Sprint - Nextel 2007 Annual Report Download - page 25

One of the primary differentiating features of our Nextel-branded service is the two-way walkie-talkie
service available on our iDEN network. A number of wireless equipment vendors, including Motorola, which
supplies equipment for our Nextel-branded service, have begun to offer wireless equipment that is capable of
providing walkie-talkie services that are designed to compete with our walkie-talkie services. Several of our
competitors have introduced handsets that are capable of providing walkie-talkie services. If these competitors’
services are perceived to be or become, or if any such services introduced in the future are, comparable to our
Nextel-branded walkie-talkie services, a key competitive advantage of our Nextel service would be reduced,
which in turn could adversely affect our business.
Failure to improve wireless subscriber service and failure to continue to enhance the quality and
features of our wireless networks and meet capacity requirements of our subscriber base could impair
our financial performance and adversely affect our results of operations.
We must continually make investments and incur costs in order to improve our wireless subscriber service
and remain competitive. In connection with our continuing enhancement of the quality of our wireless networks
and related services, we:
• maintain and expand the capacity and coverage of our networks;
• secure sufficient transmitter and receiver sites and obtain zoning and construction approvals or permits
at appropriate locations;
• obtain adequate quantities of system infrastructure equipment and handsets, and related accessories to
meet subscriber demand; and
• obtain additional spectrum in some or all of our markets, if and when necessary.
Network enhancements may not occur as scheduled or at the cost that we have estimated. Delays or failure
to add network capacity, failure to maintain roaming agreements or increased costs of adding capacity, could
limit our ability to satisfy our wireless subscribers, resulting in decreased revenues. Even if we continuously
upgrade our wireless networks, there can be no assurance that existing subscribers will not prefer features of our
competitors and switch wireless providers.
Consolidation and competition in the wholesale market for wireline services could adversely affect
our revenues and profitability.
Our Wireline segment competes with AT&T, Verizon, Qwest Communications, Level 3 Communications,
and cable operators, as well as a host of smaller competitors, in the provision of wireline services. Some of these
companies have built high-capacity, IP-based fiber-optic networks capable of supporting large amounts of voice
and data traffic. These companies claim certain cost structure advantages which, among other factors, may allow
them to maintain profitability while offering services at a price below that which we can offer profitably.
Increased competition and the significant increase in capacity resulting from new technologies and networks may
drive already low prices down further. AT&T and Verizon, as a result of their acquisitions, continue to be our
two largest competitors in the domestic long distance communications market. We and other long distance
carriers depend heavily on local access facilities obtained from ILECs to serve our long distance customers, and
payments to ILECs for these facilities are a significant cost of service for our Wireline segment. The long
distance operations of AT&T and Verizon have cost and operational advantages with respect to these access
facilities because those carriers serve significant geographic areas, including many large urban areas, as the
incumbent local carrier.
Failure to complete development, testing and deployment of new technology that supports new
services could affect our ability to compete in the industry. In addition, the technology we use may
place us at a competitive disadvantage.
We develop, test and deploy various new technologies and support systems intended to enhance our
competitiveness by both supporting new services and features and reducing the costs associated with providing
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