Metro PCS 2008 Annual Report Download - page 22

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spectrum to offer wireless services to compete directly with us. The FCC also has adopted an order that allows
companies to provide wireless services on an unlicensed basis in certain unused portions of the television spectrum.
Further, we also may face competition from providers of WiMax, which is the name given to a family of digital
technologies that are capable of supporting high-speed, long-range wireless services suitable for mobility
applications, using exclusively licensed or unlicensed spectrum. Additionally, we may compete in the future with
companies that offer new technologies and market other services we do not offer or may not be available with our
network technology, from our vendors or within our spectrum. Some of our competitors do or may bundle these
other services together with their wireless communications service, which customers may find more attractive.
Energy companies, utility companies and satellite companies also are expanding their services to offer
telecommunications services.
There continues to be substantial merger and acquisition activity in the wireless industry. We have in the past
acquired and may in the future acquire spectrum to enter new metropolitan areas. We also may in the future consider
acquisitions of or other business combinations with companies in addition to acquisitions of spectrum. For example,
we have in the past made a public offer to acquire Leap which we subsequently withdrew. In the future, there could
be discussions between us and Leap or others regarding potential transactions between the companies.
Many of our wireless, wireline, cable and other competitors’ resources are substantially greater, and their market
shares are larger, than ours. Additionally, many of our wireless competitors offer larger coverage areas and
nationwide calling plans that do not give rise to additional roaming charges for their customers. The competitive
pressures of the wireless broadband mobile services industry have caused certain competitors to offer service plans
with growing bundles of minutes of use at lower per minute prices or price plans with unlimited nights and
weekends and could lead them, and have led some of our competitors, to offer unlimited service plans similar to
ours. Our competitors’ plans could adversely affect our ability to maintain our pricing, market penetration, growth
and customer retention. In addition, large national wireless broadband mobile services carriers have been reluctant to
enter into roaming agreements at attractive rates with smaller and regional carriers like us, which limits our ability to
serve certain market segments and recent FCC actions to promote automatic roaming do not resolve these
difficulties. Moreover, the policies of the United States government have made, and may continue to make,
additional spectrum for wireless services available in each of our markets, which may increase the number of our
competitors and enhance our competitors’ ability to offer additional plans and services. Further, since many of our
competitors are large companies, they have on occasion been able to convince handset manufacturers to provide the
newest handsets exclusively to them. Our competitors also can afford to heavily subsidize the price of the
subscriber’s handset because they have greater resources than us and may require their customers to enter into long
term contracts. The FCC has indicated it may examine, and Congress is considering legislation that may limit, early
termination fees for the long term contracts used by national wireless broadband mobile services carriers which
could prompt them to reduce the subsidization of handsets and limit their long term contracts.
All of these factors may detract from our ability to attract customers from certain market segments.
As competition develops, we may add additional features or services to our existing service plans, or make other
changes to our service plans.
Seasonality
Our customer activity is influenced by seasonal effects related to traditional retail selling periods and other factors
that arise from our target customer base. Net customer additions are typically strongest in the first and fourth
calendar quarters of the year. Softening of sales and increased customer turnover, or churn, in the second and third
calendar quarters of the year usually combine to result in fewer net customer additions during the second and third
calendar quarters. However, sales activity and churn can be strongly affected by the launch of new and surrounding
metropolitan areas and promotional activity, which could reduce or outweigh certain seasonal effects. For a more
detailed discussion of seasonality in our business, please read “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Seasonality.”
Inflation
We do not believe that inflation has had a material effect on our operations.