Metro PCS 2011 Annual Report Download - page 79

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Compensation expense is recognized over the requisite service period for the entire award, which is generally the
maximum vesting period of the award.
As share-based compensation expense under ASC 718 is based on awards ultimately expected to vest, it is reduced for
estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent
periods if actual forfeitures differ from those estimates. We recognized stock-based compensation expense of approximately
$41.8 million, $46.5 million and $47.8 million for the years ended December 31, 2011, 2010 and 2009, respectively.
Customer Recognition and Disconnect Policies
Until January 2010, when a new customer subscribed to our service, the first month of service was included with the
handset purchase. Beginning in January 2010, the first month of service is no longer included in the handset purchase. Under
GAAP, we are required to allocate the purchase price to the handset and to the wireless service revenue. Generally, the amount
allocated to the handset will be less than our cost, and this difference is included in cost per gross addition, or CPGA. We
recognize new customers as gross customer additions upon activation of service. Prior to January 2010, we offered our
customers the Metro Promise, which allowed a customer to return a newly purchased handset for a full refund prior to the
earlier of 30 days or 60 minutes of use. Beginning in January 2010, we revised our Metro Promise policy to allow a customer
to return a newly purchased handset for a full refund within 7 days of purchase and less than 60 minutes of use. Customers
who returned their phones under the Metro Promise are reflected as a reduction to gross customer additions. Customers'
monthly service payments are due in advance every month. Our customers must pay their monthly service amount by the
payment date or their service will be suspended, or hotlined, and the customer will not be able to make or receive calls on our
network. However, a hotlined customer is still able to make E-911 calls in the event of an emergency. There is no service grace
period. Any call attempted by a hotlined customer is routed directly to our interactive voice response system and customer
service center in order to arrange payment. If the customer pays the amount due within 30 days of the original payment date
then the customer's service is restored. If a hotlined customer does not pay the amount due within 30 days of the payment date
the account is disconnected and counted as churn. Once an account is disconnected we may charge a reconnect fee upon
reactivation to reestablish service and the revenue associated with this fee is deferred and recognized over the estimated life of
the customer.
Revenues
We derive our revenues from the following sources:
Service. We sell wireless broadband mobile services. The various types of service revenues associated with wireless
broadband mobile for our customers include monthly recurring charges for airtime, one-time or monthly recurring charges for
optional features (including nationwide long distance, unlimited international long distance, unlimited text messaging,
international text messaging, voicemail, downloads, ringtones, games and content applications, unlimited directory assistance,
enhanced directory assistance, ring back tones, mobile Internet browsing, location based services, mobile instant messaging,
navigation, video streaming, video on demand, push e-mail and nationwide roaming) and charges for long distance service.
Service revenues also include intercarrier compensation and nonrecurring reactivation service charges to customers.
Equipment. We sell wireless broadband mobile handsets and accessories that are used by our customers in connection
with our wireless broadband mobile services. This equipment is also sold to our independent retailers to facilitate distribution to
our customers.
Costs and Expenses
Our costs and expenses include:
Cost of Service. The major components of our cost of service are:
• Cell Site Costs. We incur expenses for the rent of cell sites, network facilities, engineering operations, field
technicians and related utility and maintenance charges.
• Interconnection Costs. We pay other telecommunications companies and third-party providers for leased
facilities and usage-based charges for transporting and terminating network traffic from our cell sites and
switching centers. We have pre-negotiated rates for transport and termination of calls originated by our
customers, including negotiated interconnection agreements with relevant exchange carriers in each of our
service areas.