Clearwire 2010 Annual Report Download - page 39

• inability to use a portion of the spectrum we have acquired or leased due to interference from licensed or
unlicensed operators in our band or in adjacent bands or due to international coordination issues;
• refusal by the FCC, or one or more foreign licensing authorities to recognize our acquisition or lease of
spectrum licenses from others or our investments in other license holders;
• inability to offer new services or to expand existing services to take advantage of new capabilities of our
network resulting from advancements in technology due to regulations governing our spectrum rights;
• inability to obtain or lease more spectrum in the future due to the possible imposition of limits or caps on our
spectrum holdings;
• inability to control leased spectrum due to contractual disputes with, or the bankruptcy or other reorga-
nization of, the license holders, or third parties;
• failure of the FCC or other regulators to renew our spectrum licenses or those of our lessors as they expire;
• failure to obtain extensions or renewals of spectrum leases, or an inability to renegotiate such leases, on
terms acceptable to us before they expire, which may result in the loss of spectrum we need to operate our
network in the market covered by the spectrum leases;
• potentially significant increases in spectrum prices, because of increased competition for the limited supply
of licensed spectrum both in the United States and internationally; and
• invalidation of our authorization to use all or a significant portion of our spectrum, resulting in, among other
things, impairment charges related to assets recorded for such spectrum.
As an example of these risks, most licenses of 2.5 GHz spectrum in the United States, whether it is a BRS or
EBS license, are subject to a requirement imposed by the FCC that the holder of the license demonstrates substantial
service by May 1, 2011. If a holder fails to demonstrate substantial service by the deadline, the spectrum license
may be canceled and made available for re-licensing unless the holder obtains a waiver from the FCC. The FCC has
the discretion to grant, reject or otherwise limit such waiver requests. In addition, if the spectrum was leased from a
third party, any failure to satisfy the substantial service requirement, whether or not such failure results in a loss of
spectrum, may subject us to claims from the holder of the license that we are in breach of our obligations under the
lease, which if adversely determined against us could result in the termination of the lease and/or the payment of
monetary damages to the holder. For our spectrum, we believe that we will satisfy the substantial service
requirements for all owned and leased licenses associated with each of our commercially launched markets,
whether Pre-4G or 4G. For licenses covering areas outside of our commercially launched markets, we are in the
process of executing a plan to comply with the substantial service requirement by the deadline. Our ability, however,
to meet the substantial service deadline for every owned or leased license in areas outside of our launched markets is
uncertain, and we will likely seek waivers or extensions of the deadline from the FCC in some circumstances.
We expect the FCC to make additional spectrum available from time to time. Additionally, other companies
hold spectrum rights that could be made available for lease or sale. The availability of additional spectrum in the
marketplace could change the market value of spectrum rights generally and, as a result, may adversely affect the
value of our spectrum assets.
Interruption or failure of our information technology and communications systems could impair our
ability to provide our services, which could damage our reputation and harm our operating results.
We have experienced service interruptions in some markets in the past and we may experience service
interruptions or system failures in the future. Any service interruption adversely affects our ability to operate our
business and could result in an immediate loss of revenues or increase in churn. If we experience frequent or
persistent system or network failures, our reputation and brand could be permanently harmed. We may make
significant capital expenditures in an effort to increase the reliability of our systems, but these capital expenditures
may not achieve the results we expect.
Our services depend on the development and continuing operation of various information technology and
communications systems, including our billing system, some of which are not within our control. Currently, we do
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