Earthlink 2011 Annual Report Download - page 36

Table of Contents
significant capital and other resources to remedy, protect against or alleviate these and related problems, and we may not be able to remedy these
problems in a timely manner, or at all. Any security breaches that occur could damage our reputation, increase our security costs, expose us to
litigation and lead to the loss of existing or potential customers. If our services are perceived as not being secure, our strategy to be a leading
network, communications and IT services provider may be adversely impacted.
Interruption or failure of our network and information systems and other technologies could impair our ability to provide our services, which
could damage our reputation and harm our operating results.
Our success depends on our ability to provide reliable service. Our network, network operations centers, central offices, corporate
headquarters and those of our third party service providers are vulnerable to damage or interruption from fires, earthquakes, hurricanes, tornados,
floods and other natural disasters, terrorist attacks, power loss, capacity limitations, telecommunications failures, software and hardware defects
or malfunctions, break ins, sabotage and vandalism, human error and other disruptions that are beyond our control. Some of our systems are not
fully redundant, and our disaster recovery planning may not be adequate. We have experienced interruptions in service in the past due to factors
such as cable damage, theft of our equipment, power outages, inclement weather and service failures of our third-
party service providers. We
may experience service interruptions or system failures in the future. In addition, in connection with enhancement, expansion or consolidation of
our existing network, we may experience service interruptions despite our efforts to minimize the impact to customers. We may make significant
capital expenditures to increase the reliability of our systems, but these capital expenditures may not achieve the results we expect. The
occurrence of any disruption or system failure may result in a loss of business, increase expenses, damage our reputation for providing reliable
service, subject us to additional regulatory scrutiny or expose us to litigation and possible financial losses, any of which could have a material
adverse effect on our business, financial position, results of operations and cash flows.
Our business depends on effective business support systems and processes.
Our business relies on our data, billing and other operational and financial reporting and control systems. To effectively manage our
information technology infrastructure, we will need to continue to maintain our data, billing and other operational and financial systems,
procedures and controls, which can be costly. We have experienced system failures from time to time, and any interruption in the availability of
our business support systems, in particular our billing systems, could result in an immediate, and possibly substantial, loss of revenues. Our
ability to maintain, expand and update our information technology infrastructure in response to acquisitions, growth and changing needs is
important to the continued implementation of our new service offering initiatives. We are currently integrating certain business support systems
in connection with our recent acquisitions and nationwide product launch, including systems used for quoting, accepting and inputting customer
orders for services; provisioning, installing and delivering services; and billing for services. This is a complicated undertaking requiring
significant resources and expertise and support from third-
party vendors. For example, certain manual processing, which is more time consuming
and prone to error than automated processing, is required during the integration period. In addition, as our consumer business continues to
decline, we are more dependent on fewer individuals to maintain our internal business systems. Our inability to maintain, expand or upgrade our
technology infrastructure could have adverse consequences, which could include the delayed implementation of new service offerings, increased
acquisition integration costs, service or billing interruptions and the diversion of development resources.
Government regulations could adversely affect our business or force us to change our business practices.
Our services are subject to varying degrees of federal, state and local regulation. Federal, state and local regulations governing our services
are the subject of ongoing judicial proceedings, rulemakings and legislative initiatives that could change the manner in which our industry
operates and affect our business.
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