Windstream 2010 Annual Report Download - page 73

Windstream Corporation
Form 10-K, Part I
Item 1A. Risk Factors
Risks Relating to Windstream’s Business
We face intense competition in our businesses from many sources that could reduce our market share or adversely
affect our financial performance.
Substantial and increasing competition exists in the wireline communications industry. Our operations have
experienced, and will continue to experience, competition in their local service areas. Sources of competition to our
local service business include, but are not limited to, wireless communications providers, cable television companies,
resellers of local exchange services, interexchange carriers, incumbent local exchange carriers in markets where we
provide competitive local exchange services, satellite transmission service providers, electric utilities, competitive
access service providers, including, without limitation, those utilizing an Unbundled Network Elements-Platform or
UNE-P, VoIP providers, and providers using other emerging technologies.
Many of Windstream’s current and potential competitors (a) have substantially larger operational and financial
resources, (b) own larger and more diverse networks, (c) are subject to less regulation and (d) have superior brand
recognition.
Competition could adversely affect us in several ways, including (1) the loss of customers and resulting revenue and
market share, (2) the possibility of customers reducing their usage of our services or shifting to less profitable services,
(3) our need to lower prices or increase marketing expenses to remain competitive and (4) our inability to diversify by
successfully offering new products or services.
We may not be able to compete successfully with cable operators that are subject to less stringent industry
regulations.
We face competition from cable television companies providing voice service offerings. Voice offerings of cable
operators are offered mainly under Competitive Local Exchange Carrier certificates obtained in states where they offer
services and therefore are subject to fewer service quality or service reporting requirements than our ILEC operations.
In addition, the rates or prices of the voice service offerings of cable companies are not subject to regulation. In
contrast, our voice service rates or prices, in our capacity as an ILEC, are subject to regulation by various state public
service commissions. Unlike cable operators, our ILEC operations are also subject to “carrier of last resort”
obligations, which generally obligates us to provide basic voice services to any person regardless of the profitability of
such customer. As a result of these disadvantages, we may not be able to compete successfully with cable companies in
the offering of voice services.
Funding from the federal broadband stimulus program could result in increased competition, which could adversely
affect our operating results and financial performance.
The federal broadband stimulus program is providing approximately $7.2 billion in financial incentives to companies
for the purpose of expanding broadband service in unserved or underserved markets. Financial incentives paid to new
or existing competitors could incent them to enter markets where Windstream is already providing broadband service.
This could result in increased competition and the loss of customers, negatively impacting our operating results and
financial performance.
Competition from wireless carriers is likely to continue to cause access line losses, which could adversely affect our
operating results and financial performance.
Wireless competition has contributed to a reduction in our access lines, and generally has caused pricing pressure in the
industry. As wireless carriers continue to expand and improve their network coverage while lowering their prices, some
customers choose to stop using traditional wireline phone service and instead rely solely on wireless service. We
anticipate that this trend toward solely using wireless services will continue, particularly if wireless prices continue to
decline and the quality of wireless services improves. In the future, it is expected that the number of access lines served
by us will continue to be adversely affected by wireless substitution and that industry-wide pricing pressure will
continue. We may not be able to compete successfully with these wireless carriers.
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