and may require significant costs. In addition, the regulatory framework relating to Internet services is evolving and both the federal government
and states from time to time pass legislation that impacts our business. It is likely that additional laws and regulations will be adopted that would
affect our business. We cannot predict the impact future laws, regulatory changes or developments may have on our business, financial
condition, results of operations or cash flows. The enactment of any additional laws or regulations, increased enforcement activity of existing
laws and regulations, or claims by individuals could significantly impact our costs or the manner in which we conduct business, all of which
could adversely impact our results of operations and cause our business to suffer.
We may not be able to protect our proprietary technologies.
We regard our trademarks, service marks, copyrights, patents, trade secrets, proprietary technologies, domain names 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,
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