Earthlink 2010 Annual Report Download - page 38

Table of Contents
VoIP regulation.
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.
General Regulation
Consumer protection.
Federal and state governments have adopted consumer protection laws and undertaken enforcement actions to
address advertising and user privacy. Our services and business practices, or changes to our services and business practices could subject us to
investigation or enforcement actions if we fail to adequately comply with applicable consumer protection laws. Existing and future federal and
state laws and regulations also may affect the manner in which we are required to protect confidential customer data and other information,
which could increase the cost of our operations and our potential liability if the security of our confidential customer data is breached.
Broadband Internet access.
Currently, broadband Internet access is classified as an "information service" and, as a result, cable
companies and telephone companies that offer a broadband Internet access
information service are not required by the FCC to offer unaffiliated
ISPs stand-
alone broadband transmission. Accordingly, if our contracts with cable companies and telephone companies were to expire and not be
replaced, our broadband Internet access customer base and revenues would be adversely affected.
Forbearance.
If the FCC were to forbear from enforcing regulations that have been established to enable competing broadband Internet
access and VoIP, our consumer services business could be adversely affected. In addition, with respect to our business services, regulatory
authorities generally have decreased their oversight of incumbent carriers and from time to time are asked to forbear from applying a range of
regulations to incumbent carriers, which may increase the competitive benefits these companies experience from their longstanding customer
relationships and greater financial and technical resources, and may increase their ability to reduce prices for local and other network services by
offsetting those reductions with revenue or profits generated by unrelated businesses, products or services.
Other laws and regulations.
Our business also is subject to a variety of other U.S. laws and regulations from various entities, including
the Federal Trade Commission, the Environmental Protection Agency, and the Occupational Safety and Health Administration, as well as by
state and local regulatory agencies, that could subject us to liabilities, claims or other remedies. Compliance with these laws and regulations is
complex and may require significant costs. In addition, the regulatory framework relating to Internet and communications 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.
For example, changes in policies or regulations mandating new environmental standards could increase our operating costs, such as utility
costs at our switch sites, and changes in tax laws or the interpretation of existing tax laws by state and local authorities could increase our
income, sales, property or other tax costs. In addition, our operations are subject to a variety of laws and regulations relating to the protection of
the environment, including those governing the cleanup of contamination and the management and disposal of hazardous substances and wastes.
As an owner or operator of property, we could incur significant costs as a result of violations or liabilities under such laws and regulations,
including fines, penalties, cleanup costs and third-party claims.
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