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Expense recorded related to spectrum and operating leases was as follows (in thousands):
Spectrum lease expense
Amortization of prepaid spectrum licenses
Total spectrum lease expense
Operating lease expense
Year Ended December 31,
2010
$ 222,560
57,433
$ 279,993
$ 481,631
2009
$ 201,461
57,898
$ 259,359
$ 245,351
2008
$ 72,923
17,109
$ 90,032
$ 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
Table of Contents CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(CONTINUED)
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