Cricket Wireless 2010 Annual Report Download - page 65

None of our NOL carryforwards are being considered as an uncertain tax position or disclosed as an
unrecognized tax benefit. Any carryforwards that expire prior to utilization as a result of a Section 382 limitation
will be removed from deferred tax assets with a corresponding reduction to valuation allowance. Since we currently
maintain a full valuation allowance against our federal and state NOL carryforwards, we do not expect that any
possible limitation would have a current impact on our results of operations.
Our unrecognized income tax benefits and uncertain tax positions, as well as any associated interest and
penalties, are recorded through income tax expense; however, such amounts have not been significant in any period.
All of our tax years from 1998 to 2010 remain open to examination by federal and state taxing authorities. In July
2009, the federal examination of our 2005 tax year, which was limited in scope, was concluded and the results did
not have a material impact on our consolidated financial statements.
Customer Recognition and Disconnect Policies
We recognize a new customer as a gross addition in the month that he or she activates a Cricket service. We
recognize a gross customer addition for each Cricket Wireless, Cricket Broadband and Cricket PAYGo line of
service activated. The customer must pay his or her service amount by the payment due date or his or her service will
be suspended. Cricket Wireless customers, however, may elect to purchase our BridgePay service, which would
entitle them to an additional seven days of service. When service is suspended, the customer is generally not able to
make or receive calls or access the internet via our Cricket Broadband service, as applicable. Any call attempted by
a suspended Cricket Wireless customer is routed directly to our customer service center in order to arrange payment.
For our Cricket Wireless and Cricket Broadband services, if a new customer does not pay all amounts due on his or
her first bill within 30 days of the due date, the account is disconnected and deducted from gross customer additions
during the month in which the customer’s service was discontinued. If a Cricket Wireless or Cricket Broadband
customer has made payment on his or her first bill and in a subsequent month does not pay all amounts due within
30 days of the due date, the account is disconnected and counted as churn. For Cricket Wireless customers who have
elected to use BridgePay to receive an additional seven days of service, those customers must still pay all amounts
otherwise due on their Cricket Wireless account within 30 days of the original due date or their account will also be
disconnected and counted as churn. Pay-in-advance customers who ask to terminate their service are disconnected
when their paid service period ends. Customers of our Cricket PAYGo service are generally disconnected from
service and counted as churn if they have not replenished or “topped up” their account within 60 days after the end
of their current term of service.
Customer turnover, frequently referred to as churn, is an important business metric in the telecommunications
industry because it can have significant financial effects. Because we do not require customers to sign fixed-term
contracts or pass a credit check, our service is available to a broad customer base and, as a result, some of our
customers may be more likely to have their service terminated due to an inability to pay.
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