Sprint - Nextel 2012 Annual Report Download - page 24

Table of Contents
Consolidation and competition in the wholesale market for wireline services, as well as consolidation of Sprint's roaming partners and access
providers used for wireless services, could adversely affect Sprint's revenues and profitability.
Sprint's Wireline segment competes with AT&T, Verizon Communications, CenturyLink, Level 3 Communications Inc., other major local
incumbent operating companies, and cable operators, as well as a host of smaller competitors. Some of these companies have high
- capacity, IP - based
fiber - optic networks capable of supporting large amounts of voice and data traffic. Some of these companies claim certain cost structure advantages
that, among other factors, may allow them to offer services at lower prices than Sprint can. In addition, consolidation by these companies could lead to
fewer companies controlling access to more cell sites, enabling them to control usage and rates, which could negatively affect Sprint's revenues and
profitability.
Sprint provides wholesale services under long
- term contracts to cable television operators which enable these operators to provide
consumer and business digital telephone services. These contracts may not be renewed as they expire. Increased competition and the significant
increase in capacity resulting from new technologies and networks may drive already low prices down further. AT&T and Verizon Communications
continue to be Sprint's two largest competitors in the domestic long distance communications market. Sprint and other long distance carriers depend
heavily on local access facilities obtained from ILECs to serve Sprint's long distance subscribers, and payments to ILECs for these facilities are a
significant cost of service for Sprint's Wireline segment. The long distance operations of AT&T and Verizon Communications have cost and
operational advantages with respect to these access facilities because those carriers serve significant geographic areas, including many large urban
areas, as the ILECs.
In addition, Sprint's Wireless segment could be adversely affected by changes in rates and access fees that result from consolidation of
Sprint's roaming partners and access providers, which could negatively affect Sprint's revenues and profitability.
The blurring of the traditional dividing lines among long distance, local, wireless, video and Internet services contributes to increased
competition.
The traditional dividing lines among long distance, local, wireless, video and Internet services are increasingly becoming blurred. In
addition, the dividing lines between voice and data are also becoming blurred. Through mergers, joint ventures and various service expansion
strategies, major providers are striving to provide integrated services in many of the markets Sprint serves. This trend is also reflected in changes in
the regulatory environment that have encouraged competition and the offering of integrated services. Sprint expects competition to intensify as a
result of the entrance of new competitors or the expansion of services offered by existing competitors, and the rapid development of new technologies,
products and services. Sprint cannot predict which of many possible future technologies, products, or services will be important to maintain Sprint's
competitive position or what expenditures Sprint will be required to make in order to develop and provide these technologies, products or services. To
the extent Sprint does not keep pace with technological advances or fails to timely respond to changes in the competitive environment affecting
Sprint's industry, Sprint could lose market share or experience a decline in revenue, cash flows and net income. As a result of the financial strength and
benefits of scale enjoyed by some of Sprint's competitors, they may be able to offer services at lower prices than Sprint can, thereby adversely
affecting Sprint's revenues, growth and profitability.
Subscriber dissatisfaction, including possible litigation, related to the Nextel Platform shut
- down could have a material adverse effect on our
results of operations.
Sprint is migrating existing Nextel platform subscribers to other offerings on the Sprint platform, including existing or future offerings on
Sprint's multi
- mode network, such as Sprint Direct Connect. Sprint's ability to maintain existing subscriber relationships depends significantly on the
quality of our services, our reputation, and the continuity of service. Subscriber dissatisfaction with the shut
- down of services on the Nextel platform
or of alternative services or damage to our reputation as a result of the shut
- down could result in a loss of subscribers or
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changes in governmental regulations or approvals; and
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perceptions of general market conditions in the technology and communications industries, the U.S. economy and global market
conditions.