Metro PCS 2007 Annual Report Download - page 40

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claims of infringement, or requiring us to purchase products and services from different vendors or not sell certain
products or services. If a claim is found to be valid or if we or our suppliers cannot successfully negotiate a required
royalty or license agreement, we could be forced to pay substantial damages, including potentially treble damages,
we could be subject to an injunction that could disrupt our business, prevent us from offering certain products or
services and cause us to incur losses of customers or revenues, any or all of which could be material and could
adversely affect our business, financial performance, operating results and the market price of our stock or notes.
Substantially all of our network infrastructure equipment is manufactured or provided by a single
infrastructure vendor and any failure by that vendor could result in a material adverse effect on us.
We have an agreement with Lucent Technologies, Inc., now known as Alcatel Lucent, to provide us with PCS
and AWS CDMA system products and services, including without limitation, wireless base stations, switches,
power, cable and transmission equipment and services with an initial term through the earlier to occur of (1)
December 31, 2011, or (2) the date on which we have purchased or licensed products, services and licensed
materials under the agreement equal to a sum which we currently expect to spend for products, services, or licensed
material from Alcatel Lucent from June 6, 2005 through December 31, 2011. The agreement does not cover any
other AWS or non-PCS spectrum we may acquire in the future, including any spectrum we may acquire in the
700 MHz band. The agreement provides for both exclusive and non-exclusive pricing for PCS and AWS CDMA
products and the agreement may be renewed at our option on an annual basis for three additional years after its
initial term concludes. Substantially all of our PCS and AWS network infrastructure equipment is manufactured or
provided by Alcatel Lucent. A substantial portion of the equipment manufactured or provided by Alcatel Lucent is
proprietary, which means that equipment and software from other manufacturers may not work with Alcatel
Lucent’ s equipment and software, or may require the expenditure of additional capital, which may be material. If
Alcatel Lucent ceases to develop, or substantially delays development of, new products or support existing
equipment and software, we may be required to spend significant amounts of money to replace such equipment and
software, may not be able to offer new products or service, and may not be able to compete effectively in our
markets. If we fail to continue purchasing our PCS and AWS CDMA products exclusively from Alcatel Lucent, we
may have to pay certain liquidated damages based on the difference in prices between exclusive and non-exclusive
prices, which would be material to us.
We rely on third-party suppliers to provide our customers and us with equipment, software and services that are
integral to our business, and any significant disruption in our relationship with these vendors could increase
our cost and affect our operating efficiencies.
We have entered into agreements with third-party suppliers to provide equipment, software and services that are
integral to our business, such as customer care, financial reporting, billing and payment processing. We purchase a
substantial portion of this equipment and services from only a few major suppliers and we generally rely on one key
vendor in each geographic area. One of our vendors, Verisign, has publicly announced that it plans to leave the
telecommunications services business, including the billing services business. Sophisticated financial, management,
information and billing systems are vital to our ability to monitor and control costs, bill customers, process customer
orders, provide customer service, produce reliable and accurate financial reports, and achieve operating efficiencies.
We currently rely on internal systems and third-party vendors to provide all of our information, financial, and
processing systems. Some of our billing, financial, customer service and management information systems have
been developed by third-parties and may not perform as anticipated. If these suppliers experience interruptions or
other problems delivering these products or services on a timely basis or at all, it may cause us to have difficulty
providing services to or billing our customers, developing and deploying new services and/or upgrading,
maintaining, improving our networks, or generating accurate or timely financial reports and information. If
alternative suppliers and vendors become necessary, we may not be able to obtain satisfactory and timely
replacement services on economically attractive terms, or at all. Some of these agreements may be terminated upon
relatively short notice. The loss, termination or expiration of these contracts or our inability to renew them at all or
on favorable terms or negotiate contracts with other providers at comparable rates could harm our business. Our
reliance on others to provide essential services on our behalf also gives us less control over the efficiency, timeliness
and quality of these services. In addition, our plans for developing and implementing our financial information and
billing systems rely to some extent on the design, development and delivery of products and services by third-party
vendors. Our right to use these systems is dependent on license agreements with third-party vendors. Since we rely
on third-party vendors to provide some of these services, any switch or disruption by our vendors could be costly
and affect operating efficiencies.