Metro PCS 2008 Annual Report Download - page 28

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expenses with respect to the AWS-1 licenses, but would not receive interest or any compensation for our clearing,
construction, and other activities on the spectrum. We have constructed our Las Vegas, Philadelphia and New York
metropolitan networks on AWS-1 spectrum and we only have AWS-1 spectrum in these markets. If we lost our
AWS-1 licenses, we would cease being able to provide service in those metropolitan areas where we have already
launched service and would not be able to launch service in those markets where we have not yet launched service.
We are unable at this time to predict the likely outcome of the challenges to the New DE Requirements or any
further appeal and unable to predict the impact on the licenses granted in Auction 66 and Auction 73. We also are
unable to predict whether the litigation will result in any changes to the New DE Requirements or to the DE
program generally, and, if there are changes, whether or not any such changes will be beneficial or detrimental to
our interests.
In connection with the changes to the DE rules, the FCC also is considering whether additional restrictions should
be adopted in its DE program. We do not know what additional changes, if any, will be made to the DE program as
a result of this further rulemaking. Based on the FCC’s prior rulings, we do not expect any further changes in the DE
rules to be applied retroactively to Royal Street, but we cannot give any assurance that the FCC will not give any
new rules retroactive effect.
General Regulatory Obligations
The Communications Act and the FCC’s rules impose a number of requirements on wireless broadband mobile
services licensees, which affect our cost of doing business and that could have a material effect on our business,
operations, and financial results. Further, a failure to meet or maintain compliance with the Communications Act
and the FCC’s rules could subject us to fines, forfeitures, penalties, license revocations, or other sanctions, including
the imposition of mandatory reporting requirements, limitation on our ability to participate in future FCC auctions or
acquisitions of spectrum, and compliance programs and corporate monitors.
CMRS classification. Our wireless broadband mobile services are classified at the federal level as CMRS. The
FCC regulates providers of CMRS services as common carriers, which subjects us to many requirements under the
Communications Act and FCC rules and regulations. The FCC, however, has exempted CMRS services from some
typical common carrier regulations, such as tariff and interstate certification filings, which allows us to respond
more quickly to competition in the marketplace. The FCC also is required by federal law to reduce unreasonable
disparities in the regulatory treatment of similar wireless broadband mobile services, such as cellular, broadband
PCS, AWS, 700 MHz, and Enhanced Specialized Mobile Radio, or ESMR, services, and federal law preempts state
rate and entry regulation of CMRS providers.
The FCC permits wireless broadband mobile services licensees to offer fixed services on a co-primary basis along
with mobile services. This facilitates the provision of wireless local loop service by CMRS licensees using wireless
links to provide local telephone service. The extent of lawful state regulation of such wireless local loop service is
undetermined. While we do not presently offer a fixed service, our network can accommodate such an offering. We
continue to evaluate our service offerings, and may offer a fixed service at some point in the future.
Spectrum clearing. Spectrum allocated for AWS currently is utilized by a variety of categories of commercial and
governmental users. To foster the orderly clearing of the spectrum, the FCC adopted a transition and cost sharing
plan pursuant to which incumbent non-governmental users could be reimbursed for relocating out of the band and
the costs of relocation would be shared by AWS-1 licensees benefiting from the relocation. The FCC has established
a plan where the AWS-1 licensee and the incumbent non-governmental user are to negotiate voluntarily for three
years and then, if no agreement has been reached, the incumbent licensee is subject to mandatory relocation
procedures in which the AWS-1 licensee can relocate the incumbent non-governmental licensee at the AWS-1
licensee’s expense. The spectrum allocated for AWS-1 also currently is utilized by certain governmental users,
many of whom are required over time to relocate from the AWS-1 spectrum. However, in some cases, not all
governmental users are obligated to relocate and in other cases incumbent users are not obligated to relocate for
some period of time, with varying time frames for relocation.
Spectrum allocated for 700 MHz currently is occupied by existing analog television broadcast licensees and
certain wireless microphone users. Licensees granted 700 MHz licenses are not obligated to pay for the relocation of
existing analog television broadcast licensees. By federal law, all existing analog television broadcast licenses are
obligated to vacate the 700 MHz spectrum by the digital television transition date, currently scheduled for June 12,
2009. We cannot be certain that Congress will not alter the present digital television transition date to a later date to