US Cellular 2009 Annual Report Download - page 13

The total market population and penetration measures for consolidated operating markets apply to
markets in which U.S. Cellular provides wireless service to customers. For comparison purposes,
total market population and penetration related to all consolidated markets in which U.S. Cellular
owns an interest were 89,712,000 and 6.8%, 83,014,000 and 7.5%, and 82,371,000 and 7.4% as of
December 31, 2009, 2008 and 2007, respectively.
A wholly owned subsidiary of U.S. Cellular is a limited partner in King Street Wireless, L.P. (‘‘King
Street Wireless’’), an entity which participated in the auction of wireless spectrum in the
700 megahertz band designated by the FCC as Auction 73. At the conclusion of the auction on
March 20, 2008, King Street Wireless was the provisional winning bidder with respect to
152 licenses. These 152 license areas cover portions of 27 states and are in markets which are
either adjacent to or overlap current U.S. Cellular license areas. On December 30, 2009, the FCC
granted the licenses to King Street Wireless which increased total market population of consolidated
markets by 4,549,000 in 2009, but had no impact on the population of consolidated operating
markets.
As a result of exchange transactions with AT&T that closed in August 2003, U.S. Cellular obtained
rights to acquire additional licenses, and all except one of such licenses have been acquired and
are reflected in the total market population of consolidated markets as of December 31, 2009.
During 2009, U.S. Cellular acquired licenses pursuant to this exchange agreement which increased
total market population of consolidated markets by 1,392,000, but had no impact on the population
of consolidated operating markets. The acquisition of these licenses did not require U.S. Cellular to
provide any consideration to AT&T beyond that already provided in conjunction with the August
2003 exchange transaction and, thus, did not cause a change in U.S. Cellular’s Licenses balance in
2009. U.S. Cellular continues to have a right under the August 2003 exchange agreement to acquire
a majority interest in one additional license; that right does not have a stated expiration date.
(3) U.S. Cellular’s customer base consists of the following types of customers:
2009 2008 2007
Customers on postpay service plans in which the end user
is a customer of U.S. Cellular (‘‘postpay customers’’) . . . 5,482,000 5,420,000 5,269,000
Customers on prepay service plans in which the end user
is a customer of U.S. Cellular (‘‘prepay customers’’) .... 262,000 287,000 295,000
Total retail customers ............................ 5,744,000 5,707,000 5,564,000
End user customers acquired through U.S. Cellular’s
agreements with third parties (‘‘reseller customers’’) .... 397,000 489,000 538,000
Total customers ................................ 6,141,000 6,196,000 6,102,000
(4) Part-time employees are calculated at 70% of full-time employees. Prior year numbers were adjusted
to conform to current year presentation.
(5) Amounts include results for U.S. Cellular’s consolidated operating markets for the period January 1
through December 31; operating markets acquired during a particular period are included as of the
acquisition date.
(6) ‘‘Net retail customer additions’’ represents the number of net customers added to U.S. Cellular’s
retail customer base through its marketing distribution channels; this measure excludes activity
related to reseller customers and customers transferred through acquisitions, divestitures or
exchanges. ‘‘Net customer additions (losses)’’ represents the number of net customers added to
(deducted from) U.S. Cellular’s overall customer base through its marketing distribution channels;
this measure includes activity related to reseller customers but excludes activity related to customers
transferred through acquisitions, divestitures or exchanges.
(7) Management uses this measurement to assess the amount of service revenue that U.S. Cellular
generates each month on a per customer basis. Variances in this measurement are monitored and
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