Sprint - Nextel 2013 Annual Report Download - page 12

Table of Contents
Preservation Offices, which can make it more difficult and expensive to deploy facilities. The FCC has, however, imposed a tower siting "shot clock" that
requires local authorities to address tower applications within a specific timeframe, which can assist carriers in more rapid deployment of towers. The FCC
antenna structure registration process also imposes public notice requirements when plans are made for construction of, or modification to, antenna structures
required to be registered with the FCC, potentially adding to the delays and burdens associated with tower siting, including potential challenges from special
interest groups. To the extent governmental agencies continue to impose additional requirements like this on the tower siting process, the time and cost to
construct cell towers could be negatively impacted.
State and Local Regulation
While the Communications Act generally preempts state and local governments from regulating entry of, or the rates charged by, wireless carriers,
certain state PUCs and local governments regulate customer billing, termination of service arrangements, advertising, certification of operation, use of handsets
when driving, service quality, sales practices, management of customer call records and protected information and many other areas. Also, some state attorneys
general have become more active in bringing lawsuits related to the sales practices and services of wireless carriers. Varying practices among the states may
make it more difficult for us to implement national sales and marketing programs. States also may impose their own universal service support requirements on
wireless and other communications carriers, similar to the contribution requirements that have been established by the FCC, and some states are requiring
wireless carriers to help fund additional programs, including the implementation of E911 and the provision of intrastate relay services for consumers who are
hearing impaired. We anticipate that these trends will continue to require us to devote legal and other resources to work with the states to respond to their
concerns while attempting to minimize any new regulation and enforcement actions that could increase our costs of doing business.
Regulation and Wireline Operations
Competitive Local Service
The Telecommunications Act of 1996 (Telecom Act), which was the first comprehensive update of the Communications Act, was designed to
promote competition, and it eliminated legal and regulatory barriers for entry into local and long distance communications markets. It also required incumbent
local exchange carriers (ILECs) to allow resale of specified local services at wholesale rates, negotiate interconnection agreements, provide nondiscriminatory
access to certain unbundled network elements and allow co
- location of interconnection equipment by competitors. The rules implementing the Telecom Act
continue to be interpreted by the courts, state PUCs and the FCC. Thus, the scope of future local competition remains uncertain. These local competition rules
impact us because we provide wholesale services to cable television companies that wish to compete in the local voice telephony market. Our communications
and back
- office services enable the cable companies to provide competitive local and long distance telephone services primarily in a VoIP format to their end -
use customers.
Voice over Internet Protocol
We offer VoIP
- based services to business subscribers and transport VoIP - originated traffic for various cable companies. The FCC issued an order in
late 2010 reforming, among other things, its regulatory structure governing intercarrier compensation and again declined to classify VoIP services as either
telecommunications services or information services. However, it prescribed the rates applicable to the exchange of traffic between a VoIP provider and a local
exchange carrier providing service on the public switched telephone network (PSTN). The rate for toll VoIP
- PSTN traffic is the interstate access rate applicable
to non
- VoIP traffic regardless of whether the traffic is interstate or intrastate. The rate for non - toll VoIP - PSTN traffic is the applicable reciprocal compensation
rate. These rates will be reduced over the next several years as the industry transitions to bill
- and - keep methodology for the exchange of all traffic. Providers of
interconnected VoIP will continue to be required to contribute to the federal Universal Service Fund (USF), offer E911 emergency calling capabilities to their
subscribers, and comply with the electronic surveillance obligations set forth in the Communications Assistance for Law Enforcement Act (CALEA). Because
we provide VoIP services and transport VoIP
- originated traffic, the FCC's rate prescription decision is expected to reduce our costs for such traffic over time as
well as reduce disputes between carriers that often result in litigation.
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