Sprint - Nextel 2011 Annual Report Download - page 18

Table of Contents
those offered by us, all of which would negatively affect our average revenue per subscriber, subscriber churn, ability to attract new subscribers, and operating costs. For
example, our prepaid services compete with several carriers, including Metro PCS and Leap Wireless, which offer competitively-priced prepaid calling plans that include
unlimited long distance, texting and, in some cases, unlimited data (including 4G). In addition, we may lose subscribers of our higher priced plans to our prepaid
offerings.
The success of our network modernization plan, Network Vision, will depend on the timing, extent and cost of implementation; the performance of third-parties and
related parties; upgrade requirements; and the availability and reliability of the various technologies required to provide such modernization.
We must continually invest in our wireless network in order to continually improve our wireless service to meet the increasing demand for usage of our data
and other non-voice services and remain competitive. Improvements in our service depend on many factors, including continued access to and deployment of adequate
spectrum. We must maintain and expand our network capacity and coverage as well as the associated wireline network needed to transport voice and data between cell
sites. If we are unable to obtain access to additional spectrum to increase capacity or to deploy the services subscribers desire on a timely basis or at acceptable costs while
maintaining network quality levels, our ability to retain and attract subscribers could be materially adversely affected, which would negatively impact our operating
margins.
We are implementing Network Vision, which is a multi-year infrastructure initiative intended to reduce operating costs and provide subscribers with an
enhanced network experience by improving voice quality, coverage and data speeds, while enhancing network flexibility and improving environmental sustainability. The
focus of the plan is on upgrading the existing Sprint platform and providing flexibility for new 4G technologies, including LTE. If Network Vision does not provide a
competitive LTE network, an enhanced network experience, or is unable to provide Sprint platform push-to-talk capabilities of comparable quality to the push-to-talk
capabilities of our existing Nextel platform or our competitors' similar services, our ability to provide enhanced wireless services to our subscribers, to retain and attract
subscribers, and to maintain and grow our subscriber revenues could be adversely affected.
Using a new and sophisticated technology on a very large scale entails risks. For example, deployment of new technology, including LTE, may adversely
affect the performance of existing services on our networks. Should implementation of our upgraded network be delayed or costs exceed expected amounts, our margins
would be adversely affected and such effects could be material. Should the delivery of services expected to be deployed on our upgraded network be delayed due to
technological constraints, performance of third-party suppliers, zoning and leasing restrictions or permit issues, or other reasons, the cost of providing such services could
become higher than expected, which could result in higher costs to customers, potentially resulting in decisions to purchase services from our competitors which would
adversely affect our revenues, profitability and cash flow from operations.
We plan to migrate existing Nextel platform subscribers to other offerings on our Sprint platform, including future offerings on our multi-mode network, such
as Sprint Direct Connect®. The successful deployment and market acceptance of Network Vision is expected to result in incremental charges during the period of
implementation including, but not limited to, an increase in depreciation and amortization associated with existing assets, due to changes in our estimates of the remaining
useful lives of long-lived assets, and the expected timing of asset retirement obligations. Our ability to transition subscribers from the Nextel platform to offerings on the
Sprint platform is dependent, in part, upon the success of Sprint Direct Connect® and subscriber satisfaction with this technology.
Failure to complete development, testing and deployment of new technology that supports new services, including LTE, could affect our ability to compete in the
industry. The deployment of new technology and new service offerings could result in network degradation or the loss of subscribers. In addition, the technology we
currently use, including WiMAX, 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 those services. Successful development and implementation of technology upgrades depend, in part, on the
willingness of third parties to develop new applications or devices in a timely manner. We may not successfully complete the development and rollout of new technology
and related features or services in a timely manner, and they may not be widely accepted by our subscribers or may not be profitable, in which case we could not recover
our investment in
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