Sprint - Nextel 2015 Annual Report Download - page 10

Table of Contents
to the Telecom Act. Further restrictions on the pro-competitive aspects of the Telecom Act could adversely affect Sprint’s operations.
International Regulation
The wireline services we provide outside the U.S. are subject to the regulatory jurisdiction of foreign governments and international bodies. In general,
we are required to obtain licenses to provide wireline services and comply with certain government requirements.
Other Regulations
Network Neutrality
On February 26, 2015, the FCC issued an order reclassifying broadband Internet access service as a telecommunications service subject to Title II of
the Communications Act and promulgated new net neutrality rules applicable to both mobile and fixed service providers. The rules prohibit: (1) blocking of lawful
content, applications, services and non-harmful devices; (2) impairing or degrading Internet traffic on the basis of content, application, or service, or use of a non-
harmful device; and (3) prioritization or favoring of some network traffic over other traffic either in exchange for consideration (monetary or otherwise) from a
third party, or to benefit an affiliated entity. All of these prohibitions are subject to a "reasonable network management" exception. The rules also include a
“transparency” rule that requires us to disclose information about our commercial terms, performance characteristics, and network practices. In addition, the order
established a future conduct rule, to be applied on a case by case basis, prohibiting broadband Internet access providers from unreasonably interfering with or
disadvantaging end users’ ability to use the Internet to access lawful content, applications, service, or devices of their choice, or edge providers’ ability to make
such content applications, services, or devices available to end users. Depending upon the interpretation and application of these rules, we may incur additional
costs or be limited in the services we can provide.
Truth in Billing and Consumer Protection
The FCC's Truth in Billing rules require both wireline and wireless telecommunications carriers, such as us, to provide full and fair disclosure of all
charges on their bills, including brief, clear, and non-misleading plain language descriptions of the services provided. The FCC has opened several proceedings to
address issues of consumer protection, including the use of early termination fees, "bill shock" ( i.e., overage charges for voice, data and text usage) and has
proposed new rules to address cramming. The wireless industry has proactively addressed many of these consumer issues by adopting industry best practices, such
as the addition of free notifications regarding voice, data, messaging and international roaming usage. If these FCC proceedings or individual state proceedings
create changes in the Truth in Billing rules, our billing and customer service costs could increase.
Access Charges
ILECs and competitive local exchange carriers (CLECs) impose access charges for the origination and termination of calls upon wireless and long
distance carriers, including our Wireless and Wireline segments. In addition, ILECs and CLECs charge other carriers special access charges for access to dedicated
facilities that are paid by both our Wireless and Wireline segments. These fees and charges are a significant cost for our Wireless and Wireline segments and
continue to be the subject of interpretation and litigation.
The FCC also has initiated a proceeding to consider whether special access pricing rules need to be changed, and whether the terms and conditions
governing the provision of special access are just and reasonable. As a part of that proceeding, the FCC initiated a mandatory data collection effort, which was
completed in early 2015. In May of 2016, the FCC released an Order and Further Notice of Proposed Rule Making which would create a new regulatory
framework governing the rates, terms and conditions for the provision of TDM and Ethernet services in non-competitive markets. These changes could reduce
Sprint’s costs of providing service in some areas. The FCC is expected to complete this rule making in 2016.
Universal Service
Communications carriers contribute to and receive support from various Universal Service Funds (USF) 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. Similarly, many states have established their own USFs to which we contribute. The FCC has
considered changing its USF contribution methodology, which could impact the amount of our assessments.
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