Cricket Wireless 2010 Annual Report Download - page 9

for our new Android and Blackberry devices as well as new Cricket Broadband service plans with flat monthly rates
that vary depending upon the targeted amount of data that a customer expects to use during the month. We
eliminated the free first month of service we previously provided to new customers of our Cricket Wireless and
Cricket Broadband services that purchased a handset or modem and instead decreased the retail prices of many of
our devices. We also eliminated certain late fees we previously charged to customers who reinstated their service
after having failed to pay their monthly bill on time. Further, we introduced “smartphones” and other new handsets
and devices. We believe that these new service plans, products and other changes will be attractive to customers and
help improve our competitive positioning in the marketplace.
We have designed our unlimited Cricket products and services to appeal to customers who are seeking increased
value from their wireless services. According to the December 2010 Yankee Group North American Mobile Device
Forecast, U.S. wireless penetration was approximately 95% at December 31, 2010. The majority of wireless customers
in the U.S. have traditionally subscribed to post-pay services that may require credit approval and a contractual
commitment from the subscriber for a period of at least one year and may include overage charges for call volumes in
excess of a specified maximum. We believe that many wireless customers are increasingly price-sensitive and prefer not
to enter into fixed-term contracts. As a result, we believe our services appeal strongly to this customer segment. Our
customers have tended to be younger, have lower incomes and include a greater percentage of ethnic minorities. Our
internal customer surveys indicate that approximately three-quarters of our Cricket Wireless customers use our service
as their sole phone service and a substantial percentage of our Cricket Wireless customers use our service as their
primary phone service. For the year ended December 31, 2010, our customers used our Cricket Wireless service for an
average of approximately 1,500 minutes per month, which was substantially above the U.S. wireless national carrier
customer average. We believe that we are able to cost-effectively attract and serve customers seeking increased value
because of our high-quality, low-cost network and low customer acquisition and operating costs.
As a result of the attractive value proposition we offer to customers, we have pursued opportunities within
recent years to continue to strengthen and expand our business. These activities have included the broadening of our
portfolio of products and services, including through the introduction of our Cricket Broadband and Cricket PAYGo
services, our “all-inclusive” rate plans and our new Muve Music service. We have also pursued activities to
strengthen and expand the available network for Cricket products and services. In recent years, new Cricket markets
were launched in Chicago, Philadelphia, Washington, D.C. and Lake Charles covering approximately 24.2 million
POPs, and we enhanced network coverage and capacity in our existing markets. In addition, as discussed above, we
have entered into agreements with other wireless carriers to provide Cricket customers with nationwide voice and
data roaming services over an extended service area covering approximately 285 million POPs. We have also
entered into a wholesale agreement which permits us to offer Cricket services outside of our current network
footprint. We also currently plan to deploy next-generation LTE network technology over the next few years, with a
commercial trial market scheduled to be launched in late 2011. Other future business expansion activities could
include the launch of additional new product and service offerings, the acquisition of additional spectrum through
private transactions or FCC auctions, the build-out and launch of new markets, entering into partnerships with
others or the acquisition of other wireless communications companies or complementary businesses. We expect to
continue to look for opportunities to optimize the value of our spectrum portfolio. Because some of the licenses that
we and Savary Island hold include large regional areas covering both rural and metropolitan communities, we and
Savary Island may seek to partner with others, sell some of this spectrum or pursue alternative products or services
to utilize or benefit from the spectrum not otherwise currently used for Cricket service. We intend to be disciplined
as we pursue any expansion efforts and to remain focused on our position as a low-cost leader in wireless
telecommunications.
Cricket Business Strategy
•Target Customers in the Value Segment. Our Cricket products and services are designed to appeal to
customers who are seeking increased value. We provide unlimited nationwide voice, data and mobile
broadband wireless services with predictable billing without requiring customers to enter into long-term
commitments or pass a credit check. The foundation of our value proposition is our network, which provides
wireless services to our customers at a lower cost to us than many of our competitors. In addition, we seek to
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