Clearwire 2010 Annual Report Download - page 102

Expense recorded related to spectrum and operating leases was as follows (in thousands):
2010 2009 2008
Year Ended December 31,
Spectrum lease expense ............................... $222,560 $201,461 $72,923
Amortization of prepaid spectrum licenses ................. 57,433 57,898 17,109
Total spectrum lease expense ........................... $279,993 $259,359 $90,032
Operating lease expense ............................... $481,631 $245,351 $51,345
Other spectrum commitments — We have commitments to provide Clearwire services to certain lessors in
launched markets, and reimbursement of capital equipment and third-party service expenditures of the lessors over
the term of the lease. We accrue a monthly obligation for the services and equipment based on the total estimated
available service credits divided by the term of the lease. The obligation is reduced as actual invoices are presented
and paid to the lessors. During the years ended December 31, 2010, 2009 and 2008 we satisfied $987,000, $779,000
and $76,000, respectively, related to these commitments. The maximum remaining commitment at December 31,
2010 is $107.7 million and is expected to be incurred over the term of the related lease agreements, which generally
range from 15-30 years.
As of December 31, 2010, we have signed agreements to acquire approximately $9.9 million in new spectrum,
subject to closing conditions. These transactions are expected to be completed within the next twelve months.
Network equipment purchase obligations — We have purchase commitments with take-or-pay obligations
and/or volume commitments for equipment that are non-cancelable and outstanding purchase orders for network
equipment for which we believe delivery is likely to occur.
Other purchase obligations — We have purchase obligations that include minimum purchases we have
committed to purchase from suppliers over time and/or unconditional purchase obligations where we guarantee to
make a minimum payment to suppliers for goods and services regardless of whether suppliers fully deliver them.
They include, among other things, agreements for backhaul, subscriber devices and IT related and other services. In
addition, we are party to various arrangements that are conditional in nature and create an obligation to make
payments only upon the occurrence of certain events, such as the actual delivery and acceptance of products or
services. Because it is not possible to predict the timing or amounts that may be due under these conditional
arrangements, no such amounts have been included in the table above. The table above also excludes blanket
purchase order amounts where the orders are subject to cancellation or termination at our discretion or where the
quantity of goods or services to be purchased or the payment terms are unknown because such purchase orders are
not firm commitments.
AMDOCS Agreement — On March 31, 2009, we entered into a Customer Care and Billing Services
Agreement, as amended, which we refer to as the Amdocs Agreement, with Amdocs Software Systems Limited,
which we refer to as Amdocs, under which Amdocs will provide a customized customer care and billing platform,
which we refer to as the Platform, to us. In connection with the provision of these services and the establishment of
the Platform, Amdocs will also license certain of its software to us.
The initial term of the Amdocs Agreement is seven years. Under the terms of the Amdocs Agreement, we are
required to pay Amdocs licensing fees, implementation fees, monthly subscriber fees, and reimbursable expenses.
In addition, the Amdocs Agreement contains detailed terms governing implementation and maintenance of the
Platform; performance specifications; acceptance testing; charges, credits and payments; and warranties.
Legal proceedings — As more fully described below, we are involved in a variety of lawsuits, claims,
investigations and proceedings concerning intellectual property, business practices, commercial and other matters.
We determine whether we should accrue an estimated loss for a contingency in a particular legal proceeding by
assessing whether a loss is deemed probable and can be reasonably estimated. We reassess our views on estimated
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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)