Cricket Wireless 2011 Annual Report Download - page 42

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. The World Health Organization’s International Agency for
Research of Cancer has also stated that exposure to wireless handsets may be carcinogenic. 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. 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. Generally, there are multiple sources for the types of products and services we purchase or
use. However, we currently rely on one key vendor for billing services, a single vendor to support the platform
for our Muve Music service, a single vendor for the operation of our network operations center, a limited number
of vendors for device forecasting, fulfillment and related tasks, a limited number of vendors for voice and data
communications transport services and a limited number of vendors for payment processing services. In addition,
we are currently considering expanding the role of a current vendor to assist us with device forecasting,
fulfillment and related tasks.
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 or our business, results of
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