Cricket Wireless 2010 Annual Report Download - page 40

could have the effect of slowing or limiting our ability to introduce products and services to our customers.
Moreover, we may be subject to claims that products, software and services provided by different vendors which we
combine to offer our services may infringe the rights of third parties, and we may not have any indemnification from
our vendors for these claims. Whether or not an infringement claim against us or a supplier is valid or successful, it
could materially adversely affect our business, financial condition or results of operations by diverting management
attention, involving us in costly and time-consuming litigation, requiring us to enter into royalty or licensing
agreements (which may not be available on acceptable terms, or at all) or requiring us to redesign our business
operations or systems to avoid claims of infringement. In addition, infringement claims against our suppliers could
also require us to purchase products and services at higher prices or from different suppliers and could adversely
affect our business by delaying our ability to offer certain products and services to our customers.
Action by Congress or Government Agencies May Increase Our Costs of Providing Service or Require
Us to Change Our Services.
The FCC regulates the licensing, construction, modification, operation, ownership, sale and interconnection of
wireless communications systems, as do some state and local regulatory agencies. We cannot assure you that the
FCC or any state or local agencies having jurisdiction over our business will not adopt regulations or take other
enforcement or other actions that would adversely affect our business, impose new costs or require changes in
current or planned operations. In addition, state regulatory agencies are increasingly focused on the quality of
service and support that wireless carriers provide to their customers and several agencies have proposed or enacted
new and potentially burdensome regulations in this area. We also cannot assure you that Congress will not amend
the Communications Act, from which the FCC obtains its authority, or enact legislation in a manner that could be
adverse to us.
Under existing law, no more than 20% of an FCC licensee’s capital stock may be owned, directly or indirectly,
or voted by non-U.S. citizens or their representatives, by a foreign government or its representatives or by a foreign
corporation. If an FCC licensee is controlled by another entity (as is the case with Leap’s ownership and control of
subsidiaries that hold FCC licenses), up to 25% of that entity’s capital stock may be owned or voted by
non-U.S. citizens or their representatives, by a foreign government or its representatives or by a foreign
corporation. Foreign ownership above the 25% holding company level may be allowed if the FCC finds such
higher levels consistent with the public interest. The FCC has ruled that higher levels of foreign ownership, even up
to 100%, are presumptively consistent with the public interest with respect to investors from certain nations. If our
foreign ownership were to exceed the permitted level, the FCC could revoke our wireless licenses, which would
have a material adverse effect on our business, financial condition and results of operations. Although we could seek
a declaratory ruling from the FCC allowing the foreign ownership or could take other actions to reduce our foreign
ownership percentage in order to avoid the loss of our licenses, we cannot assure you that we would be able to obtain
such a ruling or that any other actions we may take would be successful.
In addition, legislative or regulatory action could be taken which could limit our ability to use certain foreign
vendors to supply us with equipment, materials or other services that we use in our business operations. For
example, we have previously purchased equipment used in our wireless network from a Chinese company.
Members of the U.S. Congress and certain regulatory agencies have raised concerns about American companies
purchasing equipment and software from Chinese companies, including Chinese telecommunications companies,
including concerns relating to the U.S. trade imbalance with China, alleged violations of intellectual property rights
by Chinese companies and potential security risks posed by U.S. companies purchasing technical equipment and
software from Chinese companies. Any legislative or regulatory action that might restrict us from purchasing
equipment or software from Chinese or other foreign companies could require changes in our equipment
procurement activities.
The DMCA prohibits the circumvention of technological measures employed to protect a copyrighted work, or
access control. However, under the DMCA, the Copyright Office has the authority to exempt for three years certain
activities from copyright liability that otherwise might be prohibited by that statute. In July 2010, the Copyright
Office granted an exemption to the DMCA to allow circumvention of software locks and other firmware that
prohibit a wireless handset from connecting to a wireless network when such circumvention is accomplished for the
sole purpose of lawfully connecting the wireless handset to another wireless telephone network. The DMCA
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