Earthlink 2008 Annual Report Download - page 294

the installation and subsequent licensing of the Company’s wireless data platform and terminal systems pursuant to the Master
Agreement (the “Wireless Internet Order”).
Effective October 2005, the Operating Company entered into an amendment to the Wireless Internet
Order (the “WI Amendment”). Aggregate fees under the Wireless Internet Solution Agreement and the WI Agreement were $10.7 million, of
which $7.5 million and $3.2 million were paid to SKT during the periods ended December 31, 2005 and 2006 respectively. Services under the
Wireless Internet Agreement and the WI Agreement commenced in August 2005 and were principally being capitalized as equipment additions
as prescribed under SOP 98-1. At December 31, 2006, gross capitalized costs of $10.7 million associated with the Wireless Internet Agreement
and the WI Agreement were included in property and equipment on the Company’s balance sheets.
In August 2005, the Operating Company entered into a software license and services agreement with SKT for the installation and
subsequent licensing of the Company’s Customer Care and Billing System (“CCBS”) pursuant to the Master Agreement (the “CCBS Order”).
Effective October 2005, the Operating Company entered into an amendment to the CCBS Order (the “CCBS Amendment”). Aggregate fees
under the CCBS Order and CCBS Agreement were $14.1 million, of which $4.2 million, $5.7 million and $4.2 million were paid to SKT during
the periods ended December 31, 2005, 2006 and 2007, respectively. Services under the CCBS Order and CCBS Agreement commenced in
August 2005 and were principally being capitalized as equipment additions as prescribed under SOP 98-1. At December 31, 2006 and 2007,
gross capitalized costs of $14.1 million and $14.1 million, respectively, associated with the CCBS Order and CCBS Agreement were reflected in
property and equipment on the Company’s balance sheets.
Effective May 2006, the Operating Company entered into a technical system support and services agreement with SKT whereby SKT
would provide technical and system operational support on CCBS beginning in May 2006 through December 2006 for an aggregate fee of $1.7
million (the “May 2006 Agreement”). The aggregate $1.7 million in fees for services under the May 2006 Agreement are included in the
Company’s statements of operations for the period ended December 31, 2006, of which $1.3 million and $0.4 million were paid to SKT during
the periods ended December 31, 2006 and 2007 respectively.
Effective August 2006, the Operating Company entered into a change request agreement with SKT whereby SKT expanded the scope
of technical functionality to the CCBS system under the then-existing Order, as amended, for an aggregate fee of $2.5 million (the “CCBS 1.0
Change Request”). The Company accounted for the CCBS 1.0 Change Request under SOP 98-1 and capitalized costs of $2.5 million were
included in property and equipment on the Company’s balance sheet at December 31, 2006 and 2007, of which $2.5 million was paid to SKT
during the period ending December 31, 2007.
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