Sprint - Nextel 2013 Annual Report Download - page 14

Table of Contents
market. The FCC also has initiated a further notice of proposed rulemaking to consider whether special access pricing flexibility rules need to be changed, and
whether the terms and conditions governing the provision of special access are just and reasonable. In 2013, the FCC issued a proposed mandatory data
collection effort which is expected to be completed in 2014. We continue to advocate for special access reform but cannot predict when these proceedings will
be completed or the outcome of these proceedings.
Universal Service Reform
Communications carriers contribute to and receive support from various USFs established by the FCC and many states. The federal USF program
funds services provided in high
- cost areas, reduced - rate services to low - income consumers, and discounted communications and Internet services for schools,
libraries and rural health care facilities. The USF is funded from assessments on communications providers, including our Wireless and Wireline segments,
based on FCC
- prescribed contribution factors applicable to our interstate and international end - user revenues from telecommunications services and
interconnected VoIP services. Similarly, many states have established their own USFs to which we contribute. The FCC has considered changing its USF
contribution methodology, and may replace the interstate telecommunications revenue
- based assessment with one based on either connections (telephone
numbers or connections to the public network) or by expanding the revenue base to include data revenues. The latter approach in particular could impact the
amount of our assessments. The FCC issued a notice of proposed rulemaking on USF reform in April 2012, but has not announced an estimated timeline for
adoption of an order in this proceeding. In addition, the FCC issued a decision redefining the manner in which carriers certify their compliance with USF
obligations on facilities used in the provision of information services beginning in 2014. The FCC's new service
- by - service certification process may increase
our cost of complying with the FCC's USF obligations and/or our USF contribution obligations in some circumstances. This order has been challenged on
appeal and various carriers have sought reconsideration of the decision before the FCC. As permitted, we assess subscribers a fee to recover our USF
contributions.
Virgin Mobile was designated as a Lifeline
- only Eligible Telecom Carrier (ETC) in 41 jurisdictions as of December 31, 2013 , and provides service
under our Assurance Wireless brand. Lifeline ETC applications are planned in other jurisdictions as well. Changes in the Lifeline program and enforcement
actions by the FCC and other regulatory/legislative bodies could negatively impact growth in the Assurance Wireless and wholesale subscriber base and/or the
profitability of the Assurance Wireless and wholesale business overall.
Electronic Surveillance Obligations
The CALEA requires telecommunications carriers, including us, to modify equipment, facilities and services to allow for authorized electronic
surveillance based on either industry or FCC standards. Our CALEA obligations have been extended to data and VoIP networks, and we are in compliance with
these requirements. Certain laws and regulations require that we assist various government agencies with electronic surveillance of communications and
provide records concerning those communications. We do not disclose customer information to the government or assist government agencies in electronic
surveillance unless we have been provided a lawful request for such information. If our obligations under these laws and regulations were to change or were to
become the focus of any inquiry or investigation, it could require us to incur additional costs and expenses, which could adversely affect our financial condition
or results of operation.
Environmental Compliance
Our environmental compliance and remediation obligations relate primarily to the operation of standby power generators, batteries and fuel storage
for our telecommunications equipment. These obligations require compliance with storage and related standards, obtaining of permits and occasional
remediation. Although we cannot assess with certainty the impact of any future compliance and remediation obligations, we do not believe that any such
expenditures will adversely affect our financial condition or results of operations.
Patents, Trademarks and Licenses
We own numerous patents, patent applications, service marks, trademarks and other intellectual property in the U.S. and other countries, including
"Sprint®," "
Nextel
®," "Direct Connect®," "Boost Mobile®," and "Assurance Wireless®." Our services often use the intellectual property of others, such as
licensed software, and we often license copyrights, patents and trademarks of others, like "Virgin Mobile." In total, these licenses and our copyrights, patents,
trademarks and service marks are of material importance to our business. Generally, our trademarks and
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