Cricket Wireless 2010 Annual Report Download - page 27

manufacturers and our larger competitors could put us at a significant competitive disadvantage and make it more
difficult for us to attract and retain customers. In addition, some of our competitors are able to offer their customers
roaming services at lower rates. As consolidation in the industry creates even larger competitors, advantages that
our competitors may have, as well as their bargaining power as wholesale providers of roaming services, may
increase. For example, in connection with the offering of our nationwide voice and data roaming services, we have
encountered problems with certain large wireless carriers in negotiating terms for roaming arrangements that we
believe are reasonable, and we believe that consolidation has contributed significantly to some carriers’ control over
the terms and conditions of wholesale roaming services.
The competitive pressures of the wireless telecommunications industry and the attractive growth prospects in
the prepaid segment have continued to increase and have caused a number of our competitors to offer competitively-
priced unlimited prepaid and postpaid service offerings or increasingly large bundles of minutes of use at
increasingly lower prices, which are competing with the predictable and unlimited Cricket Wireless service
plans. For example, AT&T, Sprint Nextel, T-Mobile and Verizon Wireless each now offer unlimited service
offerings. Sprint Nextel also offers competitively-priced unlimited service offerings under its Boost Unlimited and
Virgin Mobile brands, which are similar to our Cricket Wireless service. T-Mobile also offers an unlimited plan that
is competitively priced with our Cricket Wireless service. In addition, a number of MVNOs offer competitively-
priced service offerings. For example, Tracfone Wireless sells wireless offerings exclusively in Wal-Mart under its
“Straight Talk” brand using a number of other carriers’ wireless networks. Moreover, some competitors offer
prepaid wireless plans that are being advertised heavily to the same demographic segments we target. These various
service offerings have presented, and are expected to continue to present, strong competition in markets in which
our offerings overlap.
In addition to voice offerings, there are a number of mobile broadband services that compete with our Cricket
Broadband service. AT&T, Sprint Nextel, T-Mobile and Verizon Wireless each offer mobile broadband services. In
addition, Clearwire Corporation has launched unlimited 4G wireless broadband service in a number of markets in
which we offer Cricket Broadband. Best Buy also recently launched a mobile broadband product using Sprint’s
wireless network. These broadband service offerings have presented, and are expected to continue to present, strong
competition in markets in which our mobile broadband offerings overlap.
We may also face additional competition from new entrants in the wireless marketplace, many of whom may
have significantly more resources than we do. The FCC is pursuing policies designed to increase the number of
wireless licenses and spectrum available for the provision of voice, data and mobile broadband services in each of
our markets, as well as policies to increase the level of intermodal broadband competition. For example, the FCC
has adopted rules that allow the partitioning, disaggregation and leasing of wireless licenses, which may increase
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 10 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 capacity,
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
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