1110507--3/12/2007--ESCHELON_TELECOM

related topics

{system, service, information}

{financial, litigation, operation}

{product, market, service}

{debt, indebtedness, cash}

{acquisition, growth, future}

{regulation, government, change}

{competitive, industry, competition}

{cost, operation, labor}

{operation, natural, condition}

{personnel, key, retain}

{control, financial, internal}

{regulation, change, law}

Risks Related to Our Industry The communications industry faces significant regulatory uncertainties and the resolution of these uncertainties could hurt our business, results of operations and financial condition. The communications industry is subject to government regulation, and changes in current or future regulations could have a material adverse effect on our business, operating results and financial condition and restrict the manner in which we operate our business. The communications market in which we operate is highly competitive, and we may not be able to compete effectively against companies that have significantly greater resources than we do, which could cause us to lose customers and impede our ability to attract new customers. Changes in current or future regulations in the local and long distance industries may hurt our business and results of operations and restrict the manner in which we operate our business. The financial difficulties faced by others in our industry could adversely affect our public image and our financial results. We may not be able to successfully integrate acquired companies into our business and we may have to incur additional indebtedness. Risks Related to Our Business We have a history of net losses, and we may not be profitable in the future. If the RBOCs with whom we have interconnection agreements engage in anticompetitive practices, our business will be adversely affected. Our ability to provide our services and systems at competitive prices is dependent on our ability to negotiate and enforce favorable interconnection agreements. The regulation of access charges involves uncertainties, and the resolution of these uncertainties could adversely affect our business, results of operations and financial condition. Difficulties we may experience with the RBOCs and long distance providers over payment issues may hurt our financial performance. The level of our outstanding total debt may adversely affect our financial health and prevent us from fulfilling our financial obligations. Our outstanding notes contain restrictive covenants that limit our operating flexibility. If we are unable to retain and attract management and key personnel, we may not be able to execute our business plan. If we choose to grow by expanding to new markets and/or by making acquisitions, we would face additional risks. We are dependent on effective billing, customer service and information systems. Declining prices for communications services could reduce our revenue and profitability. We depend on a limited number of third party service providers for long distance and other services, and if any of these providers were to experience significant interruptions in its business operations, or were to otherwise cease to provide such services to us, our business could be materially and adversely affected. The communications industry is undergoing rapid technological changes, and new technologies may be superior to the technologies we use. Our failure to anticipate and keep up with such changes could have a material adverse effect on our business, results of operations and financial condition. A network failure could cause delays or interruptions of service, which could cause us to lose customers and revenue. We continue to monitor our network from a performance and cost perspective and as a result, our network optimization routines may have an adverse effect on our customers. Some of our employees are unionized, and we could face work disruptions due to strikes, slowdowns or other labor disputes. Terrorist attacks and other acts of violence or war may affect the markets in which we operate, our operations and our profitability.

Full 10-K form ▸

1110507--3/12/2007--ESCHELON_TELECOM_INC