Sprint - Nextel 2012 Annual Report Download - page 9

Table of Contents
network, making it easy for businesses to adapt their network to changing business requirements. In addition to providing services to our business
customers, the wireline network is carrying increasing amounts of voice and data traffic for our Wireless segment as a result of growing usage by our
wireless subscribers.
We continue to assess the portfolio of services provided by our Wireline business and are focusing our efforts on IP
- based services and
de - emphasizing stand - alone voice services and non - IP - based data services. We also provide wholesale voice local and long distance services to cable
MSOs, which they offer as part of their bundled service offerings, as well as traditional voice and data services for their enterprise use. However, the
digital voice services we provide to some of our cable MSOs have become large enough in scale that they have decided to in
- source these services.
We also continue to provide voice services to residential consumers. Our Wireline segment markets and sells its services primarily through direct sales
representatives.
Competition
Our 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 in the provision of wireline services. Over the past few
years, our long distance voice services have experienced an industry
- wide trend of lower revenue from lower prices and increased competition from
other wireline and wireless communications companies, as well as cable MSOs and Internet service providers.
Some competitors are targeting the high
- end data market and are offering deeply discounted rates in exchange for high - volume traffic as
they attempt to utilize excess capacity in their networks. In addition, we face increasing competition from other wireless and IP
- based service
providers. Many carriers, including cable companies, are competing in the residential and small business markets by offering bundled packages of
both local and long distance services. Competition in long distance is based on price and pricing plans, the types of services offered, customer
service, and communications quality, reliability and availability. Our ability to compete successfully will depend on our ability to anticipate and
respond to various competitive factors affecting the industry, including new services that may be introduced, changes in consumer preferences,
demographic trends, economic conditions and pricing strategies. See Item 1A, “Risk Factors—Consolidation and competition in the wholesale market
for wireline services, as well as consolidation of our roaming partners and access providers used for wireless services, could adversely affect our
revenues and profitability” and “—The blurring of the traditional dividing lines among long distance, local, wireless, video and Internet services
contributes to increased competition.”
Legislative and Regulatory Developments
Overview
Communications services are subject to regulation at the federal level by the Federal Communications Commission (FCC) and in certain
states by public utilities commissions (PUCs). The Communications Act of 1934 (Communications Act) preempts states from regulating the rates or
entry of commercial mobile radio service (CMRS) providers, such as those in our Wireless segment, and imposes licensing and technical requirements,
including provisions related to the acquisition, assignment or transfer of radio licenses. Depending upon state law, CMRS providers can be subject to
state regulation of other terms and conditions of service. Our Wireline segment also is subject to federal and state regulation.
The following is a summary of the regulatory environment in which we operate and does not describe all present and proposed federal,
state and local legislation and regulations affecting the communications industry. Some legislation and regulations are the subject of judicial
proceedings, legislative hearings and administrative proceedings that could change the way our industry operates. We cannot predict the outcome of
any of these matters or their potential impact on our business. See Item 1A, “Risk Factors—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.” Regulation in the communications industry is subject to change, which could
adversely affect us in the future. The following discussion describes some of the significant 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
6