Sprint - Nextel 2011 Annual Report Download - page 22

Table of Contents
operations. Clearwire reported that it will need substantial additional capital over the intermediate and long-term. Clearwire's ability, however, to raise sufficient
additional capital on acceptable terms, or at all, remains uncertain. In addition, Clearwire reported that if it fails to obtain additional capital, its business prospects,
financial condition and results of operations will likely be materially and adversely affected, and it will be forced to consider all available alternatives. Additional declines
in the value of Clearwire may require us to evaluate the decline in relation to the carrying value of our investment in Clearwire. A conclusion by us that additional
declines in the value of Clearwire are other than temporary could result in an additional impairment, which could be material.
We have entered into agreements with unrelated parties for certain business operations. Any difficulties experienced in these arrangements could result in additional
expense, loss of subscribers and revenue, interruption of our services or a delay in the roll-out of new technology.
We have entered into agreements with unrelated parties for the day-to-day execution of services, provisioning and maintenance for our wireless and wireline
networks, for the implementation of Network Vision, and for the development and maintenance of certain software systems necessary for the operation of our business.
We also have agreements with unrelated parties to provide customer service and related support to our wireless subscribers and outsourced aspects of our wireline
network and back office functions to unrelated parties. In addition, we have sublease agreements with unrelated parties for space on communications towers. As a result,
we must rely on unrelated parties to perform certain of our operations and, in certain circumstances, interface with our subscribers. If these unrelated parties were unable
to perform to our requirements, we would have to pursue alternative strategies to provide these services and that could result in delays, interruptions, additional expenses
and loss of subscribers.
The products and services utilized by us and our suppliers and service providers may infringe on intellectual property rights owned by others.
Some of our products and services use intellectual property that we own. We also purchase products from suppliers, including device suppliers, and outsource
services to service providers, including billing and customer care functions, that incorporate or utilize intellectual property. We and some of our suppliers and service
providers have received, and may receive in the future, assertions and claims from third parties that the products or software utilized by us or our suppliers and service
providers infringe on the patents or other intellectual property rights of these third parties. These claims could require us or an infringing supplier or service provider to
cease certain activities or to cease selling the relevant products and services. These claims can be time-consuming and costly to defend, and divert management resources.
If these claims are successful, we could be forced to pay significant damages or stop selling certain products or services or stop using certain trademarks, which could
have an adverse effect on our results of operations.
Government regulation could adversely affect our prospects and results of operations; the FCC and state regulatory commissions may adopt new regulations or take
other actions that could adversely affect our business prospects, future growth or results of operations.
The FCC and other federal, state and local, as well as international, governmental authorities have jurisdiction over our business and could adopt regulations or
take other actions that would adversely affect our business prospects or results of operations.
The licensing, construction, operation, sale and interconnection arrangements of wireless telecommunications systems are regulated by the FCC and,
depending on the jurisdiction, international, state and local regulatory agencies. In particular, the FCC imposes significant regulation on licensees of wireless spectrum
with respect to how radio spectrum is used by licensees, the nature of the services that licensees may offer and how the services may be offered, and resolution of issues o
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interference between spectrum bands.
The FCC grants wireless licenses for terms of generally ten years that are subject to renewal and revocation. There is no guarantee that our licenses will be
renewed. Failure to comply with FCC requirements in a given license area could result in revocation of the license for that license area.
Depending on their outcome, the FCC's proceedings regarding regulation of special access rates could affect the rates paid by our Wireless and Wireline
segments for special access services in the future. Similarly, depending on their outcome, the FCC's proceedings on the regulatory classification of VoIP services could
affect the intercarrier compensation rates and the level of USF contributions paid by us.
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