Cricket Wireless 2010 Annual Report Download - page 37

operations. We also recently implemented a new regional president structure to oversee customer and sales activity,
hiring new members of management to oversee two of our three new regions. As several members of senior
management have been hired relatively recently, it may take time to fully integrate these individuals into their new
roles. The loss of key individuals in the future may have a material adverse impact on our ability to effectively
manage and operate our business. In addition, we may have difficulty attracting and retaining key personnel in
future periods, particularly if we were to experience poor operating or financial performance.
Risks Associated With Wireless Devices Could Pose Product Liability, Health and Safety Risks That
Could Adversely Affect Our Business.
We do not manufacture devices or other equipment sold by us and generally rely on our suppliers to provide us
with safe equipment. Our suppliers are required by applicable law to manufacture their devices to meet certain
governmentally imposed safety criteria. However, even if the devices we sell meet the regulatory safety criteria, we
could be held liable with the equipment manufacturers and suppliers for any harm caused by products we sell if such
products are later found to have design or manufacturing defects. We generally have indemnification agreements
with the manufacturers who supply us with devices to protect us from direct losses associated with product liability,
but we cannot guarantee that we will be fully protected against all losses associated with a product that is found to be
defective.
Media reports have suggested that the use of wireless handsets may be linked to various health concerns,
including cancer, and may interfere with various electronic medical devices, including hearing aids and
pacemakers. Certain class action lawsuits have been filed in the industry claiming damages for alleged health
problems arising from the use of wireless handsets. In addition, interest groups have requested that the FCC
investigate claims that wireless technologies pose health concerns and cause interference with airbags, anti-lock
brakes, hearing aids and other medical devices. The media has also reported incidents of handset battery
malfunction, including reports of batteries that have overheated. Malfunctions have caused at least one major
handset manufacturer to recall certain batteries used in its handsets, including batteries in a handset sold by Cricket
and other wireless providers.
Concerns over possible health and safety risks associated with radio frequency emissions and defective
products may discourage the use of wireless handsets, which could decrease demand for our services, or result in
regulatory restrictions or increased requirements on the location and operation of cell sites, which could increase
our operating expenses. Concerns over possible safety risks could decrease the demand for our services. For
example, in 2008, a technical defect was discovered in one of our manufacturer’s handsets which appeared to
prevent a portion of 911 calls from being heard by the operator. After learning of the defect, we instructed our retail
locations to temporarily cease selling the handsets, notified our customers of the matter and directed them to bring
their handsets into our retail locations to receive correcting software. If one or more Cricket customers were harmed
by a defective product provided to us by a manufacturer and subsequently sold in connection with our services, our
ability to add and maintain customers for Cricket service could be materially adversely affected by negative public
reactions.
There also are some safety risks associated with the use of wireless devices while operating vehicles or
equipment. Concerns over these safety risks and the effect of any legislation that has been and may be adopted in
response to these risks could limit our ability to sell our wireless service.
We Rely Heavily on Third Parties to Provide Specialized Services; a Failure or Inability by Such Parties
to Provide the Agreed Upon Products or Services Could Materially Adversely Affect Our Business,
Results of Operations and Financial Condition.
We depend heavily on suppliers and contractors with specialized expertise in order for us to efficiently operate
our business. In the past, our suppliers, contractors and third-party retailers have not always performed at the levels
we expect or at the levels required by their contracts. If key suppliers, contractors, service providers or third-party
retailers fail to comply with their contracts, fail to meet our performance expectations or refuse or are unable to
supply or provide services to us in the future, our business could be severely disrupted.
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