MANAGEMENT’S DISCUSSION  AN D ANALYSIS advantage to a competitor. Annual investments in new capabilities, education and continuous improvement help to maintain and improve RCI’s security posture. These are focused on protection and prevention, robust detection and advance preparation and planning to help prevent a potential breach from turning into a crisis. Risk management resources continue to be focused in this area. We use standard industry practices for network and information technology security, survivability and disaster recovery. Our ongoing success partly depends on protecting our corporate business-sensitive data, including personal information about our customers and employees. We treat this information as intellectual property and protect it from unauthorized access and compromise. We rely on our policies and procedures and information technology systems to protect this information. If we do not secure our data and the privacy of our customer information, we may not be in compliance with regulatory standards and it could result in negative publicity, litigation and damage to our reputation. Any of these outcomes can cause us to lose customers or public confidence, or experience financial losses. If our networks or key network components fail, it could, in some circumstances, result in a loss of service for our customers for an indefinite period and have an adverse effect on our results and financial position. We rely on business partners to carry some traffic for some of our customers. If one of these carriers has a service failure, it might also cause a service interruption for our customers that would last until we could reroute the traffic to another carrier. We use encryption technology developed and supported by our vendors to protect our cable signals from unauthorized access and to control access to programming based on subscription packages. We also use encryption and security technologies to prevent unauthorized access to our Internet service. There is no assurance that we will be able to effectively prevent unauthorized decoding of television signals or Internet access in the future. If we are unable to control cable access with our encryption technology, subscriptions to digital programming, including premium VOD and SVOD, and Internet service revenues may decrease, which could result in a decline in our cable revenues. Substantially all of our business activities are regulated by Industry Canada and/or the CRTC, and any regulatory changes or decisions could adversely affect our consolidated results of operations. See “Regulation in Our Industry”. Regulatory changes or decisions made by these regulators could adversely impact our results of operations on a consolidated basis. This regulation relates to, among other things, licencing, competition, the cable television programming services that we must distribute, wireless and wireline interconnection agreements, the rates we may charge to provide access to our network by third parties, the resale of our networks and roaming on our networks, our operation and ownership of communications systems and our ability to acquire an interest in other communications systems. In addition, the costs of providing services may be increased from time-to-time as a result of compliance with industry or legislative initiatives to address consumer protection concerns or such Internet-related issues as copyright infringement, unsolicited commercial e-mail, cybercrime and lawful access. Our cable, wireless and broadcasting licences may not generally be transferred without regulatory approval. Generally, our licences are granted for a specified term and are subject to conditions on the maintenance of these licences. These licencing conditions may be modified at any time by the regulators. The regulators may decide not to renew a licence when it expires, and any failure by us to comply with the conditions on the maintenance of a licence could result in a revocation or forfeiture of any of our licences or the imposition of fines. The licences include conditions requiring us to comply with Canadian ownership restrictions of the applicable legislation. We are currently in compliance with all of these Canadian ownership and control requirements. However, if these requirements are violated, we would be subject to various penalties, possibly including, in the extreme case, the loss of a licence. The CRTC’s decision to implement its wireless consumer code of conduct, among other things, effectively requires Canadian wireless carriers to move away from offering three-year service contracts and instead offer two-year contracts, and this could change our customer acquisition and retention costs and subscriber churn. The Wireless Code also sets billing caps on data roaming and domestic data overage charges, creates a prohibition on requiring customers to provide 30- days’ notice of cancellation, and requires the payment of interest on security deposits, which could also reduce our results of operations. Our wireless business could be materially adversely affected if laws, regulation or customer behaviour makes it difficult for us to impose term commitments or early cancellation fees on customers or receive the service revenues we anticipate from the term commitments. Radio spectrum is one of the fundamental assets required to carry on the wireless business. Our ability to continue to offer and improve current services and to offer new services depends on, among other factors, continued access to and deployment of adequate spectrum, including both the ability to renew current spectrum licenses and acquire new spectrum licenses. If we cannot acquire and retain needed spectrum, we may not be able to continue to offer and improve our current services and deploy new services on a timely basis including providing competitive data speeds that customers want. As a result, our ability to attract and retain customers could be materially adversely affected. In addition, an inability to acquire and retain needed spectrum could affect network quality and result in higher capital expenditures, as a consequence of network densification and other related network upgrades. Changes to government spectrum fees could significantly increase our payments and therefore materially reduce our operating profit. Spectrum licences are an indefinite life intangible asset and we do not amortize them, however, any potential increases in spectrum licence fees may affect our current accounting policies. 2013 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 75 REGULATORY RISKS Changes in G overnment Regulations S pectrum Fees S pectrum The Wireless Code Impact of Network Failures on Revenue and Customer S ervice Unauthorized Access to Digital Boxes or Internet Modems