Sprint - Nextel 2013 Annual Report Download - page 21

Table of Contents
Degradation in network performance caused by compliance with government regulation, such as "net neutrality," loss of spectrum or additional rules
associated with the use of spectrum in any market could result in an inability to attract new subscribers or higher subscriber churn in that market, which could
adversely affect our revenues and results of operations. Furthermore, additional costs or fees imposed by governmental regulation could adversely affect our
revenues, future growth and results of operations.
Changes to the federal Lifeline Assistance Program could negatively impact the growth of the Assurance Wireless™ and wholesale subscriber base and the
profitability of the Assurance Wireless and wholesale business overall.
Virgin Mobile USA, L.P., our wholly
- owned subsidiary, offers service to low - income subscribers eligible for the federal Lifeline Assistance program
under the brand Assurance Wireless. Assurance Wireless provides a monthly discount to eligible subscribers in the form of free blocks of minutes and text
messages. Moreover, some of our wholesale customers also offer service to subscribers eligible for the federal Lifeline Assistance program. This discount is
subsidized by the Low
- Income Program of the federal USF and administered by the Universal Service Administrative Company. In 2012, the FCC adopted
reforms to the Low Income program to increase program effectiveness and efficiencies. More stringent eligibility and certification requirements have made it
more difficult for Lifeline service providers to sign up and retain Lifeline subscribers. Some regulators and legislators have questioned the structure of the
current program, and the FCC is continuing to review and implement measures to improve the program, including enforcement action involving alleged rule
violations, and roll
- out of the National Lifeline Accountability Database. Changes in the Lifeline program as a result of the ongoing FCC proceeding or new
legislation, or potential enforcement action, could negatively impact growth in the Assurance Wireless and wholesale subscriber base and/or the profitability of
the Assurance Wireless and wholesale business overall.
If our business partners and subscribers fail to meet their contractual obligations, it could negatively affect our results of operations.
The current economic environment has made it difficult for businesses and consumers to obtain credit, which could cause our suppliers, distributors
and subscribers to have problems meeting their contractual obligations with us. If our suppliers are unable to fulfill our orders or meet their contractual
obligations with us, we may not have the services or devices available to meet the needs of our current and future subscribers, which could cause us to lose
current and potential subscribers to other carriers. In addition, if our distributors are unable to stay in business, we could lose distribution points, which could
negatively affect our business and results of operations. If our subscribers are unable to pay their bills or potential subscribers feel they are unable to take on
additional financial obligations, they may be forced to forgo our services, which could negatively affect our results of operations.
Our reputation and business may be harmed and we may be subject to legal claims if there is loss, disclosure or misappropriation of or access to our
subscribers' or our own information or other breaches of our information security.
We make extensive use of online services and centralized data processing, including through third - party service providers. The secure maintenance
and transmission of customer information is an important element of our operations. Our information technology and other systems that maintain and transmit
customer information, including location or personal information, or those of service providers, may be compromised by a malicious third
- party penetration of
our network security, or that of a third
- party service provider, or impacted by advertent or inadvertent actions or inactions by our employees, or those of a third -
party service provider. Cyber attacks, which include the use of malware, computer viruses and other means for disruption or unauthorized access, have
increased in frequency, scope and potential harm in recent years. While, to date, we have not been subject to cyber attacks or other cyber incidents which,
individually or in the aggregate, have been material to our operations or financial condition, the preventive actions we take to reduce the risk of cyber incidents
and protect our information technology and networks may be insufficient to repel a major cyber attack in the future. As a result, our subscribers
’ information
may be lost, disclosed, accessed, used, corrupted, destroyed or taken without the subscribers
’ consent.
In addition, we and third
- party service providers process and maintain our proprietary business information and data related to our business - to -
business customers or suppliers. Our information technology and other systems that maintain and transmit this information, or those of service providers, may
also be compromised by a malicious third
- party penetration of our network security or that of a third - party service provider, or impacted
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