Metro PCS 2011 Annual Report Download - page 52

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We use a single provider for most of our domestic and international long distance services.
We currently use a single provider for most of the domestic and international long distance services that we provide to our
customers under a long-term contract. This arrangement requires us to send a significant portion of our domestic and
international long distance traffic to the provider for transmission and termination. If the provider experiences service outages
or other problems affecting its services, our customers may have difficulty completing domestic and international calls. As all
of our service plans include domestic long distance services, any such disruption could have a significant effect on our
customers which may cause them to become dissatisfied with our service. In addition, one of our service plans also includes
international long distance and a disruption in that service, or the cessation of service to destinations which our customers want
to call, could cause our customers to leave our service. As such, if the long distance services we provide do not meet the needs,
demands or expectations of our customer, substantial numbers of customers could be dissatisfied or leave our service or we
could have difficulty adding new customers, which could result in reduced growth, higher churn, lower revenues and reduced
profitability, all of which could have a material adverse effect on our business, financial condition and operating results.
We rely on third parties to provide products, software, applications and services that are integral to our business.
Sophisticated financial, management, information, network management, and billing systems are vital to our business. We
currently rely on internal systems and third-party vendors to develop and to provide all of these systems. We have entered into
agreements with third-party suppliers to provide products, software, applications, services and content that are integral to our
business, such as customer care, product distribution, content development, financial reporting, network management, network
infrastructure equipment and services and billing and payment processing. We purchase a substantial portion of the products,
software, services and content from only a few major suppliers and we generally rely on one or two key vendors in each area.
Some of these agreements may be terminated upon relatively short notice. 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, software, applications, and services by third-party vendors. Our right to use these systems is dependent on agreements
with third-party vendors and these systems may not perform as anticipated.
If our suppliers terminate their agreements with us, experience disruption or difficulty in raising necessary capital, go
bankrupt, or experience interruptions or other problems delivering quality products, software, applications or services to us on a
timely basis or at all, it may result in significantly increased prices or cause us to have difficulty providing services to or billing
our customers, developing, delivering, and deploying new products (including sufficient volume and types) and services and/or
upgrading, maintaining, improving our networks, generating accurate or timely financial reports and information, or providing
customer care. 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. Our reliance on others to provide essential products, software,
applications, and services on our behalf also gives us less control over the efficiency, timeliness and quality of these products,
software and services. The loss, termination or expiration of these agreements or our inability to renew them at all or on
favorable terms or negotiate agreements with other providers at comparable rates could have a material adverse effect on our
business, financial condition or operating results.
We rely heavily on indirect distribution channels.
Unlike many of our competitors that rely upon “big box” retailers, company owned stores, direct sales forces, and exclusive
partners, our business model utilizes and relies predominately on indirect distribution outlets including a range of exclusive and
non-exclusive local, regional and national mass-market dealers and retailers allowing us to reach the largest number of potential
customers in our metropolitan areas at a relatively low cost. Approximately 90% of the sales of our handsets and services occur
through these indirect distribution channels. Many of our dealers own and operate more than one location, sell wireless
broadband mobile services of other providers and may operate in more than one of our metropolitan areas. Because these third
party dealers are the primary contact between us and our customers in many instances, including accepting payment for our
services on our behalf, they play an important role in our ability to grow our business and in customer retention. With the recent
deterioration of the United States economy, employment rates, mortgage foreclosures, and the credit markets, which may
continue for the foreseeable future, some of our dealers and vendors have experienced, and may in the future, experience
problems and may be unable to continue their operations or secure funds for their continued operations or to grow their
operations. Further, due to the present economic conditions, we may be unable to find participants in our local markets that
would qualify or be able to open a location to replace closed operations. Moreover, since we rely on such third parties to
provide some of our services, any bankruptcy, termination, switch or disruption in service by such third parties or diminution in
the number of such third parties could be costly and affect operating efficiencies and our ability to attract and retain customers
which could have a material adverse effect on our business, financial condition and operating results.