Sprint - Nextel 2008 Annual Report Download - page 8

change, which could adversely affect us in the future. The following discussion describes some of the major
communications-related regulations that affect us, but numerous other substantive areas of regulation not
discussed here may also influence our business.
Regulation and Wireless Operations
The FCC regulates the licensing, construction, operation, acquisition and sale of our wireless operations
and wireless spectrum holdings. FCC requirements impose operating and other restrictions on our wireless
operations that increase our costs. The FCC does not currently regulate rates for services offered by CMRS
providers, and states are legally preempted from regulating such rates and entry into any market, although states
may regulate other terms and conditions. The Communications Act and FCC rules also require the FCC’s prior
approval of the assignment or transfer of control of an FCC license, although the FCC’s rules permit spectrum
lease arrangements for a range of wireless radio service licenses, including our licenses, with FCC oversight.
Approval from the Federal Trade Commission and the Department of Justice, as well as state or local regulatory
authorities, also may be required if we sell or acquire spectrum interests. The FCC sets rules, regulations and
policies to, among other things:
‰grant licenses in the 800 megahertz (MHz) band, 900 MHz band, 1.9 gigahertz (GHz) personal
communications services (PCS) band, and license renewals;
‰rule on assignments and transfers of control of FCC licenses, and leases covering our use of FCC
licenses held by other persons and organizations;
‰govern the interconnection of our CDMA and iDEN networks with other wireless and wireline
carriers;
‰establish access and universal service funding provisions;
‰impose rules related to unauthorized use of and access to customer information;
‰impose fines and forfeitures for violations of FCC rules;
‰regulate the technical standards governing wireless services; and
‰impose other obligations that it determines to be in the public interest.
We hold several kinds of licenses to deploy our services: 1.9 GHz PCS licenses utilized in the CDMA
network, and 800 MHz and 900 MHz licenses utilized in the iDEN network. We also hold 1.9 GHz and other
FCC licenses that are not currently being utilized, but which we intend to use in the future consistent with
customer demand and our obligations as a licensee.
1.9 GHz PCS License Conditions
All PCS licenses are granted for ten-year terms. For purposes of issuing PCS licenses, the FCC utilizes
major trading areas (MTAs) and basic trading areas (BTAs) with several BTAs making up each MTA. Each
license is subject to build-out requirements, and the FCC may revoke a license after a hearing if the build-out or
other applicable requirements have not been met. We have met these requirements in all of our MTA and BTA
markets.
If applicable build-out conditions are met, these licenses may be renewed for additional ten-year terms.
Renewal applications are not subject to auctions. If a renewal application is challenged, the FCC grants a
preference commonly referred to as a license renewal expectancy to the applicant if the applicant can
demonstrate that it has provided “substantial service” during the past license term and has substantially complied
with applicable FCC rules and policies and the Communications Act. The licenses for the 10 MHz of spectrum in
the 1.9 GHz band that we received as part of the FCC’s Report and Order, described below, have ten-year terms
and are not subject to specific build-out conditions, but are subject to renewal requirements that are similar to
those for our PCS licenses.
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