Sprint - Nextel 2012 Annual Report Download - page 10

Table of Contents
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:
We hold 1.9 GHz, 800 MHz, and 900 MHz FCC licenses authorizing the use of radio frequency spectrum to deploy our wireless services.
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 which we have met 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.
800 MHz and 900 MHz License Conditions
Spectrum in our 800 MHz and 900 MHz bands originally was licensed in small groups of channels, therefore we hold thousands of these
licenses, which together allow us to provide coverage across much of the continental United States. Our 800 MHz and 900 MHz licenses are subject to
requirements that we meet population coverage benchmarks tied to the initial license grant dates. To date, we have met all of the construction
requirements applicable to these licenses, except in the case of licenses that are not material to our business. Our 800 MHz and 900 MHz licenses have
ten
- year terms, at the end of which each license is subject to renewal requirements that are similar to those for our 1.9 GHz licenses.
Spectrum Reconfiguration Obligations
In 2004, the FCC adopted a Report and Order that included new rules regarding interference in the 800 MHz band and a comprehensive plan
to reconfigure the 800 MHz band (the “Report and Order”
). The Report and Order provides for the exchange of a portion of our 800 MHz FCC spectrum
licenses, and requires us to fund the cost incurred by public safety systems and other incumbent licensees to reconfigure the 800 MHz spectrum band.
Also, in exchange, we received licenses for 10 MHz of nationwide spectrum in the 1.9 GHz band; however, we were required to relocate and reimburse
the incumbent licensees in this band for their costs of relocation to another band designated by the FCC. We completed all of our 1.9 GHz incumbent
relocation and reimbursement obligations in the second half of 2010.
The minimum cash obligation under the Report and Order is
$2.8 billion . We are, however, obligated to pay the full amount of the costs
relating to the reconfiguration plan, even if those costs exceed $2.8 billion . As
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grant licenses in the 800 MHz band, 900 MHz band, 1.9 GHz PCS band, and license renewals;
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rule on assignments and transfers of control of FCC licenses, and leases covering our use of FCC licenses held by other persons and
organizations;
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govern the interconnection of our networks with other wireless and wireline carriers;
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establish access and universal service funding provisions;
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impose rules related to unauthorized use of and access to customer information;
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impose fines and forfeitures for violations of FCC rules;
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regulate the technical standards governing wireless services; and
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impose other obligations that it determines to be in the public interest