Cricket Wireless 2010 Annual Report Download - page 17

the number of our competitors. More recently, the FCC announced in March 2010, as part of its National Broadband
Plan, the goal of making an additional 500 MHz of spectrum available for broadband use within the next ten years,
of which the FCC stated that 300 MHz should be made available for mobile use within five years. The FCC has also
adopted policies to allow satellite operators to use portions of their spectrum for ancillary terrestrial use and recently
made further changes intended to facilitate the terrestrial use of this spectrum for voice, data and mobile broadband
services. Taking advantage of such developments, at least one new entrant, LightSquared, has announced plans to
launch a new wholesale, nationwide 4G-LTE wireless broadband network integrated with satellite coverage to
allow partners to offer terrestrial-only, satellite-only or integrated satellite-terrestrial services to their customers.
The FCC has also permitted the offering of broadband services over power lines. The auction and licensing of new
spectrum, the re-purposing of other spectrum or the pursuit of policies designed to encourage broadband adoption
across wireline and wireless platforms may result in new or existing competitors acquiring additional spectrum,
which could allow them to offer services that we may not be able to offer cost-effectively, or at all, with the licenses
we hold or to which we have access.
Our ability to remain competitive will depend, in part, on our ability to anticipate and respond to various
competitive factors and to keep our costs low. In August 2009 and March 2010, we revised a number of our Cricket
Wireless service plans to provide additional features previously only available in our higher-priced plans, to
eliminate certain fees we previously charged customers who changed their service plans and to include unlimited
nationwide roaming and international long distance services. These changes, which were made in response to the
competitive and economic environment, resulted in lower average monthly revenue per customer and increased
costs. In August 2010, we introduced a number of new initiatives to respond to the evolving competitive landscape,
including revising the features of a number of our Cricket service offerings, offering “all-inclusive” rate plans,
eliminating certain late fees we previously charged to customers who reinstated their service after having failed to
pay their monthly bill on time, entering into a new wholesale agreement and nationwide data roaming agreement
and introducing “smartphones” and other new handsets and devices. We believe that these new initiatives will be
attractive to customers, will help improve our competitive positioning in the marketplace and will lead to improved
financial and operational performance over the longer term. Since their introduction, these August 2010 initiatives
have led to higher average monthly revenue per customer and lower customer turnover, although they have also
resulted in increased costs, including equipment subsidy for new and upgrading customers, sales and marketing
expenses and other costs. The extent to which our new initiatives will be successful and impact our future financial
and operating results will depend upon customer acceptance of our new product and service offerings and our ability
to retain these customers. The evolving competitive landscape may result in more competitive pricing, slower
growth, higher costs and increased customer turnover. Any of these results or actions could have a material adverse
effect on our business, financial condition and operating results.
Government Regulation
Pursuant to its authority under the Communications Act of 1934, as amended, or the Communications Act, the
FCC regulates the licensing, construction, modification, operation, ownership, sale and interconnection of wireless
communications systems, as do some state and local regulatory agencies. Congress also periodically revises or
enacts laws affecting the telecommunications industry, as do state legislatures. Decisions by these bodies could have
a significant impact on the competitive market structure among wireless providers and on the relationships between
wireless providers and other carriers. These mandates may also impose significant financial, operational or service
obligations on us and other wireless providers. We are unable to predict the scope, pace or financial impact of legal
or policy changes that could be adopted in these proceedings.
Licensing of our Wireless Service Systems
We hold broadband Personal Communications Services, or PCS, licenses, and we and Savary Island hold
Advanced Wireless Services, or AWS, licenses. The licensing rules that apply to these two services are summarized
below.
PCS Licenses. A broadband PCS system operates under a license granted by the FCC for a particular market
on one of six frequency blocks allocated for broadband PCS. Broadband PCS systems generally are used for two-
way voice and data applications. Narrowband PCS systems, in contrast, generally are used for non-voice
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