Cricket Wireless 2012 Annual Report Download - page 27

future action by Congress, the FCC, or the states in which we have been designated as an ETC could reduce or
eliminate the amount of Lifeline funding we receive for providing wireless service to certain qualifying low income
customers, which could result in the loss of subscribers and the associated service revenue.
In November 2011, the FCC adopted an order establishing new universal service support mechanisms
intended to support both voice and broadband services in high-cost areas, which would be funded through a new
Connect America Fund, or CAF. Over time, these CAF mechanisms will replace legacy high-cost support
mechanisms that currently provide funding to wireless carriers and other ETCs. The new CAF mechanisms place
greater limits on the total amount of high-cost support available to wireless ETCs (as opposed to wireline
incumbents). At the same time, the CAF mechanisms will reduce or eliminate available support in certain high-
cost areas that benefit from competition. The CAF program has not yet been implemented fully, and the FCC has
sought further public comment with respect to certain details of its implementation. For example, the FCC has
stated its intent to distribute funds to wireless ETCs through a competitive auction mechanism but has not yet
finalized the details of such a program. In addition, the FCC order establishing the CAF program is the subject of
pending petitions for reconsideration filed with the FCC, as well as pending judicial appeals. As such, there is
uncertainty as to how and when the CAF program will be implemented fully and how such implementation could
impact wireless carriers and competition in local and national markets.
We also are subject, or potentially subject, to numerous additional rules and requirements, including universal
service obligations; number portability requirements; number pooling rules; rules governing billing, subscriber
privacy and customer proprietary network information; roaming obligations; rules that require wireless service
providers to configure their networks to facilitate electronic surveillance by law enforcement officials; rate
averaging and integration requirements; rules governing spam, telemarketing and truth-in-billing; and rules
requiring us to offer equipment and services that are accessible to and usable by persons with disabilities, among
others. There are also pending proceedings exploring the imposition of various types of nondiscrimination, open
access and broadband management obligations on our devices and networks; the prohibition of device exclusivity;
the possible re-imposition of bright-line spectrum aggregation requirements; further regulation of special access
used for wireless backhaul services; and the effects of the siting of communications towers on migratory birds,
among others. Some of these requirements and pending proceedings (of which the foregoing examples are not an
exhaustive list) pose technical and operational challenges to which we, and the industry as a whole, have not yet
developed clear solutions. These requirements generally are the subject of pending FCC or judicial proceedings, and
we are unable to predict how they may affect our business, financial condition or results of operations.
State, Local and Other Regulation
Congress has given the FCC the authority to preempt states from regulating rates and entry into commercial
mobile radio service. The FCC, to date, has denied all state petitions to regulate the rates charged by commercial
mobile radio service providers. State and local governments are permitted to manage public rights of way and
can require fair and reasonable compensation from telecommunications providers, on a competitively neutral and
nondiscriminatory basis, for the use of such rights of way by telecommunications carriers, including commercial
mobile radio service providers, so long as the compensation required is publicly disclosed by the state or local
government. States may also impose competitively neutral requirements that are necessary for universal service,
to protect the public safety and welfare, to ensure continued service quality and to safeguard the rights of
consumers. While a state may not impose requirements that effectively function as barriers to entry or create a
competitive disadvantage, the scope of state authority to maintain existing requirements or to adopt new
requirements is unclear. State legislators, public utility commissions and other state agencies are becoming
increasingly active in efforts to regulate wireless carriers and the service they provide, including efforts to
conserve numbering resources and efforts aimed at regulating service quality, advertising, warranties and returns,
rebates, and other consumer protection measures.
The location and construction of our wireless antennas and base stations and the towers we lease on which such
antennas are located are subject to FCC and Federal Aviation Administration regulations, federal, state and local
environmental and historic preservation regulations, and state and local zoning, land use or other requirements.
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