Cricket Wireless 2012 Annual Report Download - page 41

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, or if we experience delays, disruptions or service degradation
during any transition to a new outsourcing provider or other vendor, our business could be severely disrupted. In
addition, the costs and time lags that can be associated with transitioning from one supplier or service provider to
another could cause further disruptions if we were required to replace the products or services of one or more
major suppliers or service providers with those from another source, especially if the replacement became
necessary on short notice. Any such disruptions could have a material adverse effect on our business, results of
operations and financial condition.
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 seek to enter into
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. We are currently a defendant in a matter brought by an
individual alleging that one of our wireless handsets caused brain cancer. 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, and the FCC recently indicated that it plans to gather additional data regarding wireless handset
emissions. The media has also reported incidents of handset battery malfunction, including reports of batteries
that have overheated.
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, rules or regulations that have been
and may be adopted in response to these risks could limit our ability to sell our wireless service.
System Failures, Security Breaches, Business Disruptions and Unauthorized Use or Interference with Our
Network or Other Systems Could Result in Higher Churn, Reduced Revenue and Increased Costs, and
Could Harm Our Reputation.
Our network and information technology (IT) infrastructure and the infrastructure of our vendors (including
systems supporting service activation, billing, point of sale, inventory management, customer care and financial
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