Qualcomm 2011 Annual Report Download - page 26

risks due to a lack of attention associated with the use of wireless devices while driving. Legislation that may be adopted in response to these
concerns or adverse news or findings about safety risks could reduce demand for our products and those of our licensees and customers in the
United States as well as in foreign countries.
We are subject to government regulations. Our business may suffer as a result of changes in laws or regulations, our failure or inability to
comply with laws or regulations or adverse rulings in enforcement or other proceedings.
National, state and local environmental laws and regulations affect our operations around the world. These laws may make it more expensive
to manufacture, have manufactured and sell products. It may also be difficult to comply with laws and regulations in a timely manner, and we
may not have compliant products available in the quantities requested by our customers, which may have an adverse impact on our results of
operations. There is also the potential for higher costs driven by environmental regulations. Our costs could increase if our vendors (e.g., third-
party manufacturers or utility companies) pass on their costs to us.
As part of the development and commercialization of our IMOD display technology, we are operating both a development and a production
fabrication facility. The development and commercialization of IMOD display prototypes is a complex and precise process involving restricted
materials subject to environmental and safety regulations. Our failure or inability to comply with existing or future environmental and safety
regulations could result in significant remediation liabilities, the imposition of fines and/or the suspension or termination of development and
production activities.
Our products and services, and those of our customers and licensees, are subject to various regulations, including FCC regulations in the
United States and other international regulations, as well as the specifications of international, national and regional standards bodies. The
adoption of new laws or regulations, changes in the regulation of our activities, or exclusion or limitation of our technology or products by a
government or standards body, could have an adverse effect on our business, including, among other factors, changes in laws, policies, practices
or enforcement affecting trade, foreign investments, licensing practices, spectrum license issuance, adoption of standards, the provision of
wireless device subsidies by wireless operators to their customers, taxation, environmental protection, loans and employment.
We hold licenses to use spectrum in the United States and the United Kingdom. All of these licenses are subject to a variety of ongoing
regulatory proceedings in these respective countries. Additionally, certain of our licenses in the United States are subject to FCC minimum
build-out requirements to be met at various dates beginning in June 2013. In the event that we fail to meet a FCC build-out requirement for a
given license, the FCC can impose sanctions, including a monetary fine, a reduction in our licensed territory and/or revocation of our license.
On December 20, 2010, we announced that we have agreed to sell substantially all of our United States spectrum licenses to AT&T, subject
to the satisfaction of customary closing conditions, including approval by the FCC. We, together with AT&T, filed an application for approval of
the sale with the FCC on January 13, 2011. On August 8, 2011, the Chief of the FCC Wireless Telecommunications Bureau sent a letter to us
and AT&T stating that the FCC had decided to coordinate its review of our transaction with its review of the proposed merger of AT&T and T-
Mobile USA, although the FCC reserved the right to treat the two transactions independently at a later date, and the FCC declined to formally
consolidate its proceedings over the two transactions. Our application remains pending before the FCC. Our agreement with AT&T terminates
on January 13, 2012; however, we or AT&T can extend the agreement for another 90 days thereafter if the FCC approval has not been received
by then. We may not receive FCC approval before the agreement expires. If we do receive FCC approval before the agreement expires, the FCC
could impose conditions on its approval. Depending on the conditions imposed, AT&T may not be obligated to close the sale in light of the
conditions. If we do not receive FCC approval for the sale of these licenses pursuant to this agreement or if the sale does not close because of the
conditions imposed by the FCC on its approval, we may not be able to obtain a comparable price from another party, enter into a transaction that
would obtain FCC approval or meet the applicable build-out requirements for those licenses.
In June 2010, we won a 20 MHz slot of Broadband Wireless Access (BWA) spectrum in four regions (known as telecom circles) in India as
a result of the completion of the BWA spectrum auction for which we made a $1.1 billion payment ($994 million at September 25, 2011). We
created four wholly-owned subsidiaries, and on August 9, 2010, each subsidiary filed an application to obtain a license to operate a wireless
network on this spectrum for one of the respective regions. Thereafter, two Indian companies each acquired 13% of each subsidiary. On
September 21, 2011, we received a letter dated September 7, 2011 from the Government of India’s Department of Telecommunications (DoT)
(the DoT Letter) notifying us that our applications had been rejected based on its conclusion that the applications were filed after the deadline
and that we were restricted to filing one application rather than four. On September 27, 2011, we filed a petition with the Telecom Disputes
Settlement and Appellate Tribunal (TDSAT) seeking to overturn the DoT Letter. On September 28, 2011, the TDSAT issued an order granting
us interim relief, pending a final determination of our case, directing the DoT to (i) not issue the spectrum that has been earmarked to us to
anyone else and (ii) not forfeit or appropriate the payment that we made for the spectrum. On October 10, 2011, one of our subsidiaries received
a letter from the DoT offering to issue it a license that would cover all of India, including the four regions for which we won spectrum at the June
2010 auction, assuming that the subsidiary met certain requirements by
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