Sprint - Nextel 2008 Annual Report Download - page 12

Google and the Open Handset Alliance, an open access or net neutrality mandate that is not narrowly crafted
could adversely affect the operation of our broadband networks by constraining our ability to control the network
and protect our users from harm caused by other users and devices. The FCC has a pending proceeding to
consider whether all high-speed Internet access services, including wireless services, should be subject to such
“net neutrality” obligations. The imposition of any such obligations could result in significant costs to us.
International Regulation
The wireline services we provide outside the United States are subject to the regulatory jurisdiction of
foreign governments and international bodies. In general, this regulation requires that we obtain licenses for the
provision of wireline services and comply with certain government requirements.
Other Regulations
Truth in Billing and Consumer Protection
The FCC’s Truth in Billing rules generally require both wireline and wireless telecommunications
carriers, such as us, to provide full and fair disclosure of all charges on their bills, including brief, clear, and
non-misleading plain language descriptions of the services provided. In response to a petition from the National
Association of State Utility Consumer Advocates, the FCC found that state regulation of CMRS rates, including
line items on consumer bills, is preempted by federal statute. This decision was overturned by the 11th Circuit
Court of Appeals and the Supreme Court denied further appeal. As a consequence, states may attempt to impose
various regulations on the billing practices of wireless carriers. In addition, the FCC has opened a new
proceeding to address issues of consumer protection, including the use of early termination fees, and appropriate
state and federal roles. If this proceeding or individual state proceedings create changes in the Truth in Billing
rules, our billing and customer service costs could increase.
Access Charge Reform
ILECs and competitive local exchange carriers (CLECs) impose access charges for the origination and
termination of long distance calls upon wireless and long distance carriers, including our Wireless and Wireline
segments. Also, interconnected local carriers, including our Wireless segment, pay to each other reciprocal
compensation fees for terminating interconnected local calls. In addition, ILECs and CLECs impose special
access charges for their provision of dedicated facilities to other carriers, including both our Wireless and
Wireline segments. These fees and charges are a significant cost for our Wireless and Wireline segments. There
are ongoing proceedings at the FCC related to access charges and special access rates, which could impact our
costs for these services and the FCC has released recently a further Public Notice addressing special access
charges. We cannot predict when these proceedings will be completed.
Several ILECs have sought and received forbearance from FCC regulation of certain enterprise
broadband services. Specifically, the FCC granted forbearance to AT&T, ACS Anchorage, CenturyLink
(formerly Embarq), Frontier and Citizens from price regulation of their non-time division multiplexing (TDM)
based high-capacity special access services. Furthermore, in 2007, the U.S. Court of Appeals for the District of
Columbia found that Verizon was “deemed granted” forbearance from the same rules when the FCC deadlocked
on its similar forbearance petition, and that the “deemed grant” was unreviewable by the Court. Our request for
en banc review was denied. The appeal of the FCC’s rulings with respect to AT&T, Citizens, Frontier and
CenturyLink was denied. These deregulatory actions by the FCC could enable the ILECs to raise their special
access prices.
The FCC currently is considering measures to address “traffic pumping” by local exchange carriers
(LECs) predominantly in rural exchanges, that have very high access charges. Under traffic pumping
arrangements, the LECs partner with other entities to offer “free” or almost free services (such as conference
calling and chat lines) to end users; these services (and payments to the LECs’ partners) are financed through the
assessment of high access charges on the end user’s long distance or wireless carrier. Because of the peculiarities
of the FCC’s access rate rules for small rural carriers, these LECs are allowed to base their rates on low historic
demand levels rather than the vastly higher “pumped” demand levels, which enables the LEC to earn windfall
10