Wireless Survey

Entertainment, media and communications
Beyond the horizon*

2008 Global Wireless Industry Survey
Introduction
The PricewaterhouseCoopers (PwC) 2008 Wireless Industry Survey was led
by Paul Rees, PwC’s Global Infocomm Leader and Pierre-Alain Sur, PwC’s US
wireless industry leader, and represents the efforts and ideas of many members
of our Entertainment, Media and Communications Industry group. The principal
contributors were: Shara Slattery, Sarah McWilliams, Rob Glasgow, Tom Leonard
Jr., Mackenzie Welch, Michael Riordan, Jamal Douglas, Kristen Lybrand, Taylor
Cloninger, Erik Hönig, Constantin Vogel, Brian Caisman, Timothy Schmitt, Tyler
Furness, Peter Osvaldik, Karen Plunkett, Dominic Wong, and Keri Dickey.
PwC would especially like to thank the companies that participated in and
contributed topics for the survey. Their candid responses and support of this
project are very much appreciated. Together we have created valuable insight
into the operations of and challenges faced by today’s wireless industry on a
global basis.
About this survey

The PricewaterhouseCoopers Wireless Industry Survey is an annual publication
that covers the financial and operational reporting policies and practices of
wireless telecommunications service providers. The 2008 survey includes
companies in the U.S., Canada, Europe, Asia-Pacific, and South America. The
survey is conducted by PwC’s Entertainment, Media and Communications
Industry group, which prepares the survey questions, solicits company
participation and compiles and analyzes the survey results. Companies participate
voluntarily and the individual survey results are kept confidential by PwC.
PwC has taken reasonable steps to ensure that the information contained in
this publication accurately summarizes the survey responses received from the
participating companies; however, PwC has not performed any procedures to
verify the accuracy of the survey responses. The survey provides a summary
of the participating companies’ financial and operational reporting policies and
practices and does not purport to render accounting guidance nor any other
type of professional advice. Should such advice be required, please contact your
local PricewaterhouseCoopers office.
You can access our worldwide office directory at www.pwc.com.

Contents
01
Executive summary
05
Participating company information
23
Revenue recognition
63
Performance measures
93
Property, plant and equipment
149
Legal and regulatory
Executive summary
We are pleased to publish the first annual

PricewaterhouseCoopers Global Wireless Industry Survey.
This survey is a continuation of the past 11 years of the North
American Survey and for 2008 has been expanded to include
global wireless operators. The expansion of the survey globally
also reflects the ever-growing importance of International
Financial Reporting Standards (IFRS) and the United States and
Canada adoption in the future of IFRS. The global survey will
provide the opportunity for carriers to compare and contrast
the two frameworks. This year’s survey begins to articulate
differences. The goal of the survey is to help companies
understand industry performance measures and their evolution
over time, policies and procedures utilized by responding
companies, and to help companies better understand the
comparability of financial statements within the industry. We
also have a goal of addressing general financial accounting
and reporting practices in the industry and identifying emerging
trends or issues.
The survey has become a resource for many wireless

communication industry executives and has evolved with
the changing businesses and trends of the industry. We have
provided a highlight of this year’s survey results in the executive
summary. We hope you find the 2008 PricewaterhouseCoopers
Global Wireless Industry Survey informative, pertinent,
and stimulating.
PricewaterhouseCoopers 2008 Global Wireless Industry Survey |1

Executive summary
The 2008 survey results reflect the participation of nine U.S. companies, including
six of the largest wireless operators, plus four Canadian wireless companies
and five carriers in the rest of world. Because of the breadth of coverage and
participation, we believe that the survey provides the most representative
summary of industry accounting policies and practices available on a global basis.
In the 2007 North American Wireless Survey, and the surveys before that, we
examined wireless carriers in the U.S. and Canada only. This year, we expanded
our population of carriers and responding companies to include wireless carriers
from the rest of the world, outside of North America, including Asia, Europe and
South America. Although the responding carriers differ only slightly this year from
our last North American Survey, we highlighted important changes, if applicable
throughout the survey.
Here are a few highlights from this year’s results that covers 2007 year-end and
early 2008 metrics:
Revenue and performance measures

New products and features represent ongoing sources of additional revenue
growth for wireless carriers. Industry competition has continued to decrease
monthly rate plans while minutes of use continue to increase to an average of
628 minutes used per month. Recently, many of the North American carriers
began offering all-inclusive packages to increase data usage. Data services—
including SMS, picture, ring tones, e-mail services and games—continue to
increase revenue for the responding companies. On average, data revenue
increased by more than 50% for all responding companies on a year over year
basis. The industry defines data users by several different methods ranging
from daily data use to all subscribers if data technology exists on the handset.
In addition, prepaid plans continue to be a significant portion of revenue,
representing on average 26.8% of total service revenue.
We asked survey respondents how they define minutes of use (MOU) and 61%
define MOU as billed minutes (whether included as part of the customer’s plan
or additional non-packaged minutes billed). Roaming revenue for the responding
companies represents an average of five percent (5%) of total service revenue
while long distance revenue represents six percent (6%) of total service revenue.
Advertising of products and services represents a significant expense for
most responding carriers. The average advertising cost per gross addition for
companies with revenue greater than $5.0 billion is $82.50, and for companies
with less than $5.0 billion in revenue it is $65.75. Advertising dollars are mostly
spent for television spots (34%), newspaper (13%), other printed media (12%),
and radio (11%).
2 | Beyond the horizon

We asked the responding companies to identify the method through which
their postpaid subscribers receive their monthly invoices. On average, 85% of
subscribers receive a paper bill. Six percent (6%) receive bills electronically while
five percent (5%) do not receive any type of invoice.

As the demands of subscribers change and the industry experiences changes in
technology and equipment, 76% of the respondents stated that they have either
recorded impairment charges or accelerated depreciation. The respondents
stated that the primary drivers of this decision included obsolescence due to
technological updates (77%). The demand for new products and services,
especially data, translates into significant amounts of capital expenditures. On
average, capital expenditures as a percentage of service revenue was 21.2%
or an average of $122.24 per subscriber. Seventy-six percent (76%) of the
respondents indicated they had performed an inventory of network assets and
over half had completed the inventory within the past 12 months.

The Sarbanes-Oxley Act continues to be an area that consumes time and
resources for wireless carriers even four years after its implementation in the
United States. One trend that has continued is the reduction in the number of
key controls that are tested each year. The average number of controls tested
for companies with revenue greater than $5.0 billion has decreased from over
1,300 to just over 400, and companies with revenue of less than $5.0 billion have
seen a decrease from approximately 700 to approximately 125 controls. The
decrease in the number of key controls has evolved as companies place greater
emphasis on entity level controls. Consistent with the prior year North American
Wireless Industry Survey, fixed assets, financial reporting and general computer
controls remain the largest sources of significant deficiencies. The Securities and
Exchange Commission (SEC) continues to be active among the North American
wireless carriers as over half of the respondents received comment letters in the
last three years.

Participating
company information
The 2008 Global Wireless Industry Survey results

represent nine United States, four Canadian and five
rest of world wireless companies. The following pages
provide the demographics and general corporate data
and structure of the responding carriers.
Names of participating companies
Company type and subscriber base
Annual service revenue
Employee base
Sales locations
Customer care
Licensed spectrum
Environmental sustainability

Names of participating companies
United States Canada

Alltel Corporation Bell Mobility
AT&T Mobility Rogers Wireless
Centennial Communications Saskatchewan Telephone
Leap Wireless TELUS Mobility
Metro PCS
Sprint/Nextel Rest of world

T-Mobile USA PT Excelcomindo Pratama Tbk.
U.S. Cellular KPN International
Verizon Wireless Oi Movel
Smart Communications, Inc.
T-Mobile Germany

Company type and subscriber base
Ninety-four percent (94%) of the responding companies reported being required,
or being a subsidiary of a company that is listed on a stock exchange and is
required, to file quarterly and/or annual financial statements. The chart below
depicts which stock exchanges the responding companies are listed on.
Stock exchanges
26%
42%
NYSE
21%
NASDAQ
11% Toronto Stock Exchange
Other*
* Other includes EURONEXT, Frankfurt, Indonesian, Philippine, and Sao Paulo exchanges.
The responding companies prepare their financial statements under various

generally accepted accounting principles (GAAP). Twenty-two percent (22%) of
the responding companies currently report under International Financial Reporting
Standards (IFRS). IFRS was adopted by one carrier in 2004, two carriers in 2005
and one carrier in 2007. Forty-two percent (42%) of the responding companies
either have the option to prepare local statutory accounts in accordance with
IFRS, or are mandated to prepare local accounts in accordance with IFRS.
The chart below shows the number of responding companies preparing their
financial statements according to the respective accounting principles.
Accounting principle followed
U.S. GAAP 8
Canadian GAAP 4
IFRS 4
Other* 3
Number of respondents
* Other Includes Brazilian, Indonesian, and Philippine GAAP.

Chart sums to greater than the number of respondents as multiple responses were allowed.

The chart below shows the responding companies’ reported subscribers as of

March 31, 2008.
Subscribers as of March 31, 2008
11%
11%
50%
Less than 1.0 million
22% 2.6 million - 5.0 million
5.1 million - 7.5 million
6% 12.6 million - 15.0 million
Greater than 15.0 million
There were no responses in the 1.0 million - 2.5 million, 7.6 million - 10.0 million,
and 10.1 million - 12.5 million categories.
The industry continues to experience subscriber growth as more people are

substituting wireless devices for traditional wireline service. For North American
carriers, the subscriber levels increased: 89% of the responding carriers reported
greater than 2.5 million total subscribers compared to the 74% reported in the
2007 North American Wireless Survey.

The chart below illustrates the responding companies’ service revenue reported
for the most recently ended fiscal year (December 31, 2007 for all respondents,
except one which is May 31, 2008). The average revenue is $19.7 billion for
carriers with revenue greater than $5.0 billion and $2.2 billion for carriers with
revenue less than $5.0 billion.
11%
28% 6%
Less than $500 million

$500 million - $999.9 million
17% 38%
$1.0 billion - $4.9 billion
$5.0 billion - $9.9 billion
Greater than $9.9 billion

Employee base
Seventy-eight percent (78%) of the responding companies reported operating
their company on a centralized basis (a single headquarters location that
completes the accounting/finance function for the entire organization), as opposed
to a decentralized basis (multiple business units or segments that have separate
accounting/finance functions that are consolidated by a headquarters office).
The chart below represents the number of full-time employees as of March 31,
2008 by the responding companies with greater than $5.0 billion in revenue.
Full-time employees (Carriers with revenue > $5.0 billion)
25%
62%
13%
5,001 - 10,000 employees

10,001 - 20,000 employees
Greater than 30,001 employees
No responses were received in the fewer than 5,000 and 20,001-30,000 categories.
The chart below represents the number of full-time employees as of March 31,
2008 by the responding companies with less than $5.0 billion in revenue.
Full-time employees (Carriers with revenue < $5.0 billion)
10%
50%
40%
Fewer than 1,000 employees

1,001 - 5,000 employees
5,001 - 10,000 employees

The charts below depict the number of full-time employees for each functional
category as of March 31, 2008. The responding companies were split between
carriers with greater than $5.0 billion in revenue and those with less than $5.0
billion in revenue.
Average number of employees per functional position
Network/engineering 848
4,279
256
Information technology 2,144
1,653
Customer care 12,750
1,295
Retail employees 10,826
Average number of employees

Carriers with revenue < $5.0 billion
Carriers with revenue > $5.0 billion
Average number of employees per functional position
10
Commission accounting
40
8
Payroll
59
5
Property accounting
22
7
Inventory accounting 10
28
Revenue accounting 42
9
Internal audit 21
14
Tax accounting 38
Average number of employees

PricewaterhouseCoopers 2008 Global Wireless Industry Survey | 11

Sales locations
All but three of the responding companies reported using company-owned retail
store/kiosk locations to sell and provide services to customers. The chart below
depicts how many company-owned retail store/kiosk locations the responding
companies reported.
Company-owned retail stores and kiosk locations
7%
29%
50%
1 - 99 retail stores/kiosk
14%
Greater than 1,000 retail stores/kiosk
The average number of company-owned retail stores for carriers with greater
than $5.0 billion in revenue and for those with less than $5.0 billion in revenue is
1,208 and 183, respectively.

The charts below depict the number of reseller/retail stores (third-party
companies) and branded franchise locations that sell each carrier’s services.
Reseller/retail stores
8%
38%
54%
500 - 999 reseller/retail stores
1,000 - 4,999 reseller/retail stores
Greater than 10,000 reseller/retail stores
No responses were received in the 1 - 499 and 5,000 - 9,999 categories.
The average number of reseller/retail stores (third-party companies) that sell

services for carriers with revenue greater than $5.0 billion and for carriers with
revenue of less than $5.0 billion is 53,034 and 2,188, respectively.
Franchise locations
8%
50%
42%
1 - 99 franchise locations
100 - 999 franchise locations
Greater than 1,000 franchise locations
Franchise locations represent a branded store that is independently owned by

a third party. The average number of franchise locations that sell services for
carriers with revenue greater than $5.0 billion and for carriers with revenue of
less than $5.0 billion is 2,782 and 473, respectively.

Customer care
The following charts depict the responding carrier’s percentage of customer care
activity by the source.
Customer care activity via internet transactions
7%
14%
36%
7%
No customer care via the internet
1% - 10% of customer care via the internet
36% 26% - 50% of customer care via the internet
No responses were received in the 76% - 100%.
The average percentage of all customer care activity performed via internet
transactions by carriers with revenue greater than $5.0 billion is 23% and is 7%
for carriers with revenue of less than $5.0 billion.
Customer care activity via Interactive Voice Response (IVR)
7%
30%
21%
1% - 10% of customer care via IVR

21% 21% 26% - 50% of customer care via IVR

Customer care activity via live customer service representative
7%
21% 7%
1% - 10% of customer care via
service representative
21% service representative
44% 51% - 75% of customer care via
The average customer care activity via the web is 14% (up slightly from the 2007
North American Wireless Survey) and nine companies are using the internet. Live
customer service via a customer service representative continues to be utilized
the most at 51%, consistent with the 2007 North American Wireless Survey.
Carriers with revenue greater than $5.0 billion use IVR for 25% of all customer
care activity, and use live customer service representatives approximately
50% of the time. Carriers with revenue of less than $5.0 billion have more live
interaction (53% of all transactions) for customer care activity and complete 39%
of transactions through IVR.

The number of employees in customer care at each organization varies due to

the differing levels of outsourcing to third parties. Twenty-eight percent (28%) of
the responding companies outsource all of their customer care call volume, while
an additional 22% do not outsource any of their customer care call volume. The
remaining 50% outsource a portion of their customer care call volume. The chart
below depicts the percentage of outsourced call volume for those responding
companies who outsource a portion of their volume.
Outsourced customer care activity
11%
22%
0% - 25% outsourced
67% 26% - 50% outsourced
Greater than 50% outsourced
Among the companies that outsource a portion or all of their customer care
volume, an average of 71% of customer care is performed domestically (i.e.
in the primary country of operation) and 29% is performed internationally (i.e.
outside of the primary country of operation). The following chart shows the
percentage of this outsourced volume that is handled domestically (primary
country of operation).
Outsourcing handled domestically
14%
51% 21%
0% - 25% domestic
26% - 50% domestic
14%
51% - 99% domestic
100% domestic

The chart below depicts the number of respondents that outsource a portion of
their primary accounting functions. For those functions that are outsourced, the
average percentage of their activity that is outsourced is depicted below.
Outsourced functions
14
Internal audit
4 average % outsourced = 49%
16
Accounts payable
Accounts receivable 10
collections 8 average % outsourced = 42%
9
Inventory management
12
Remittance processing
16
Payment processing
10
Payroll processing
Income taxes 10
No outsourcing
Function outsourced

Licensed spectrum
The responding companies own and use licenses primarily in the cellular (~850
MHz) and Personal Communication Services (~1.9 GHz) categories to provide
service within North America. The chart below shows the percentage of companies
that own and/or use each of the reported license types within North America.
North American licensed spectrum
Personal Communication 13
Services (PCS) (~1.9 GHz) 13
10
Cellular (~850 MHz)
10
WLS communication 2
services (~2.3 GHz) 6
Advanced Wireless 3
Spectrum 5
Specialized Mobile Radio 2

(SMR) services (~800/900 MHz) 2
Use spectrum
Own spectrum
Chart sums to greater than the number of responding carriers as multiple responses were allowed.

Outside North America, the responding companies own and use licenses across
various categories, as represented by the chart below.
Licensed spectrum outside of North America
4
3G UMTS/IMT - 2000
5
4
GSM - 1800
4
4
GSM - 900
4
GSM - 850 2
2
CDMA - 2000 1
1
GSM - 1900 1
1
Use spectrum
Own spectrum
No responses were received in the GSM-400 and CDMA-450 categories.

Environmental sustainability
Given the growth in environmental responsibility by individual companies and
the increase in environmental concerns by consumers, we asked responding
companies about their environmental responsibility programs. The chart below
shows who within the responding companies’ organization has responsibility for
overall environmental performance.
Environmental performance responsibility
14%
30%
21%
C-level executive, other than chief executive officer
The board of directors
21% No one person specifically tasked with this function
14%
Chief executive officer
Functional managers

The surveyed companies were asked several questions related to their views on
environmental practices. The companies were asked to respond on a scale of
1 to 5, with 1 being “strongly agree” and 5 being “strongly disagree.” The chart
below represents the average response received for each question.
Environmental views
Green efforts are more of a fad than they are an enduring

transformation for our company and our industry. 3.7
Our industry has a moral responsibility to help consumers change their
own behaviors (through editorial, effective programming and advertising). 2.1
Investors and stakeholders will increasingly reward companies
with above average performance on sustainability issues. 2.1
We can achieve cost savings implementing
sound environmental practices. 1.6
We must demonstrate progress on our environmental
records to continue to attract and retain customers. 1.6
1. Strongly agree
These initiatives make a positive contribution to
workplace/employee morale/recruitment/retention. 1.5 2. Agree
These efforts are valuable to our brand, who 3. Neutral
we are as a company, and to our customers. 1.5 4. Disagree
The adoption of environmentally friendly practices 5. Strongly disagree
can drive stronger corporate performance. 1.5
Average response
Sixty percent (60%) of the responding companies reported their performance

on environmental or social issues to the public (either through triple-bottom
line reporting or another discretionary report such as a corporate responsibility
report). Another 13% of the respondents indicated that they plan to report
environmental performance in the future.
Eighty-nine percent (89%) of the responding companies reported supporting

existing programs to recycle mobile phones/accessories and reducing their
environmental impact. These programs include in-store collection, donating
proceeds to local charities, planting trees and customer account credits. Only
50% of the respondents reported monitoring their carbon footprint to determine
ways to reduce environmental impact.

Revenue recognition
The following pages cover wireless company

practices in the area of revenue recognition.
Service contracts and family plans
Termination fees and bad debt expense
Prepaid
Data services
Mobile advertising
Wi-Fi data services
Customer retention
Sales incentives
Market development funds and rebates
Other revenue activities
Revenue assurance
Customer billing and payments
Handset insurance
All-inclusive packages

Revenue recognition
Service contracts and family plans

Of the responding companies, 83% said they have postpaid service contracts
with their subscribers. Of the 15 total respondents that have postpaid service
contracts, 11 offer one-year contracts, 13 offer two-year contracts, and six offer
three-year contracts.
The following two charts illustrate the respondents’ terms of postpaid service
contracts and the approximate percentage of customers on each contract
term. Not all respondents indicated the percentage of customers on each
contract term.
One-year contract term
76% - 100% 1
26% - 50% 1
11% - 25% 1
10% or less 5
No responses were received in the 51% - 75% category.
Two-year contract term
76% - 100% 4
51% - 75% 2
26% - 50% 1
11% - 25% 2
10% or less 1

The chart below illustrates the approximate percentage of customers who are
out of contract or who do not currently have a contract.
Out of contract/no current contract
26% - 50% 1
11% - 25% 6
No responses were received in the 10% or less and the greater than 50% categories.
An increasing number of companies are offering family plans to their customers.

Seventy-eight percent (78%) of the responding companies offer family plans to
their postpaid subscribers. The chart below shows the percentage of postpaid
subscribers who are on family plans.
Percentage of postpaid subscribers on family plans
51% - 75% 36%
26% - 50% 10%
11% - 25% 27%
10% or less 27%
Percentage of respondents
No responses were received in the greater than 75% category.
The average percentage of postpaid subscribers on family plans among all

respondents is 33%. For companies with revenue greater than $5.0 billion, 46%
of total subscribers are on family plans, compared to 26% for companies with
revenue of less than $5.0 billion.

Revenue recognition
Of the responding companies that offer family plans, 43% indicated that family
plans average two subscribers per plan and 50% indicated that family plans
average three subscribers per plan. The remaining seven percent indicated an
average of four subscribers per plan. The chart below illustrates the average
postpaid monthly revenue per user for subscribers enrolled in family plans.
Average monthly family plan subscriber revenue
9%
18%
9%
18%
Less than $20
$41 - $50
$51 - $60
46%
$61 - $70
Greater than $70
No responses were received in the $21 - $40 category.
In order to add subscribers to family plans, many of the respondent companies

charge for each additional subscriber enrolled. Fifty-six percent (56%) of the
respondents charge $10 or less per additional subscriber on family plans, while
the remaining 44% charge between $10.01 and $20.00.

Termination fees and bad debt expense
The chart below illustrates how responding companies charge contract
termination fees, and how strictly the companies bill and enforce the collection
of the contract termination or early disconnect fees. None of the North American
companies responded that they strictly enforce contract termination fees; in
comparison, in the 2007 North American Wireless Survey, six percent of the
respondents strictly enforced contract termination fees. Eighty percent (80%) of
the rest of world responding companies indicated that they strictly enforce early
termination fees.
Contract termination or early disconnect fees
11%
11%
Charge somewhat (most early termination fees
are billed and most have to pay except in certain
56% situations, e.g., close to the end of the contract
term, waived for high-value subscribers)
22% Charge strictly (every early termination fee is billed
and subscriber has to pay regardless of situation)
Charge rarely/not at all
Do not charge contract termination fees
Six companies responded that contract termination or early disconnect fees

are prorated over the life of the contract. Among them, the six companies use
several methods to determine the prorated amount. One prorates 100%, one
prorates three percent per month, two prorate $20 for each month remaining in a
contract, and the others utilize a combination of the aforementioned methods.

Revenue recognition
We also asked the responding companies to comment on their success in

collecting contract termination or early discount fees. As indicated in the charts
below, the collection rates on these fees vary drastically depending on whether
the customer has voluntarily terminated service or whether service has been
involuntarily terminated by the company. As illustrated in the chart below, 41%
of the 2008 responding companies are collecting approximately 50% or more of
contract termination fees related to voluntary terminations. The following charts
represent data compared to the 2007 North American Wireless Survey and
represent only North American carriers.
Collection rates - Voluntary termination fees

8%
Greater than 75%
10%
33%
51% - 75%
30%
18%
26% - 50%
30%
33%
10% - 25%
20%
8%
Less than 10%
10%
2008
2007
Collection rates—Involuntary termination fees

51% - 75% 8%
17%
26% - 50%
20%
42%
10% - 25%
20%
33%
Less than 10%
60%
2008
2007

The responding companies use several different methods to record bad
debt expense related to termination fees. The following chart illustrates what
percentage of companies uses each type of method identified.
Revenue recognition of contract termination or early disconnect fees
Recognize no revenue until amount billed is

collected (no bad debt expense is ever recorded);
8% represents reporting revenue on a cash basis
25% Record 100% of billed termination fee as service
revenue and record bad debt expense (through
the company’s allowance method); represents
gross reporting of revenue
Record as revenue only the portion of the billed
8% termination fee that is expected to be collected and
record any additional bad debt expense against
this amount; represents net reporting of revenue
59%
Termination fee is recorded as fully reserved for
bad debt; any collections on this are treated as
recoveries that reduce bad debt expense
The following chart illustrates the bad debt expense related to postpaid
receivables as a percentage of total postpaid revenues.
Postpaid bad debt expense
1.00% or less 29%
1.01% - 2.00% 36%
2.01% - 3.00% 21%
3.01% - 4.00% 7%
Greater than 10.00% 7%
No responses were received in the 4.01% to 10% category.
For companies with revenue greater than $5.0 billion, the average postpaid bad
debt expense as a percentage of postpaid revenue was 2.23%. For companies
with revenue of less than $5.0 billion, average bad debt expense as a percentage
of postpaid revenue was 2.54%.

Revenue recognition
Prepaid
Of the responding companies, 100% offer customers the opportunity to pay
for service in advance. The following chart illustrates the percentage of the
responding companies’ total subscribers that are prepaid subscribers.
Percentage of prepaid subscribers
Greater than 75% 5
51% - 75% 2
11% - 25% 6
10% or less 5
The following chart indicates the average percentage of prepaid subscribers as a

percentage of total subscribers.
Average percentage of prepaid subscribers
Rest of world respondents 78.2%

Carriers with revenue
< $5.0 billion 53.2%
All respondents 39.7%
North American respondents 24.8%

> $5.0 billion 22.8%

The responding companies reported the average prepaid subscriber life as
approximately 18 months. The chart below represents the average prepaid
subscriber life in months for the responding companies that offer this service.
Average prepaid subscriber life
6 - 10 months 13%
11 - 15 months 40%
16 - 20 months 20%
21 - 25 months 7%
31 - 35 months 20%
No responses were received in the 26 - 30 months category.
For companies with revenue greater than $5.0 billion, the average prepaid
subscriber life was 18 months in 2008. For companies with revenue of less than
$5.0 billion, the average prepaid subscriber life was 17 months.
Of the responding companies, 86% have prepaid cards with expiration

periods. The chart below illustrates the average expiration periods for the
responding companies.
Expiration periods
11% 11%
11%
11%
3 to 15 day expiration
1 - 2 month expiration
56% 3 - 4 month expiration
12 month expiration
No expiration
Forty-four percent (44%) of the responding companies’ inactivated prepaid

cards have an expiration period/expiration date.

Revenue recognition
The chart below illustrates the average monthly minutes of use (MOU) per
prepaid subscriber for the responding companies. The average minutes of use
per month for all the responding companies were 343.
Average monthly MOU per prepaid subscriber

Less than 100 minutes 27%
100 - 250 minutes 27%
251 - 500 minutes 27%
501 - 750 minutes 7%
751 - 1,000 minutes 12%
Companies with revenue greater than $5.0 billion reported average prepaid MOU
of 387 minutes, and companies with revenue of less than $5.0 billion reported
average prepaid MOU of 292.

The following charts represent prepaid revenues as a percentage of total
revenues, both for the responding companies in total and by categories
of respondents.
Prepaid revenue as a percentage of total revenues
81% - 100% 3
51% - 70% 2
11% - 20% 2
6% - 10% 3
5% or less 8
No responses were received in the 21% - 50% and 71% - 80% categories.
Average prepaid revenue as a percentage of total revenues by category

of respondents

< $5.0 billion 38.3%

Carriers with revenue 12.5%
> $5.0 billion
Four of the 18 responding companies offer family plans to their prepaid

subscribers.

Revenue recognition
Data services
Data services continue to be an area of focus, as most responding companies
are seeking opportunities to grow revenue. The responding companies use
several different methods to define users of data services. The following chart
illustrates what percentage of the responding companies uses each type of
method identified.
Definition of user of data services
7%
27%
Use of data services on a daily basis

Use of data services on a monthly basis
Use of data services at least once in a
46% 12 month period
13% Other
7% All subscribers, regardless of usage are defined
as data subscribers if the technology exists on
the handset
We asked the responding companies what percentage of their data revenue

is generated from stand-alone data services versus combined voice and
data bundled packages. The chart below illustrates that the majority of the
respondents (54%) indicated that more than 50% of their data revenue is from
stand-alone data services.
Data revenue generated from stand-alone data service
31%
39%
Less than 26%

15% 26% - 50%
15% 51% - 75%
Greater than 75%
Twenty-eight percent (28%) of the respondents have implemented e-wallet (the

ability to make purchases through the mobile phone).

The chart below illustrates the percentage of service revenues, excluding SMS/
text, generated by postpaid and prepaid data services.
Percentage of service revenues generated by postpaid and prepaid data
services
12.1% - 15.0% 1
10.1% - 12.0% 3
1
8.1% - 10.0% 3
3
6.1% - 8.0% 4
1
4.1% - 6.0% 1
5
2.1% - 4.0% 1
4
Less than 2%
Prepaid
Postpaid
The chart below indicates the effect that data services, excluding SMS/text,
have on the average revenue per user on a monthly basis for total, prepaid, and
postpaid ARPU.
Data services, excluding SMS/Text, effect on ARPU

14%
$7.01 - $8.00 9%
14%
$6.01 - $7.00 28%
$4.01 - $5.00 18%
14% Total ARPU per user

$3.01 - $4.00 9% Prepaid ARPU per
prepaid user
21%
$2.01 - $3.00 9% Postpaid ARPU per
postpaid user
7%
$1.51 - $2.00 27%
18%
30%
$0.00 - $1.50 73%
9%
No responses were received in the $5.01 - $6.00 category.

Revenue recognition
Fifty-eight percent (58%) of the responding companies indicated that postpaid

data services revenue, excluding SMS/text, increased more than 50% year over
year. Sixty-seven percent (67%) of the responding companies had an increase of
more than 50% in their prepaid data services revenue year over year.
As SMS/text becomes increasingly popular among North American subscribers,

companies are beginning to see the positive effects of SMS/text revenue on
total services revenue, prepaid revenue, and postpaid revenue. The chart below
illustrates SMS/text revenue as a percentage of total services revenue, prepaid
revenue, and postpaid revenue.
SMS/text revenue as a percent of service revenues
20%
Greater than 11.00% 51%
14%
9.1% - 11.00% 14%

8%
20%
7.01% - 9.00% 14%
14%
33%
5.01% - 7.00% 7%
36%
20%
3.01% - 5.00% 7%
14%
7%
1.01% - 3.00% 7%
14%
SMS/text as a % of total revenues
SMS/text as a % of prepaid revenues
SMS/text as a % of postpaid revenues

The chart below indicates the monthly contribution of SMS/text revenue to total,
prepaid, and postpaid ARPU.
SMS effect on ARPU
$9.01 to $10.00 9%
16%
$4.01 to $5.00 28%
23%
$3.01 to $4.00 9%
18%
23%
$2.01 to $3.00 18%
18%
23%
$1.51 to $2.00 18%
9%
15%
$0.00 to $1.50 55%
18%
Monthly ARPU per SMS/text user
Monthly prepaid ARPU per prepaid SMS/text user
Monthly postpaid ARPU per postpaid SMS/text user
No responses were received in the $5.01 - $9.00 category.
We asked the responding companies to indicate SMS/text data revenue for each
of the following: SMS/text data revenue per user, prepaid SMS/text data revenue
per prepaid user, and postpaid SMS/text revenue per postpaid user. The results
are illustrated in the chart below.
SMS data ARPU

11%
$10.01 - $15.00 14%
12%
22%
$7.51 - $10.00 25%
22%
$5.01 - $7.50 25%
11%
$2.51 - $5.00 43%
38%
34%
$0.00 - $2.50 43%
Total ARPU per user
Prepaid ARPU per prepaid user
Postpaid ARPU per postpaid user

Revenue recognition
We asked the responding companies whether they allocate airtime usage charges
between data services and voice service. Only 28% of the responding companies
indicated that they allocate airtime usage between data services and voice service.
Fifty-four percent (54%) of the responding companies indicated a more than

50% increase in postpaid data services revenue for SMS/text revenue only
year over year. Fifty-eight percent (58%) of the responding companies had an
increase of more than 50% in prepaid data services revenue year over year.
Eighty-eight percent (88%) of the respondents’ subscribers can access third-

party content that the company does not source through their handsets, e.g.,
through a shortcode SMS/text, m-sites, or a premium rate. The chart below
illustrates how the respondents account for the revenue share payment made to
the third-party content provider.
Third-party content
31%
54%
15% Reduction of revenue

Operating expense other than cost of service
Cost of service

The chart below illustrates the criteria the responding companies considered in
determining the accounting for the revenue share payment for third-party content.
Criteria used to determine revenue share payment for third-party content
Ability to set price to end customer 85%
Existence of credit risk 54%
Ability to select the content provider 54%

Margin earned on the provision of 46%
the service
Ability to change or modify the 31%
content before it is transmitted
Branding 15%
Chart sums to greater than 100% because multiple responses were allowed.
Mobile advertising
We asked the responding companies whether they include any non-subscriber
revenue in calculating average revenue per user (e.g., roaming revenue, wholesale
revenue, and advertising revenue). Seventy-eight percent (78%) of the responding
companies include other non-service revenues in their ARPU. Seventy-one
percent (71%) of those carriers reported that they include roaming revenues.
Of the responding companies, 39% record revenue related to mobile advertising.

Fifty-seven percent (57%) of the respondents indicated that they recognize the
revenue using the gross method, while the remaining 43% indicated that they
use the net method.

Revenue recognition
Wi-Fi data services

Wi-Fi hotspots and wireless broadband access cards are common in today’s
marketplace. Of the responding companies, 67% offer Wi-Fi hotspots in public
locations, such as airports, coffeehouses, hotels, and offices.
For the companies that offer hotspot services and pay the hotspot location a
portion of the fee billed to the customer, 88% account for fees paid to location
owners as an operating expense. The remaining 12% of respondents account for
such fees as a reduction of revenue.
For the companies that offer hotspot services and pay the hotspot location a
portion of the fee billed to each customer, the following chart shows the various
types of rate structures used.
Rate structures used for payments to hotspot locations
14%
24%
24%
Flat rate per subscriber
Flat rate per subscriber plus a variable amount
24%
Included as part of the service
14% Percentage of revenue per subscriber
Percentage of revenue based on usage
Of the responding companies, 94% provide wireless broadband access through

personal computer cards. Of companies that offer wireless broadband access,
the average number of users for companies with revenues greater than $5.0
billion is 1.33 million, while the average number of users for companies with
revenues of less than $5.0 billion is 82.4 thousand.

Customer retention
Companies continue to focus on retaining current customers, as overall market
penetration rates have slowed. Accordingly, retention-related activities have
increased in recent years. The chart below illustrates the percentage that
retention-related costs increased from fiscal year 2006 to fiscal year 2007 for the
Increase in retention-related costs FY06-FY07
Greater than 50% 18%
31% to 40% 10%
21% to 30% 27%
11% to 20% 27%
Less than 10% 18%
Subsidies offered on handset upgrades to retain current customers can be a

significant component of customer retention costs. The range of subsidy costs
per handset upgrade reported by the responding companies is presented in the
chart below.
Average handset subsidy for customer retention
8%
17%
8%
Less than $50

25% $51 - $100
34% $101 - $150
$151 - $200
8% $201 - $250
Greater than $250

Revenue recognition
The increased focus on retaining customers is further evidenced by the

percentage of equipment and accessory revenue that is attributed to retention
activities, which is illustrated in the chart below.
Equipment and accessory revenue attributed to retention activities

Greater than 50% 28%
41% to 50% 18%
31% to 40% 9%
21% to 30% 18%
11% to 20% 18%
Less than 10% 9%

Sales incentives
All the responding companies offer significant subsidies on handsets to attract
new customers. The following charts present the range of average handset
subsidies the respondents offer to new postpaid, to new prepaid, and to their
total customers.
Average new postpaid customer handset subsidy
11%
23%
11%
$0 - $50
$51 - $100
22% 22% $101 - $150
$151 - $200
11% $201 - $250
Greater than $250
Average new prepaid customer handset subsidy
13%
49%
38%
$0 - $50
$51 - $100
$101 - $150

Revenue recognition
Average new customer handset subsidy
7%
13%
33%
$0 - $50
27% $51 - $100
$101 - $150
20%
$151 - $200
$201 - $250
We asked respondents when they consider a customer eligible to receive

subsidies for a new handset. The chart below illustrates when companies allow
subsidies to existing customers for a new handset.
Postpaid customer eligibility to receive retention subsidy for a new handset
8%
23%
15%
After 12 months of service

8% After 24 months of service
Two months before contract expiration
23% 8% Three months before contract expiration
Six months before contract expiration
15% Only upon expiration of current contract
Once during contract period

Market development funds and rebates
Seventy-six percent (76%) of the responding companies receive marketing
development funds from their vendors. Of those companies, 85% classify these
receipts as contra-expense.
The following chart illustrates the incentives and services offered as customer
subsidies by the respondents.
New customer incentives and services offered
Free services (free minutes

of service) 11
Mail-in or internet based rebate
(cash based) 10
Instant rebate (cash based) 9
Waive activation fees 8
Free goods (accessories, etc.) 6
Other 4
In store gifts 1
* Other includes third-party gift cards, airline vouchers, gas cards, and free downloads.
Chart sums to greater than the number of responding companies as multiple responses were allowed.
Many companies use mail-in rebates as a way of attracting new customers to

buy their handsets. Of the responding companies, 44% offer mail-in rebates
to their postpaid customers while 33% offer mail-in rebates to their prepaid
customers. Thirty-three percent (33%) of the responding companies indicated
that the value of the rebate depends on the length of the contract terms.
Of the companies that provide mail-in rebates, 91% indicated that they use a
third-party provider to process mail-in rebate programs. The remaining 9% use a
combination of internal and third-party providers to process redeemed rebates.

Revenue recognition
Rebate requirements vary widely for the responding companies; however, most
respondents required customers to return the receipt, rebate redemption form,
and UPC code. Other carriers required a packaging slip and a copy of the
customer’s bill.
Many different levels of rebates are offered to customers. Each responding

company that offers mail-in rebates quantified the dollar value of the
rebates. The following chart summarizes their responses within prepaid and
postpaid categories.
Dollar value of mail-in rebates offered
Greater than $150 3
$126 - $150 5
1
$101 - $125 4
3
$76 - $100 7
2
$51 - $75 6
5
$26 - $50 7
4
Less than $25 3
Prepaid
Postpaid

The following chart represents the average percentage redeemed for each dollar-
value range of rebates offered, for both prepaid and postpaid.
Percentage of rebates redeemed by dollar value
Greater than $150 67%
$126 - $150 45%
$101 - $125 56%
48%
$76 - $100 68%
39%
$51 - $75 63%
52%
$25 - $50 41%
Less than $25 57%
Percentage redeemed
Prepaid
Postpaid
The following chart illustrates the dollar value of instant rebates offered.
Dollar value of instant rebates offered
Greater than $100 7
$76 - $100 8
$51 - $75 8
$30 - $50 10
Less than $30 6
Fifty-six percent (56%) of the responding companies team with their handset
and accessory vendors to provide joint rebates to subscribers in which the
manufacturer reimburses the carriers. Of those responding companies, 80%
recognize a liability under the program when the related revenue is recognized.
The companies recognize the reimbursement either as equipment revenue (40%)
or as a reduction of the cost of revenues (40%).

Revenue recognition
Other revenue activities

Fifty-six percent (56%) of the responding companies are currently or expect to
be eligible for the status of Eligible Telecommunication Carrier (ETC) this year. Of
the companies with revenue greater than $5.0 billion, 63% receive ETC revenue;
and of the companies with revenue of less than $5.0 billion, 50% receive ETC
revenue. We asked those who are receiving or expect to receive ETC amounts
during the period to specify what percentage of their service revenues they
expect to derive from ETC distributions. Of those that replied, 78% of those
receiving ETC revenue expect less than one percent, 11% expect between two
percent and five percent, and 11% expect more than five percent.
The following chart illustrates how the responding companies classify costs
related to directory assistance (e.g., 411 calls) on the income statement.
Classification of directory services
25%
56%
19%
Cost of services
Customer service expense/G&A
Cost of revenues
Revenue assurance
The revenue assurance function plays an important role in ensuring adequate
internal controls over financial reporting and in minimizing revenue leakage. In
fact, each of the 18 respondents currently has a dedicated revenue assurance
function. The responding companies were asked what level of importance they
place on the revenue assurance function within their company. Sixty-five percent
(65%) rate revenue assurance as very important and 35% consider revenue
assurance important.

Primary responsibility for the revenue assurance function varies across the
responding companies. The chart below shows the primary departments that
oversee the revenue assurance functions.
Responsibility for revenue assurance
12%
24%
6%
Corporate finance
Revenue assurance and fraud/risk management
58% Billing operations
Business unit finance
The following charts illustrate how many individuals are dedicated specifically to
the revenue assurance function, and the number of dedicated revenue assurance
individuals per $1.0 billion in total revenue.
Dedicated number of revenue assurance individuals

1 - 15 5
16 - 40 5
41 - 100 4
101 - 200 1
Greater than 200 2
Dedicated number of revenue assurance individuals per $1.0 billion
1-5 5
6 - 10 7
Greater than 11 2

Revenue recognition
The extent of the activities carried out by the revenue assurance function
varies among the companies. We asked the responding companies with a
dedicated revenue assurance function to indicate which core activities their
revenue assurance group performs. The results are presented in the chart
below. In addition, for those activities that are performed, we asked whether the
procedures are primarily manual, primarily automated, or evenly split.
Revenue assurance activities
Re-rating and bill accuracy 5 5 7
Tax and surcharge accuracy review 8 4 3 1
Fraud management 4 8 5
Reseller revenue validation 4 1 5 4
Inter-carrier verification and settlements 4 8 5
Switch to bill minutes reconciliation 1 8 5 2
Network translation accuracy 2 7 5 2
Network test calling 3 5 6 3
End-to-end usage reconciliation 3 6 4 3
Primarily manual
Primarily automated
Both manual and automated
Not performed
When asked which components of the revenue process represent the greatest
area for revenue and margin leakage, the respondents identified the following
greatest areas of risk in order of importance: rating and invoicing, activation
revenue, customer care, and fraud revenue.

The following chart shows the percentage of each company’s annualized
revenue that is subject to the revenue assurance program.
Annualized revenue subject to revenue assurance program
13%
6%
6%
Less than 20%

56%
19% 41% - 60%
61% - 80%
81% - 90%
91% - 100%
The chart below illustrates the revenue assurance and fraud management
opportunities reported by the responding companies.
Revenue assurance/fraud management opportunities
Unbilled access charges for content 12
Unbilled international calls 11
Unbilled text messages (SMS) 10
Unbilled roaming charges 10
Active telephone numbers at the 10

switch that do not exist in billing
Usage lost/not corrected between 10
the switch and the bill
Incorrect rates 10
Unbilled per minute charges 9
Incorrect billing of surcharges 9
Usage not captured at network 8
Incorrect billing of taxes 8
Unbilled wireless web monthly charges 7
Issues with shared/family plan minutes 4
Chart sums to greater than the number of responding companies as multiple responses were allowed.

Revenue recognition
Customer billing and payments

Practice varies among carriers as to whether certain charges can be included
on a new subscriber’s first billing cycle. Of the responding companies, 53%
allow equipment purchases and 87% allow activation fees to be included on a
subscriber’s first billing cycle. The average number of billing cycles per month
varies by respondent. The chart below illustrates the distribution of billing cycles
per month.
Average number of billing cycles per month
23%
27%
Less than 15
15 - 20
27% 17%
21 - 25
6% 26 - 30
Greater than 30

We asked the responding companies to indicate the percentage of customer
payments that they received through each channel for both postpaid and
prepaid customers. The results are depicted in the charts below.
Postpaid customer payment channel
Carrier O 38 62
Carrier N 60 32 7 1
Carrier M 100
Carrier L 100
Carrier K 10 90
Carrier J 5 5 30 5 5 10 5 25 5 4 1
Carrier I 1 23 41 11 11 48 1
Carrier H 8 2 66 1 5 5 2 3 8
Carrier G 82 22 10 4
Carrier F 82 2 5 3 5 3
Carrier E 10 10 5 18 4 50 3
Carrier D 10 3 21 8 14 5 11 13 7 8
Carrier C 8 20 28 6 17 5 6 5 5
Carrier B 1 37 6 13 4 7 13 2 17
Carrier A 5 1 35 3 14 3 10 16 4 9
Percentage of customer payments

In-store payments
Agent/reseller locations
Lockbox/direct mail/bank
Retail kiosks
Interactive Voice Response (IVR)
Automatically deducted from bank account (e.g., ACH, customer initiated)
Automatically charged to credit card (pre-authorized)
Automatically charged to credit card for Prepay Subscribers (customer initiated)
Internet payments
Customer care/call center (non-IVR based)
Initiated via handset menu
Other
* Other includes payment channels such as home banking, bank transfer, and smart money.

Revenue recognition
On average for the responding companies, 20% of all payments (credit card,
debit, Automated Clearing House, check) are recurring each month.
Prepaid customer payment channel
Carrier M 1 96 3
Carrier L 50 50
Carrier K 95 5
Carrier J 12 47 5 12 11 4 4 2 3
Carrier I 24 65 1 4 1 4 1
Carrier H 100
Carrier G 96 22
Carrier F 41 44 10 5
Carrier E 13 58 1 13 3 12
Carrier D 3 81 16
Carrier C 2 48 46 1 3
Carrier B 26 2 32 30 10
Carrier A 5 17 5 63 12 2 5

In-store payments
Agent/reseller locations
Lockbox/direct mail/bank
Retail kiosks
Interactive Voice Response (IVR)
Automatically deducted from bank account (e.g., ACH, customer initiated)
Automatically charged to credit card (pre-authorized)
Automatically charged to credit card (customer initiated)
Internet payments
Customer care/call center (non-IVR based)
Initiated via handset menu

The following charts summarize the different types of postpaid and prepaid
customer payments that are received via the various payment channels.
Methods of postpaid customer payments
Carrier M 91 7 2
Carrier L 86 13 1
Carrier K 100
Carrier J 30 15 25 10 20
Carrier I 71 18 11
Carrier H 31 25 14 5 25
Carrier G 80 2 16 2
Carrier F 15 15 3 67
Carrier E 66 4 26 4
Carrier D 43 9 37 11
Carrier C 13 11 17 3 51 5
Carrier B 42 5 22 8 23
Carrier A 18 6 24 1 43 8

Check (including e-check)
Cash
Credit card
Debit card
ACH/ARC/Wires
Other*
* Other includes pinless debit, PC banking, and direct billing.
Checks, representing 31% in the current year survey, continue to be the

most common form of customer payment. ACH/ARC/Wires, cash, and
credit cards account for 27%, 20%, and 18%, respectively, of all postpaid
customer payments.

Revenue recognition
Methods of prepaid customer payments
Carrier M 97 3
Carrier L 100
Carrier K 70 30
Carrier J 100
Carrier I 7 68 25
Carrier H 95 5
Carrier G 50 50 2 16 2
Carrier F 100
Carrier E 1 92 7
Carrier D 50 20 30
Carrier C 1 99
Carrier B 53 36 11
Carrier A 17 5 62 16

Check (including e-check)
Cash
Credit card
Debit card
ACH/ARC/Wires
Pin cards
Other*
* Other includes pinless transactions and banks/ATMs.
Cash, representing 35%, is the most common form of prepaid customer

payment. Credit cards, checks (including e-checks), and ACH/ARC/Wires
represent 28%, 21%, and 8%, respectively, of all prepaid customer payments.

Practices vary from carrier to carrier, as well as within certain carriers, as to
whether postpaid subscribers are billed in advance or in arrears. The charts
below illustrate the range of percentages of postpaid customers billed in arrears
versus in advance for the responding companies.
Customers billed in arrears
9%
18% 37%
Less than 15%

9%
15% - 25%
26% - 50%
27% 51% - 75%
76% - 100%
Customers billed in advance
15%
15%
70%
26% - 50%
51% - 75%
76% - 100%
No responses were received in the less than 26% category.
The responding companies indicated that, on average, they bill 25% of their
customers in arrears and bill 75% in advance.

Revenue recognition
We asked the responding companies how they bill postpaid subscribers for
usage charges. The following chart illustrates how the responding companies bill
their customers’ usage.
Billing of usage
21%
29%
Based on per second usage

Based on per minute billing
50% (seconds rounded up to the next minute)
Based on per second usage and per minute billing

Handset insurance
Most responding companies offer their subscribers a handset insurance or
protection program. This program can either be self-insured by the provider,
provided through a third party, or provided by a combination of the company
and a third party. Seventy-one percent (71%) of the respondents offer handset
protection programs. Of the respondents that offer a handset replacement
program, 64% use a third-party provider, 27% use a self-insured protection
program, and the remaining 9% indicated using a combination of a company-
sponsored and a third-party program. The chart below illustrates the percentage
of subscribers who choose to participate in handset replacement programs.
Handset protection participation
10%
30%
30%
Less than 11%
10% 11%-20%
21%-30%
20% 31%-40%
51%-60%
No responses were received in the 41% - 50% or the greater than 60% categories.

Revenue recognition
Eighty-two percent (82%) of the responding companies that offer handset

replacement programs bill subscribers based on a fixed monthly amount, while
the remaining 18% bill customers based on the value of the handset. The chart
below illustrates the average fixed monthly fees charged to customers for
handset replacement protection.
Fixed fees charged for handset protection
22%
56%
22%
$4.00 - $4.99
$5.00 - $9.99
$10.00 - $15.00

All-inclusive packages
The responding companies were asked whether they offer all-inclusive packages
to subscribers. Fifty-six percent (56%) of the responding companies offer
all-inclusive packages. Of those companies, 63% indicated that less than two
percent of their subscribers participate in the plans they offer. The following chart
illustrates the services that the respondents include in the all-inclusive packages.
Services offered in all-inclusive package
Voice 89%
Text/SMS 56%
Internet 56%
Pictures 44%
E-mail 33%
Web surfing 33%
Other 33%
GPS Navigation 22%
Video 11%
* Other includes unlimited text to in-system subscribers, unlimited to other countries, video
messaging, roaming, and television.

The following section focuses on the internal and

external key performance measures that wireless
companies track and report.
Customers/Metrics
Subscriber costs
General and administrative
Data
Ring tones
Games
SMS and premium SMS
Phone/BlackBerry-based e-mail and Web access
Laptop cards
Internet access from handsets
Picture revenue
Network
Long distance and interconnect expense
Rate plans and billing

Customers/Metrics
The chart below depicts the average length of the responding companies’
relationships with postpaid customers.
Average length of customer relationship—Postpaid
17%
25%
33% 20 - 40 months
25% 41 - 60 months
61 - 80 months
Greater than 80 months
The average length of customer relationships is approximately 63 months

in 2008. For companies with revenue greater than $5.0 billion, the average
customer relationship is 73 months, and for companies with revenue of less
than $5.0 billion, the average is 56 months. For North American respondents,
the average length of customer relationships is 70 months. For North American
companies with revenue greater than $5.0 billion, the average customer
relationship is 73 months, while companies with revenue of less than $5.0 billion
have an average customer relationship of 67 months.
We asked the respondents how they define minutes of use (MOU). Sixty-one
percent (61%) of the respondents define MOU as billed minutes (whether
included as part of the customer’s plan or additional non-packaged minutes
billed); 39% of the respondents define MOU as minutes per the switch,
regardless of whether those minutes are ultimately billed to the customer.
The following chart depicts the average MOU per customer per month.
According to the responding companies, the average percentage of MOU
that is billed as excess (i.e., over plan) minutes is 20%. For North American
respondents, the average MOU billed as excess is 7% in the current year and
was 6% in the 2007 North American Wireless Survey.

The average MOU for all responding carriers is 628 minutes for the current year.
The average North American MOU increased to 800 minutes in the current year
survey from the 744 minutes reported in the 2007 North American Wireless
Survey. MOU for North American respondents with revenue greater than $5.0
billion averages 836 in 2008, as compared to 818 minutes in 2007; and the
responding companies with revenue of less than $5.0 billion have an increase in
average MOU to 771 in 2008 from the 710 reported in the 2007 North American
Wireless Survey.
Average monthly minutes of use per postpaid subscriber
20% 20%
13%
Less than 200 MOU
27% 200 - 500 MOU
501 - 800 MOU
20% 801 - 1,000 MOU
Greater than 1,000 MOU
Seventy-two percent (72%) of the responding companies report postpaid

churn externally, and 44% of the responding companies report prepaid churn
externally. The responding carriers indicated that an average of 32% of all
churn is a result of involuntary disconnects (company-induced disconnects or
termination of service).
We asked the companies how postpaid churn is calculated. Half of the
responding companies use net deactivations for the numerator of the churn
calculation, while 44% use gross deactivations. The majority (63%) of the
respondents use average subscribers for the denominator of the churn
calculation, while 25% use beginning subscribers and 12% use ending
subscribers for the period. For the companies using net deactivations for the
numerator, the definition varies widely—ranging from excluding only same-day
activations/deactivations to a 60-day period.

The responding companies indicated that for prepaid churn, 60% use net
deactivations for the numerator of the calculation, while 40% use gross
deactivations. For the denominator of the prepaid churn calculation, 60% of the
respondents use average subscribers, while 27% use beginning subscribers and
13% use ending subscribers for the period.
Ninety-four percent (94%) of the respondents track information regarding

postpaid and prepaid customers separately. The percent of respondents with a
postpaid churn rate of two percent or less is 93% in the current year. For prepaid
churn, the number of respondents with a churn rate of five percent or less is
56% in the current year. For North American respondents, 90% have a postpaid
churn rate of less than two percent in 2008, as compared to the 75% reported in
the 2007 North American Wireless Survey.
The percentage of respondents with postpaid average revenue per user (ARPU)
greater than $50.00 is 77%. The percentage of respondents with prepaid ARPU
greater than $20.00 is 56%. The average North American respondents’ ARPU for
postpaid and ARPU for prepaid subscribers are $59.98 and $27.76, respectively,
in the current year, as compared to $58.72 and $23.56, respectively, in the 2007
North American Wireless Survey.
For those responding companies that track information separately, the

following four charts compare churn rates and ARPU for postpaid and prepaid
subscribers.
Churn for postpaid subscribers
7%
21%
21% 51% Less than 1.0%

1.0% - 1.5%
1.6% - 2.0%
Greater than 2.0%

Churn for prepaid subscribers
13%
25%
19% 43% Less than 3%

3.0% - 5.0%
5.1% - 7.0%
Greater than 7.0%
ARPU for postpaid subscribers
23%
31%
Less than $50

46%
$51 - $60
Greater than $60
ARPU for prepaid subscribers
13%
43%
19%
Less than $20

$20.01 - $29.99
25% $30 - $40
Greater than $40

We asked companies what percentage of their 2007 postpaid subscriber

revenue is access versus usage. Sixty-four percent (64%) of the respondents’
revenue is due to access. Companies with revenue greater than $5.0 billion
have a larger percentage of subscriber revenue obtained from access charges
(approximately 75%) than do the companies with revenue of less than $5.0
billion (approximately 55%).
We asked the respondents what percentage of total service revenue was a

result of roaming. The average of all respondents was five percent. For all
responding carriers with revenue greater than $5.0 billion and the rest of world
based respondents, the average was six percent; and for all responding carriers
with revenue of less than $5.0 billion and the North American respondents, the
average was four percent.
The following charts show the percentage of revenue for all responding
companies that are a result of long distance and features.
Long distance revenue as a percentage of service revenue
Rest of world respondents 14%
Carriers with revenue < $5.0 billion 8%
All respondents 6%
North American respondents 4%
Carriers with revenue > $5.0 billion 3%

Feature revenue as a percentage of total service revenue
All respondents 15%
We also asked the responding companies their percentage of bad debt expense
and operating expense to total services revenue. Two percent (2%) was the
average bad debt expense. The chart below shows operating expense as a
percentage of service revenue for 2007.
Operating expense as percentage of service revenue
All respondents 53%

The chart below shows the EBITDA (earnings before interest, taxes, depreciation,
and amortization) margin of the responding companies as a percentage of
service revenue.
EBITDA margin as a percentage of service revenue
All respondents 41%
We asked companies how long they wait before discontinuing service if a

prepaid customer fails to “replenish” his/her account when the balance is zero
and when the subscriber has not had activity in the customer’s account. Their
responses are illustrated in the following two charts.
Time to discontinue service
6%
12%
29%
12%
Less than 30 days
30 - 45 days
46 - 60 days
12%
61 - 90 days
29% 91 - 120 days
Other*
* Other includes 121 days to one year.

Time to disconnect prepaid customers with no activity
13%
19%
49%
30 - 45 days
46 - 60 days
19%
61 - 90 days
Other*
* Other includes 91 days to one year.
Further, we asked companies how they account for any remaining balance on an
account when a prepaid customer is disconnected. Seventy-six percent (76%)
stated that the customer forfeits the balance and that revenue is recognized.
The remaining 24% stated that either the remaining balance is refunded to the
customer or the subscriber is charged a monthly maintenance fee until the
balance is zero.

Carriers use various sales channels to acquire subscribers (postpaid and

prepaid) and to allow prepaid subscribers to replenish service. We asked the
responding companies to indicate the percentage of their postpaid subscribers,
prepaid subscribers, and prepaid replenishments that they acquire through each
channel. Their responses are illustrated in the following three charts.
Postpaid subscriber acquisition channels
50%
Resellers/agents
33%
32%
Retail stores
41%
2%
Other
8%
4%
Direct sales
7%
4%
Telesales/telemarketing
5%
6%
Kiosks
1%
Call Center
3%
1%
Internet 3%
Percentage of subscribers added through channel


In terms of regional differences, the North American responding carriers obtain
more postpaid subscribers via retail stores (32%) compared to the rest of world-
based respondents (21%). In contrast, the rest of world-based respondents
obtain more postpaid subscribers via the reseller/agent channel (50%) than
North American respondents do (40%).
Prepaid subscriber acquisition channel
44%
Resellers/agents
51%
41%
Retail stores
40%
Kiosks 13%
Other 5%
Call center 3%
Direct sales 1%
Telesales/telemarketing 1%
Internet 1%
Percentage of subscribers added through channel

In terms of regional differences, the North American responding carriers

obtain more prepaid subscribers via resellers/agents (53%) compared to the
rest of world-based respondents (24%). In contrast, the rest of world-based
respondents obtain more prepaid subscribers via kiosks (24%) than North
American respondents do (2%).
The allocation of different sales channels for all respondents to acquire postpaid
and prepaid customers in the current year is consistent with the responses
received in the 2007 North American Wireless Survey.

Subscriber costs
The following chart illustrates the allocation of cash cost per user (CCPU)
between each component for all responding carriers and for carriers with greater
than and less than $5.0 billion in revenue.
Components of total Cash Cost Per User (CCPU)
33%
Network/engineering 25%
27%
2%
Other 23%
16%
13%
General/admin salaries 11%
12%
11%
Retention costs 6%
8%
6%
Information technology 9%
8%
8%
Customer care 6%
7%
8%
Commissions and selling 6%
7%
1%
Billing and other outside services 6%
4%
5%
Bad debt 2%
3%
3%
Advertising 3%
3%
4%
Revenue based taxes 1%
2%
3%
Rent (store/corporate) 1%
2%
3%
Rebates/credits 1%
1%

All respondents

We asked the responding companies what percentage of each component make
up the total costs per gross addition (CPGA). The results are presented in the
chart below for all responding carriers and for carriers with greater than and less
than $5.0 billion in revenue.
Components that make up total cash costs per gross addition (CPGA)
22%
Advertising 26%
25%
29%
Commission expense 21%
24%
22%
Equipment subsidy 18%
20%
16%
Sales/admin salaries 9%
11%
5%
Other 12%
10%
3%
Marketing expense 8%
6%
1%
Rebates 5%
3%
2%
Rent (store/corporate) 1%
Customer care 1%

Average of all respondents
Eighty-eight percent (88%) of all the responding carriers’ expense customer

acquisition costs related to postpaid subscribers, while the remaining 12%
capitalize all or part of these costs. Ninety-four percent (94%) of all the
responding carriers expense customer retention costs for postpaid subscribers.
All the responding carriers’ expense customer acquisition and retention costs
related to prepaid subscribers.

The responding companies were asked to indicate the costs that they include
in the numerator for their calculation of CPGA when used as a performance
measure. The following chart shows the elements used in the numerator for
the calculation.
Costs included in CPGA
Advertising 93%
Sales commissions-activation 87%
Gross equipment 80%
Direct sales force salaries 73%
Equipment revenues 73%
Dealer volume sales bonuses 73%
Agent rebates 67%
Subscriber rebates 60%
Retail store facility 53%
Cooperative marketing 53%
Direct sales force and G&A 53%
Training 47%
Post activation commissions 40%
Product development 27%
Airtime promotions 20%
Other 20%
Direct subscriber retention 13%
Credit check expense 13%

We asked the responding companies what their advertising costs were per gross
addition. The results are presented in the chart below.
Advertising cost per gross addition
21%
37%
14% Less than $30

$30 - $60
7% $61 - $80
21% $81 - $100
Greater than $100
The average advertising cost per gross addition for companies with revenue
greater than $5.0 billion is $82.50, and for companies with less than $5.0 billion
in revenue it is $65.75.
The responding carriers were also asked which media they used for advertising
their service. The table below shows the average response by each source
of advertising.
Advertising medium
Television 34%
Newspaper 13%
Other print media 12%
Radio 11%
Billboards 9%
Advertising/agency fees 8%
Other 5%
Internet 4%
Sponsorship 3%
Magazine 1%

Carriers with revenue greater than $5.0 billion reported using television for
50% of their advertising and the internet for seven percent. Carriers with less
than $5.0 billion in revenue use those two media only 24% and two percent,
respectively; and they use billboards for 14% and radio for 13% of their
advertising. In comparison, the carriers with revenue greater than $5.0 billion use
billboards only one percent and radio only nine percent.
We asked the responding carriers to provide the percentage of commission

expense for each sales channel in fiscal year 2007. The results are
presented below.
Commission expense by channel

2%
14% 19%
National retail sales

Agent sales
65% Direct retail sales
Direct enterprise sales
Eighty-one percent (81%) of the responding carriers’ commission payments

typically are structured to pay in full at the point of acquisition or retention of the
subscriber. The remainder of the responding carriers pay in installments.
Thirty-five percent (35%) of the survey respondents record an accrual for
potential chargebacks (reduction to commission expense resulting from potential
deactivations). Of these companies, the majority record an accrual based on
average chargeback percentages.

Fifty-nine percent (59%) of the survey respondents pay recurring residual
commission fees. Of the companies that pay a residual commission expense,
100% pay it to sales agents and 60% pay the residual commission expense
to national retail sales channel. Sixty percent (60%) of the respondents
recognize the residual commission fee paid to agents when earned, while 30%
recognize the commission fee paid to agents when paid. For the national retail
sales channel, 83% recognize this expense when earned. Only one carrier
pays residual commission expense for direct retail sales, and this expense is
recognized when earned.
The responding companies were asked to indicate how they treat the sale of
handsets if their company uses resellers and/or indirect agents.
Treatment of postpaid handset sales
10%
30%
30%
Sell handsets separately at cost

Sell handsets separately at cost, plus a mark-up
30% Sell handsets separately at cost, less discount
Suggested retail price
Treatment of prepaid handset sales
15% 15%
23%
Sell handsets separately at cost

47% Sell handsets separately at cost, plus a mark-up
Sell handsets separately at cost, less discount(s)
Suggested retail price
Seventeen percent (17%) of the responding companies pay commissions to

resellers for sales of handsets in addition to the activation of subscribers.

General and administrative

We asked the responding companies what their average monthly general and
administrative (G&A) costs were per customer. The results are presented in the
chart below.
Average monthly general and administrative cost per subscriber
27% 27%
Less than $5
19% $5 - $8
27%
$9 - $12
Greater than $12
The average monthly general and administrative cost per subscriber in 2008 was
$9.92 compared to $13.20 in the 2007 North American Wireless Survey.

Data
All of the responding companies offer data services to postpaid customers, while
94% of the responding companies offer data services to prepaid customers.
The responding companies offer multiple types of data services to customers.

SMS continues to be the data revenue stream that generates the majority of data
revenue. The chart below depicts the percentage of total revenue generated for
each type of data service identified as related to postpaid data services.
Postpaid data revenue
SMS 43%
BlackBerry based email and web 19%
Other 11%
Laptop cards 9%
Data bundles 4%
Internet access from handsets 4%
Pictures 3%
Ring tones 3%
Games 2%
Premium SMS 2%
With the exception of SMS, phone/BlackBerry, laptop cards, and data bundling,
no significant differences were reported between companies with revenue
greater than $5.0 billion and those with revenue of less than $5.0 billion. For
SMS, companies with revenue greater than $5.0 billion average 34% of data
revenue, while companies with revenue of less than $5.0 billion average 51%.
However, companies with revenue greater than $5.0 billion average nine percent
of data revenue related to data bundling and 23% and 11% related to phone/
BlackBerry and laptop cards, respectively. Companies with revenue of less
than $5.0 billion average only one percent of data services revenue from data
bundling and 15% and seven percent related to phone/BlackBerry and laptop
cards, respectively.

The chart below depicts the percentage of total revenue generated for each type
of data service identified as related to prepaid data services.
Prepaid data revenue
SMS 55%
Internet access 11%
Data bundles 9%
Ring tones 8%
Downloading games 4%
Other 4%
Premium SMS 4%
Pictures 2%
Ringback tones 1%
BlackBerry based email and web 1%
Game usage 1%

The following explanations and charts illustrate how the responding companies
bill and recognize the various data revenue streams.
Ring tones
The majority (71%) of the companies bill their customers per download/usage
charge, and 21% bill based on a fixed monthly fee plus variable fees per
usage. Seventy-five percent (75%) of the responding companies recognize ring
tones revenue gross on the income statement, and the remaining 25% use a
net presentation.
Games
Sixty-seven percent (67%) of the companies bill their customers per download/
usage charge and 17% bill a fixed monthly fee plus variable fees based on usage
related to games. Eighty-six percent (86%) recognize game revenue gross on the
income statement.

SMS and premium SMS

Sixty-seven percent (67%) of the respondents recognize SMS and premium SMS
revenue gross on the income statement. The chart below illustrates how SMS is
billed to customers.
Billing of SMS revenues
7%
29%
Per download/use charge

64%
Fixed monthly fee plus variable per usage
Fixed monthly fee
Compared to SMS in the chart above, 85% of the companies bill premium SMS
based on a per-download use/charge or variable pricing.
Phone/BlackBerry-based e-mail and Web access

Sixty-seven percent (67%) of the respondents recognize phone/BlackBerry-
based e-mail and Web access revenue gross on the income statement. A
majority (82%) of the survey respondents bill their customers a fixed monthly fee
plus a variable fee based on usage.
Laptop cards
Seventy-five percent (75%) of the respondents recognize laptop card revenue
gross on the income statement. Sixty-seven percent (67%) of the survey
respondents bill their customers a fixed monthly fee plus a variable fee based on
usage, and 25% bill based on a fixed monthly fee.

Internet access from handsets
Sixty percent (60%) of the respondents recognize internet access from handset
revenue gross on the income statement. The chart below shows the methods of
billing internet access from handsets to customers.
Billing of internet access from handset revenue
21% 21%
14%
44%
Fixed monthly fee
Combination
Picture revenue
Seventy-one percent (71%) of the respondents recognize picture revenue
gross on the income statement. The chart below indicates how picture revenue
is billed.
Billing of picture revenue
23%
31%
15%
31% Fixed monthly fee
Other

Network
We asked the responding companies which costs are included in the network/
system expense. The responses are depicted below.
Costs included in network/system costs
Maintenance/utility 93%
Interconnect 86%
Long distance 79%
Engineer salaries 71%
Roaming 71%
Data 71%
Rent 71%
Government fees 50%
Subscriber usage 20%
Switch support 29%
Directory assistance 29%
Backhaul support 21%

We asked the responding companies what percentages of each component
make up the total network/system costs. Their average responses are illustrated
in the chart below.
Components of network costs
Interconnect 20%
Other 14%
Rent 12%
Roaming 10%
Maintenance/utility 10%
Long distance 7%
Government fees 7%
Data 7%
Engineer salary 5%
Subscriber usage 3%
Backhaul support 3%
Switch support 1%
Directory assistance 1%

The chart below depicts the percentage of cell sites that the responding
companies lease rather than own. Four respondents indicated that they lease all
of their cell sites, while one respondent indicated that they own all of their cell
sites. Sixty percent (60%) of the responding companies stated that they lease
80% or more of their total cell sites.
Percentage of cell sites leased
7%
27% 13%
20% No cell sites leased

40% - 60% cell sites leased
61% - 80% cell sites leased
33% 90% - 99% cell sites leased
100% cell sites leased
No responses were received in the 1% - 39% or 81% - 89% categories.
Seventy-five percent (75%) of the responding companies indicated that they

use a circuit inventory tracking system to account for system expense. Of those
companies, 50% use Excel to track circuit inventory.

Long distance and interconnect expense
Ninety-four percent (94%) of the respondents perform bill verification for long
distance and interconnect expenses. Of those companies, 75% perform bill
verification internally, 19% use third parties to perform their bill verification, and
six percent use a combination of internal resources and a third party to perform
their bill verification. The following chart depicts which internal group performs
their bill verification.
Internal department that performs bill verification
9%
9%
46%
Engineering
36%
Revenue
Roaming
Transmission
We asked the companies to report interconnect and long distance expenses as

a percentage of service revenue. The average of all responding companies was
5.82%. The chart below illustrates the results.
Interconnect and long distance as a percentage of total service revenue
19%
36%
Less than 3%
45%
3% - 6%
Greater than 6%

Fifty percent (50%) of the responding companies reported that they recognize
reciprocal compensation for calls terminating on ILEC networks with no
reciprocal compensation agreements in place. The chart below illustrates how
these companies account for terminating expenses when there is no reciprocal
compensation agreement in place.
Accounting for calls terminated on ILEC networks
17%
8%
50% No accrual recorded until ILEC notifies the
company of its desire to establish a reciprocal
compensation agreement
Record an accrual based on the actual minutes
25% terminated and an estimated settlement rate
Bill and keep
Other
Rate plans and billing

For fiscal year 2007, we asked the responding companies to identify the method
through which their postpaid subscribers receive their monthly invoices. The
responses are below.
Monthly invoice delivery method
4%
5%
6%
Paper bill
Electronic bill (e-bill)
85%
No invoice
Paper & e-bill

The charts below indicate the varying numbers of rate plans that the responding
companies currently offer to postpaid and to prepaid subscribers.
Number of rate plans offered to postpaid customers
Fewer than 100 plans 8
100 - 500 plans 3
Greater than 500 plans 1
Number of rate plans offered to prepaid customers
Fewer than 10 plans 8
10 - 30 plans 2
Greater than 30 plans 2
Compared to the number of plans currently offered (shown above), nine carriers
indicated that they have more than 1,000 postpaid plans maintained in the billing
system and five carriers indicated that they have more than 30 prepaid plans
active in the billing system. Fifty-eight percent (58%) of the companies indicated
that they are currently focused on reducing the number of rate plans offered
to subscribers.

The following pages cover wireless company practices

in the area of property, plant and equipment.
Capital expenditure reporting
Capitalization policies
Capitalized labor
Site acquisition costs
Asset impairments and fair value
Business combinations
Asset retirement obligations
Lease accounting and tracking
Asset tracking
Asset useful lives
Taxes and tax useful lives
Co-location
Fixed asset reporting

Capital expenditure reporting

The chart below shows what methods the responding companies use in
reporting capital expenditures externally.
Externally reported capital expenditures
6%
18%
Reported on an accrual basis

Reported on an accrual basis, along with a
reconciliation to cash basis capital expenditures
76%
Reported on a cash basis, including those
capital expenditures that were paid for during
the relevant period
Survey respondents were asked whether their method of externally reporting

capital expenditures was consistent with the capital expenditures reported on
the statement of cash flows. Eighty-eight percent (88%) of all the respondents
stated that their method of externally reporting capital expenditures was
consistent with capital expenditures reported on the statement of cash flows,
and 12% reported making other adjustments, which included acquisition of
companies and capitalized interest.

The chart below illustrates the percentage of respondents who include the
following expenditures in their externally reported capital expenditures related to
property, plant and equipment (P,P&E).
Types of capital expenditures

Purchase of non-network P,P&E, or land 100%
Purchase of network-related P,P&E 100%
Capitalized internal use software 94%
Leasehold improvement 88%
Capitalized labor and overhead costs 88%
Purchases of software licenses 65%
Purchases of licenses & related licensing costs 53%
Prepayments or deposits made for any P,P&E 29%
Acquisitions of companies/markets 29%
Other 24%
Asset retirement obligations 12%
Rental expense 6%
* Chart sums to greater than 100% because multiple responses were allowed.
* Other includes perpetual license software, capitalized interest, and progress payments.
Responding companies were asked whether they consider the hardware and
software components of network equipment separately. Eight-eight percent (88%)
of the respondents consider hardware and software components separately.

The chart below illustrates which software costs the responding companies
classify separately from property, plant, and equipment.
Software classified separately from property, plant, and equipment
Billing and mediation device software 64%
Switch software 57%
Network software 50%
Network management systems 43%
Other 14%
* Other includes separate identification of network vs. non-network software and SAP/Windows.
We asked the responding companies on which externally reported balance

sheet line item they recorded capitalized internal use software. Seventy-one
percent (71%) of the respondents include capitalized internal use software as
property, plant, and equipment, and 29% record it as intangible assets subject
to amortization, including three of the four carriers reporting under IFRS.
Eighty-eight percent (88%) of the respondents indicated that they disclose their
construction-in-progress balance in their financials or notes thereto.

Capitalization policies
The chart below illustrates the types of costs associated with fixed assets that
responding companies capitalize.
Types of capital expenditures

External labor 94%
Installation costs 94%
Internal labor and related costs 88%
Legal/permitting fees 76%
Sales taxes 71%
Overhead costs 53%
Interest expense on P,P&E 47%
Utilities during construction period 35%
Interest expense on wireless licenses 35%
Rigging activity 24%
Telco charges during construction period 24%
Rent during construction period 18%
Property taxes during construction period 6%
Other 6%
* Other includes network maintenance.

Responding companies that capitalize rent during the construction period

indicated that doing so is related to site rental.

The chart below depicts the responding companies’ de minimus level for the
capitalization of property, plant, and equipment. The rest of world carriers had
lower levels of capitalization policies (all equal to or less than $500) compared to
the responding companies in North America.
Minimum capitalization threshold for property, plant, and equipment
6% 13%
13%
No minimum capitalization threshold;

all amounts are capitalized
25% $0 - $500
43%
$501 - $1,000
$1,001 - $2,000
$2,001 - $3,000
The respondents were asked whether or not they capitalize interest on

wireless licenses or fixed assets. Fifty-five percent (55%) of the responding
North American companies indicated that they capitalize interest on wireless
licenses, and none of the responding rest of world companies capitalize
interest on wireless licenses. Sixty-seven percent (67%) of the North American
companies capitalize interest on fixed assets, and only one rest of world
company capitalizes interest on fixed assets. Ninety-four percent (94%) of all
the responding companies indicated that they had debt/borrowings that incur
a material amount of interest expense, and 76% indicated that they are actively
building out new markets.
Of the respondents who stated that they capitalize interest on wireless licenses,
50% indicated that they record the capitalized interest to fixed assets on the
balance sheet. The other 50% record the capitalized interest to wireless licenses
on the balance sheet.
The respondents were asked whether they receive rebates from their
equipment vendors based on a specified level of fixed asset purchases or other
commitments. Eighty-eight percent (88%) of the respondents indicated that they
receive those types of rebates from equipment vendors.

For the responding companies that receive rebates from equipment vendors, the
chart below depicts how these respondents account for the rebates received
from the vendors.
Accounting for rebates received from vendors
7%
27%
Reduce the cost basis of equipment only at the
time the rebate has been earned (i.e., specified
66% level of purchases have been met)
Reduce the cost basis of equipment at the time
of purchase based on an estimate of the rebates
to be received
Other*
* Other includes other operating income related to bonuses and discounts.
We asked the responding companies whether they received any type of

liquidating damages from equipment vendors for instances related to equipment
failure, service downtime, customer service delays, repair delays, etc. Forty-
two percent (42%) of the respondents indicated that they received liquidating
damages from equipment vendors for those types of events. The chart below
depicts how the responding companies that received liquidating damages
accounted for the liquidating damages received.
Accounting for liquidating damages
14%
29% 57%
Reduce the cost basis of equipment for the
amounts to be received from the vendor
Record the amounts received as a reduction
of expenses
Record the amounts received as income

Capitalized labor
The chart below illustrates how the respondents determine or quantify their
internal capitalized labor amounts.
Determination of capitalized labor amounts
13%
Indirect—It is based upon a percent of groups

27% salaries and other related costs derived from
60% cost studies
Direct—It is based upon a direct allocation
of salaries (100% of specific groups salaries
are capitalized)
Other
The chart below depicts the frequency of cost studies that are used to determine
the internal capitalized labor cost. Sixty-four percent (64%) of the respondents
noted that the cost studies are performed annually.
Frequency of cost studies
9%
9%
18%
64%
Annually
Bi-annually
Quarterly
Monthly

The chart below illustrates the types of expenses that the responding companies
include in their internal capitalized labor costs.
Types of internal capitalized costs

Engineer salaries 100%
Benefits and taxes 73%
Vehicle expenses 47%
Administrative salaries 40%
Meals and entertainment 40%
Lodging and hotel 40%
Office supplies 33%
Executive management salaries 27%
Cellular phone usage 27%
Training 20%
Telephone usage 20%
Office rent 13%
Utility expenses 13%
Equipment rental 7%
Sales and marketing 7%

Site acquisition costs

The chart below shows how the responding companies account for site
acquisition costs associated with unsuccessful candidates within a search ring.
We noted that 44% of the respondents expensed the site acquisition costs
immediately to cost of services for all candidates/search rings evaluated.
Accounting for site acquisition costs
25%
44%
Capitalize costs of unsuccessful candidates

within a search ring and depreciate over the life
of other site acquisition costs
31% Capitalize/defer costs, expense if site is later
determined unsuccessful
Expense immediately to cost of services

The charts below illustrate how the responding companies account for and
classify construction-in-progress (CIP) abandonment costs related to soft assets
(e.g., site acquisition costs and tangible assets such as radios, switch hardware,
and software) under SFAS 144/IAS 36 or the equivalent.
Tangible assets
11% 11%
17% Cost of service (cost of revenue)

Classified as a component of depreciation expense
28%
Allocated among cost of service, general and
administrative, and sales and marketing expense
Transfer to another site where the asset can
22% be used
11% Classified on a separate line item
Other
* Other includes non-operating expense and infrastructure expense.
Soft assets
11%
22%
Cost of service (cost of revenue)

Classified as a component of depreciation expense
6% 33% Classified on a separate line item
Transferred to another site where the asset can
11% be used
Allocated among cost of service, general and
17% administrative, and sales and marketing expense
Other

Asset impairments and fair value

Eighty-two percent (82%) of the respondents indicated that they exclude asset
impairment charges from their EBITDA calculations.
The chart below indicates how respondents define the lowest level of cash flows
under SFAS 144/IAS 36 or the equivalent standard. Fifty-nine percent (59%)
of the respondents stated that they define the lowest level of cash flows at the
enterprise level. The global results below are consistent with the results of the
2007 North American Wireless Survey.
Lowest level of cash flows
29%
59%
12%
At the enterprise level
At a regional level
At a reporting unit/segment level
The chart below depicts whether the respondents’ definitions of the lowest
level of cash flows/cash generating units (CGU) under SFAS 144/IAS 36 or the
equivalent standard are consistent with their operating segments under SFAS
131/IAS 14 or the equivalent standard.
Definition of the lowest level of cash flows
6%
29%
Generally consistent with our operating segments

65%
under SFAS 131/IAS 14 or equivalent
Generally at a lower level than our operating
segments under SFAS 131/IAS 14 or equivalent
Cash generating unit

Business combinations
Of the respondents who perform a fair value analysis under FAS 141/IFRS 3 or
the equivalent, 40% indicated that the analysis is performed internally. Thirty-
three percent (33%) indicated that they use the assistance of a third party.
The remaining 27% use a combination of internal and third-party resources.
Sixty-three percent (63%) of the respondents indicated that they completed a
business combination within the past three years.
The chart below depicts the types of valuation methodologies the respondents
use in determining fair values under FAS 141/IFRS 3 or the equivalent.
Valuation methodologies for FAS 141/IFRS 3 or equivalent analysis
Business enterprise value 67%

Greenfield income approach 50%
Cost approach 42%
Income approach (relief from royalty method) 33%
Market approach (purchase price allocation) 25%
Excess earnings method 25%
Market approach (auctions) 25%
Market approach (license resales) 25%
Market approach (guideline company) 17%
Discounted cash flow 8%

Of the respondents who perform a fair value analysis for valuation under FAS
142/IAS 38 or the equivalent, 27% indicated that the analysis is performed
internally. Thirty-three percent (33%) indicated that they use the assistance
of a third party. The remaining 40% use a combination of internal and third-
party resources.
The chart below depicts the types of valuation methodologies respondents use
to determine fair values under FAS 142/IAS 38 or the equivalent.
Types of valuation methodologies
Greenfield income approach 57%

Business enterprise value 50%
Market approach (auctions) 29%
Market approach (license resales) 29%
Cost approach 21%
Income approach (relief from royalty method) 21%
Excess earnings method 14%
Market approach (guideline company) 7%
Market approach (purchase price allocation) 7%

The chart below depicts where the responding companies record a resulting gain
or loss upon the sale of a long-lived asset or group of assets.
Recording gain/loss from sale of long-lived assets
6%
28%
If material, as a separate line item within

operating income. If not material, netted against
individual operating expense line item
44% As a separate line item within operating income
Included in other income
22%
Mass asset accounting and gains and losses or
normal retirements and disposals are recorded
into accumulated depreciation
We asked the responding companies if they had recorded any non-monetary

license exchanges in the past two years. Only 29% had any non-monetary
license exchanges that were recorded under FAS 153/IAS 38 or the equivalent.
Sixty-seven percent (67%) of those responding companies that had non-
monetary license exchanges recorded the transactions at fair value. The
remaining 33% recorded the non-monetary license exchanges at carrying value
or used a combination, depending on the situation.
The survey asked the responding companies if they have either recorded an
impairment of fixed assets or accelerated depreciation on a category or group
of assets in the last 12 months. Seventy-six percent (76%) of the respondents
stated that they have either recorded impairment charges or accelerated
depreciation. The respondents stated that the primary drivers of the decision
included obsolescence due to technological updates (77%), disposition or
acquisition, or abandoned development for certain planned cell sites.

Asset retirement obligations

The chart below depicts the percentage of responding companies that have
asset retirement obligations (ARO) (SFAS 143/IAS 16 or the equivalent)
associated with the following types of long-lived assets.
Long-lived assets with asset retirement obligations
Cell sites 88%
MTSOs 53%
General and administrative 47%
Retail sales facilities 41%
Data centers 18%
Underground network 18%
Network operating center 12%
Telehouse sites 6%
Responding companies were asked to indicate the location of their cell sites.
The results are presented in the chart below.
Cell site locations

3%
3%
15%
23% Rooftops
10%
Monopoles
3% Utility towers
5% Towers on owned land
Towers on leased land
Co-located cell sites
38% Non-tower-in building
Other

We asked the respondents for their estimates, low and high, of the expected
ARO for each major asset type. Responses are summarized in the two
charts below.
Average minimum ARO by asset type
Rooftops 11 45 11 11 22
Monopoles 34 22 11 22 11
Utility tower 14 44 14 14 14
Tower (owned) on leased land 40 30 20 10
Co-located cell sites 58 14 14 14
Non-tower—In building 40 20 20 20
Tunnels 50 50
Retail stores 66 17 17
Average maximum ARO by asset type
Rooftops 12 38 38 12
Monopoles 22 34 11 11 11 11
Utility tower 14 44 14 14 14
Tower (owned) on leased land 35 35 10 10 10
Co-located cell sites 49 17 17 17
Non-tower—In building 50 50
Tunnels 100
Retail stores 40 20 20 20
Less than $5,000
$5,001 - $10,000
$10,001 - $15,000
$15,001 - $20,000
$20,001 - $25,000
$30,001 - $35,000
$35,001 - $40,000
$40,001 - $45,000
$45,001 - $50,000
$65,001 - $70,000
$95,001 - $100,000
$165,001 - $170,000
No responses were received in the $25,001 - $30,000, $50,001 - $65,000, $70,001 - $95,000,
and $100,001 - $165,000 categories.

Of the respondents who indicated that they record an ARO, the chart below
summarizes the costs included in the respective ARO calculations.
Costs included in ARO calculation
Dismantle assets 88%
Recondition site 81%
Demolish site 69%
Move assets off site 50%
Redeploy assets 19%
Chart sums to more than 100% because multiple responses were allowed.
Of the responding companies, 59% indicated that lessors have required

performance of remediation or restoration activities for cell site leases that have
been terminated.
The survey asked the responding companies whether they factored the
probability of the lessor enforcement into the calculation of their ARO liability.
Forty-seven percent (47%) of the respondents factor the probability of lessor
enforcement into the calculation of their ARO liability.

The survey responses indicate that there continues to be variation in classifying
ARO accretion expense in the income statement. The chart below shows where
the responding companies record accretion expense.
Income statement line item of accretion expense related to AROs
7%
36%
57%
Operating expense line item other than
depreciation and amortization
Depreciation and amortization
Finance costs or similar charges
Of those companies that record accretion expense on an operating expense line

item other than depreciation and amortization, 86% record it as cost of services
or equivalent cost line item and 14% record the accretion expense in selling,
general, and administrative.
The responding companies were asked which line items on the statement
of cash flow are utilized for reporting accretion expense. The chart below
shows which items on the statement of cash flow they use for reporting
accretion expense.
Reporting of accretion expense on statement of cash flows
21% 21%
As part of the changes in accruals/payables/
provisions to reconcile net income to operating
cash flow
“Other, net” as an adjustment to reconcile net
14% income to operating cash flow
Combined with depreciation and amortization
expense as an adjustment to reconcile net
income to operating cash flow
44%
Separately as an adjustment to reconcile net
income to operating cash flow

The chart below illustrates the responding companies’ various methods of

identifying, calculating, and tracking AROs.
Method of identifying, calculating, and tracking AROs
18%
35%
12% My company uses a sampling method to identify,

calculate, and track AROs
My company identifies, calculates, and tracks
AROs for each individual asset
My company uses a portfolio approach of
35% stratifying asset types
My company uses location specific information
The chart below depicts the frequency with which the responding companies
update their SFAS 143/IAS 16 or equivalent ARO analysis.
Frequency of update of SFAS 143/IAS 16 or equivalent ARO analysis
19%
44%
31% Annually
Bi-annually
6% Quarterly
Monthly

Lease accounting and tracking
The chart below illustrates the average life that the responding companies utilize
to recognize the scheduled increases in rent expense on a straight-line basis.
Average life of scheduled increases in rent expense
Co-location sites with escalations 30 40 10 10 10
Office and retail locations with escalations 50 36 7 7
Cell site land leases with escalations 9 28 9 36 18
5 years
10 years
15 years
20 years
25 years or greater
Current lease term
The chart below illustrates the policy that the respondents follow to determine
the average lease life used to recognize the scheduled increases in rent expense
on a straight-line basis.
Policy used to determine lease life

Co-location sites with escalations 23 31 23 23
Office and retail locations with escalations 23 54 8 15
Cell site land leases with escalations 31 23 23 23
Life of related asset
Current period/term only
Current period/term plus determined number of renewals
Current period/term plus all stated renewals

We asked the respondents how their companies track leases with escalations,
renewable terms, retirement obligations, rent holidays, etc. Eighty-one percent
(81%) of the responding companies indicated that they track this type of
information via separate applications external to the accounting general ledger
application. Six percent (6%) indicated that they use an application within the
accounting general ledger application system, and 13% indicated that they use
mainly spreadsheets.
Of the respondents who indicated that they use a separate application

external to the general ledger application, 38% indicated that the application
was developed internally, 46% indicated that the application was developed
externally, and the remaining 16% indicated that a portion of the application was
developed externally and a portion internally.
Fifty percent (50%) of the respondents indicated that their lease tracking
application is managed within their company’s engineering/property
management function and 38% indicated managing the application within the
accounting and finance function. The remaining respondents (12%) indicated
that accounting and property management share responsibility for managing the
lease tracking application.
Forty percent (40%) of the respondents stated that they had plans to add,
modify, or purchase lease software applications.

Asset tracking
The chart below illustrates how the respondents track the movement of their
network fixed assets.
Tracking network fixed assets
9%
17% A fixed asset system that uses a bar code

39% scanning system (automated)
A fixed asset system with movements entered
real-time into the system (manual)
Manual input of fixed asset movements based on
13%
transfer tags
Physical counts that are reconciled to the fixed
22% asset system
Other manual processes
Responding companies were asked which fixed asset tracking system they
use. The fixed asset tracking systems the respondents use include CATS/
Fulcrum (cellular asset tracking system), SAP, GAMMA, Lawson, Oracle, EMPAC/
Infowave, and AM-01.
Of the respondents, 69% stated that their tracking systems also track spare parts.
Fifty-seven percent (57%) of the respondents who use a bar coding system
indicated that the bar coding system is integrated or interfaced directly with the
fixed asset sub-ledger.
Survey respondents were asked whether they have performed an inventory of

their network assets. The results are presented in the chart below.
Completion of network asset inventory
12%
12%
Yes
76%
No, but we plan to perform one within the next
1 - 2 years
No, and we have no plans to perform one

The respondents who completed an inventory were asked when they had
performed the inventory. Fifty-nine percent (59%) stated that the inventory was
completed within the last 12 months.
Timing of inventory of network assets
8%
17%
8% Inventory completed within the past 12 months

59%
Inventory completed within the past 1 - 2 years
8% Inventory completed within the past 2 - 3 years
Inventory completed within the past 3 - 4 years
Inventory completed over 5 years ago
The responding companies indicated whether the inventory process for

network assets was a result of physical counts or cycle counts for each type of
item counted.
Nature of inventory procedures
6 6
5
Number of 4 4
responding
companies 3 3 3 3
Cell sites Switches Depots Warehouses Vendor

warehouses
Physical counts
Cycle counts

The respondents were asked how they reconcile their physical or cycle counts to
their fixed asset ledger. The results are presented in the chart below.
Reconciliation of inventory
8%
15%
77% Specific identification of each asset

Application of a standard cost to the asset
Unit counts and average costs by location and item
We asked the respondents whether they performed physical counts by internal

resources, third-party resources, or a combination of the two. The results are
summarized in the chart below.
Resources used for completion of physical inventory
38%
47%
Internal resources only

15% Third party under management supervision
Combination of internal and third party resources

Asset useful lives

The chart below depicts the respondents’ fixed asset components that are
tracked and depreciated separately within the respondents’ fixed asset systems.
Separately tracked and depreciated fixed asset components
Switch—hardware 100%
Switch—software 94%
Radios (RF)—hardware 88%
Towers/base stations 82%
Antenna 82%
Test equipment 76%
Radios (RF)—software 76%
Leasehold improvements 71%
Power equipment 71%
Shelters/buildings 71%
Microwave equipment 65%
Data network 65%
Voicemail equipment 53%
Channel cards 53%
Cabling 53%
Capitalized interest on P,P&E 35%
Land improvement—owned land 29%
Land improvement—leased land 29%
Capitalized interest wireless licenses 18%

The charts below illustrate the depreciation lives for the fixed asset components.
The charts are separated into the depreciation lives of 2.0G, 2.5G, and 3.0G for
each fixed asset component.
Radios (RF) and related equipment—Hardware
2.0G (average useful life = 8.2 years)
10 3
Number of years
8 4
7 1
5 1
10 2
Number of years
8 4
7 4
6.5 1
10 2
Number of years
8 2
7 4
5 3

Radios (RF) and related equipment—Software

Number of years
10 3
8 2
2 1
10 2
8 2
Number of years
7 2
5 1
3 2
2 1
10 2
8 2
Number of years
7 2
5 1
3 1
2 1

Switch—Hardware
Number of years
10 6
8 1
7 1

Number of years
10 2
8 4
7 5

Number of years
10 4
8 3
7 5

Switch—Software
10 3
Number of years
8 1
5 1
3 1
2 1
10 1
8 1
Number of years
7 2
5 1
3 4
2 1
1 1
10 2
8 1
Number of years
7 2
5 1
3 3
2 1
1 1

Antenna
15 1
Number of years
10 4
8 3
7 1
4 1
15 1
Number of years
10 1
8 3
7 3
4 2

15 1
10 2
Number of years
8 3
7 3
5 1
4 2

Cabling
24 1
Number of years
15 1
10 3
8 1
18 1
Number of years
15 2
10 1
8 2
7 2
15 1
Number of years
10 1
8 2
7 3

Microwave equipment
20 1
Number of years
15 1
10 3
8 1
15 1
10 2
Number of years
8 2
7 2
6 1
2 1
15 1
Number of years
10 2
8 2
7 2
2 1

Shelters/Buildings
25 2
Number of years
21 1
20 1
15 1
10 3

39 1
21 1
Number of years
20 4
15 2
14 1
10 2

25 1
21 1
Number of years
20 2
15 2
14 1
10 3

Towers/Base stations
25 1
Number of years
16 2
15 2
10 3
7 1

30 1
25 1
Number of years
20 1
16 2
15 5
10 1

25 1
20 1
Number of years
16 2
15 5
14 1
10 2

Test equipment
12 1
Number of years
5 1
4 1
3 3
7 1
Number of years
5 5
4 1
3 2
7 1
Number of years
5 4
4 1
3 4

Land improvements—Leased land
Number of years
12 1
5 1
20 1
Number of years
15 1
12 1
5 1

Number of years
15 1
12 1
5 1

Land improvements—Owned land

Number of years
12 1

Number of years
20 2
15 2
12 1

Number of years
20 1
15 1
12 1

Leasehold improvements
10 1
Number of years
5 3
4 1
3 1

Number of years
10 1
5 5
4 1
10 2
Number of years
5 3
4 1
3 1

Channel cards
10 1
Number of years
8 1
7 1
5 1
8 2
Number of years
7 2
6.5 1
5 2

Number of years
8 2
7 2
5 3

Power equipment
Number of years
17 1
10 5
8 1

Number of years
11 1
10 3
8 2
7 2
14 1
Number of years
11 1
10 3
8 2
7 2

Voicemail equipment
10 1
Number of years
8 2
6 1
5 2

Number of years
8 3
7 2
5 3

Number of years
8 3
7 2
5 2

Data network
20 1
Number of years
10 2
8 1
5 2
10 1
Number of years
8 2
7 2
5 3
10 1
Number of years
8 1
7 2
8 1
5 3

Responding companies were asked if they changed any of their fixed asset
useful lives during the past year. Fifty-nine percent (59%) of the respondents
indicated that they have had a change in the useful lives of their fixed assets.
Sixty percent (60%) of the respondents who indicated that they have changed
their fixed asset useful lives during the past year stated that the change generally
increased depreciation expense.
The respondents were also asked what triggered the change in the assessment
of the fixed asset useful lives. Responses include technology developments,
company-specific replacement of assets, and third-party asset review.
The chart below illustrates the last time the respondents performed a full study
of their fixed asset useful lives.
Most recent fixed asset useful life study
6%
24%
52%
Within the last 12 months

18% Between 1 and 2 years ago
More than 4 years ago
Study of lives has not been performed
The respondents were asked when they plan to perform their next study of asset
lives and the chart below illustrates the responses. Forty-one percent (41%) of
the respondents plan to perform a study of asset lives within the next 12 months.
Next planned fixed asset useful life study
12%
35%
41% Within the next 6 months

Within the next 12 months
12%
Within the next 1-2 years
No plans to perform a study

Taxes and tax useful lives
The charts below represent the useful lives for tax purposes of the fixed asset
components utilized by the respondents.
Radio (RF) and related equipment—Hardware

(tax average useful life = 6.6 years)
10 2
Number of years
8 3
7 3
5 8
Radio (RF) and related equipment—Software

12 1
8 1
Number of years
7 3
5 1
4 1
3 5
Switch—Hardware
46 1
Number of years
10 2
8 1
7 2
5 9

Switch—Software
12 1
10 1
Number of years
7 2
5 3
4 1
3 6
Antenna
15 1
Number of years
10 4
8 3
7 4
5 4
Cabling
42 1
20 1
Number of years
16 1
15 3
10 1
7 2
5 3

Microwave equipment
20 1
15 1
Number of years
10 1
8 2
7 2
5 5
Shelters/Buildings
39 4
25 2
20 2
Number of years
15 7
10 2
8 1
7 1
5 3
1 1
Towers/Base stations
25 1
15 8
Number of years
14 1
10 1
8 2
7 1
5 2

Text equipment
8 1
Number of years
7 4
5 4
4 1
3 3
Land improvements—Leased land

Number of years
20 1
15 5
13 1
Land improvements—Owned land

Number of years
17 1
15 5

Leasehold improvements
39 4
20 1
Number of years
15 3
13 1
10 2
7 1
3 1
Channel cards
Number of years
8 1
7 1
5 7
Power equipment
46 1
14 1
Number of years
10 4
8 1
7 1
5 5

Voicemail equipment
Number of years
8 1
5 7
Data network
Number of years
20 1
5 1
5 7
The respondents were asked whether or not they have an integrated fixed asset
system that links book basis and tax basis calculations for recording additions,
disposals, transfers, etc. Fifty percent (50%) of the respondents indicated that
they have an integrated fixed asset system.
The remaining 50% of the respondents that do not have an integrated fixed
asset system stated that they utilize two fixed asset systems.
The respondents were asked when they last reconciled their fixed-asset tax
basis and book basis differences. Ninety-four percent (94%) indicated that they
have performed such reconciliation within the last 12 months, and, of those
companies, 44% perform the reconciliation regularly (at least semi-annually).

Co-location
The chart below depicts approximately what percentages of the respondents’
total cell sites generate co-location receipts.
Co-location receipts
6%
6% 18%
No co-location
Less than 25%
70% 25% - 50%
Greater than 50%
The chart below depicts where the respondents record co-location receipts
on their income statements. Forty-three percent (43%) record their co-location
receipts on the revenue section of their income statements.
Classification of co-location receipts on income statement
13%
13%
43%
Revenue
Other income
18% Reduction of cost of service
Reduction of an operating expense other than
13% direct cost of service
Not applicable; no co-location receipts

Fixed asset reporting

We asked the responding companies to report their capital expenditures as a
percentage of service revenue, of gross fixed assets, and of net fixed assets for
the last fiscal year. The results are illustrated in the following three charts for the
different categories of responding companies.
Capital expenditures as a percentage of service revenue
Carriers with revenue < $5.0 billion 27.5%
Carriers with revenue > $5.0 billion 13.2%
Capital expenditures as a percentage of gross fixed assets
Capital expenditures as a percentage of net fixed assets

The charts below show the responding companies’ depreciation expense as a
percentage of service revenue and gross fixed assets for fiscal year 2007 for the
different categories of responding companies.
Depreciation expense as a percentage of service revenue
Depreciation expense as a percentage of gross fixed assets

The charts below illustrate the capital expenditures per average POP, per
average subscriber, and per average cell site for the different categories of
Capital expenditures per average POP
Carriers with revenue > $5.0 billion $18.29
All respondents $15.24
Carriers with revenue < $5.0 billion $12.18
Capital expenditures per average subscriber
Capital expenditures per average cell site
Carriers with revenue < $5.0 billion $243,654
All respondents $188,989
Carriers with revenue > $5.0 billion $116,104

The responding companies were asked what their depreciation expense per
average POP, per average subscriber, and per average cell site was for fiscal
year 2007. The results for the different categories of responding companies are
shown in the following three charts.
Depreciation expense per average POP
Depreciation expense per average subscriber
Depreciation expense per average cell site
Carriers with revenue > $5.0 billion $89,649
All respondents $76,755
Carriers with revenue < $5.0 billion $61,712

The following pages discuss the continued compliance

of Section 404 of the Sarbanes-Oxley Act and the
financial reporting regulatory environment.
Section 404 of the Sarbanes-Oxley Act
SEC reviews

Section 404 of the Sarbanes-Oxley Act

The majority of the responding companies (83%) are subject to complying with
Section 404 of the Sarbanes-Oxley Act. Only 17% of the respondents are private
and are not required to implement Section 404. Seventy-two percent (72%) of
the companies have complied with Section 404 for at least two years and 11%
implemented the requirements in 2007. None of the responding companies were
required to comply with Section 404 for the first time in 2008 and no responding
carriers are considering delisting to reduce the regulatory and financial burden of
the Sarbanes-Oxley Act.
The majority of companies (72%) have completed at least two years of Section
404 compliance. Consequently, they have established long-term plans and
assigned responsibilities. When asked which department will be responsible
for Section 404 compliance in the long term, the majority of the respondents
identified the Sarbanes-Oxley compliance department, the accounting/finance
organization or internal audit. However, the responsibility has been shifted from
both the Sarbanes-Oxley compliance department and internal audit to the
accounting/finance organization.
Long-term responsibility for Section 404 compliance
7%
7%
27%
Accounting/finance organization
39% Internal audit
20% Sarbanes-Oxley compliance department
Cross departmental
Corporate governance department

The majority of the responding companies’ assigned lead responsibilities
for information technology general computer (ITGC) controls either cross-
departmentally or to internal audit (33% and 34%, respectively). Eighty-seven
percent (87%) of the respondents do not expect the department that leads
the IT aspect of the Section 404 effort to change in the future. The chart below
illustrates the departments within each responding company that led the Section
404 efforts in the areas of ITGC this past year.
Lead department for ITGC Controls
13% 6%
34%
Accounting/finance organization
34%
Internal Audit
Sarbanes-Oxley compliance department
13% Cross-departmental
Other*
* Other includes corporate governance and IT organization.
Similar to the 2007 North American Wireless Survey, most of the responding
companies (80%) indicated a continuing need for outside consultants to support
Section 404 efforts in the future. Outside consultants are primarily used for direct
testing and documentation assistance, yet assistance in remediation, identification
and design control also plays a major role, as indicated in the chart below.
Areas of assistance provided by outside consultants
Provide direct control

53%
testing assistance
Documentation assistance 47%
Remediation assistance 27%

Assist with identification
20%
and design controls
Control testing Q & A 7%

As compared to the 2007 North American Wireless Survey, companies tend

to use outside consultants less with respect to the areas of assistance in the
identification and design of controls and direct control testing.
Compliance with Section 404 continues to be a significant expense for many

carriers. These costs include internal resources, outsourced resources, software
tools and systems, and additional external auditor fees. The chart below
shows total external costs for Section 404 compliance for the first four years of
implementation.
Section 404 costs
2
6
Less than $2.0 million 5
2
2
1
$2.1 million - $4.0 million 2
3
$4.1 million - $6.0 million 2

Year 4
Year 3
1 Year 2
Greater than $6.0 million 1
Year 1
1
The number of respondents is not equal for each year due to required year of adoption of
Section 404 compliance.

Despite significant internal and external costs related to Section 404, survey
respondents continue to experience and expect efficiencies - even after four
years of compliance. As companies are in different stages of Section 404
compliance, we asked the respondents to identify the area where they gained the
most important efficiencies after the first year of implementation. For most of the
companies, efficiencies were gained due to reducing the number of key controls.
Most important area of efficiency following Year 1 of Section 404
Number of key
47%
controls reduced
Less remediation 20%
Performing process
13%
additional times
Process documentation 13%
SEC registration 7%
In addition, we asked the responding companies in which areas they perceive

efficiencies due to external auditors. The results are illustrated in the chart below.
Their answers indicate that auditors are helpful mainly in reducing the number of
key controls tested.
Most important area of external auditors’ efficiencies following Year 1 of

Section 404
Number of key controls reduced 40%
Additional reliance on management 26%
Less documentation 13%
Less remediation 7%
Reduction in testing scope for
sample sizes and key locations 7%
Other 7%

In prior years we asked respondents to report the total number of key controls
identified across all financial reporting cycles, business processes and units.
The results shown in the chart below indicates a clear and continual trend:
Responding companies have reduced the number of key controls that are tested
each year.
Total number of key controls
7
11
1 - 500 6
4
4
501 - 1,000 5
1
1,001 - 1,500 1
1
1 Year 4
1,501 - 2,000
2
Year 3
Year 2
Over 2,000 1 Year 1
The number of respondents is not equal for each year due to required year of adoption for

When the respondents were asked to identify the number of controls specific to
income tax processes, the same trend held: The number of income tax-related
controls decreased with each year of Section 404 compliance. The following chart
depicts the trends for income tax controls by year of Section 404 compliance.
Number of key income tax controls (4-year comparison)
1
4
0 - 10 controls 4
3
2
4
11 - 20 controls 3
5
1
21 - 30 controls 1
1 Year 4
Year 3
3
Over 30 controls 2 Year 2
3
Year 1
3
The number of respondents is not equal for each year due to required year of adoption for
Similar to the 2007 North American Wireless Survey, we asked the responding
companies how much internal time is required for testing manual/application,
ITGC, and entity level controls testing, regardless of the year of Section 404
compliance. The majority of the respondents indicated that they devote the
same amount of time to testing any control (an average of 14 hours). The chart
below depicts the number of hours spent for each control.
Hours required per control tested
0 - 10 hours 40%
11 - 20 hours 40%
Greater than 20 hours 20%

The following three charts compare the number of un-remediated control

deficiencies, significant deficiencies, and material weaknesses that survey
respondents reported for all years of Section 404 compliance. The charts show
that only one carrier reported material weaknesses by the fourth year of Section
404 compliance. Although the trend was for carriers to report a decreasing total
number of control deficiencies, they still had significant deficiencies by year three.
Control deficiencies (4-year comparison)
3
4
0 - 30 6
5
31 - 60 3
5
61 - 90 1
2
1
91 - 120 Year 4
1
1
Year 3
1 Year 2
Over 120 2
2
Year 1

For companies with revenue greater than $5.0 billion the average number of
control deficiencies has decreased substantially each year. The average number
of control deficiencies was 48, 51, 77 and 112 in years four, three, two and
one, respectively.
Significant deficiencies (4-year comparison)

6
0-5 7
10
9
1
6 - 10 2
Year 4
3 Year 3
Year 2
Over 20 1 Year 1
No responses were received in the 11 -15 and 16 - 20 categories
Also for companies with revenue greater than $5.0 billion, the average number
of significant deficiencies has decreased substantially each year. The average
number of significant deficiencies was two, one, two, and nine in years four,
three, two, and one, respectively. The number of significant deficiencies for
companies with revenue of less than $5.0 billion was three, three, two, and three
in years four, three, two, and one, respectively.
Material weaknesses (4-year comparison)
1
5 1
4 2
3
Year 4
2 1
Year 3
1 Year 2
1 1
Year 1
1

Companies with revenue greater than $5.0 billion reported no material

weaknesses. The number of material weaknesses for companies with revenue
less than $5.0 billion was on average one, two, one and one in years four, three,
two and one, respectively.
We also asked respondents to specify in which areas they reported significant

deficiencies. Consistent with the 2007 North American Wireless Survey, the
areas of fixed assets, financial reporting, and ITGCs continue to have significant
deficiencies. The chart below illustrates areas of significant deficiencies for the
Source of significant deficiencies

Fixed assets 14
Financial reporting 9
General computer controls 9
Purchasing/payables cycle 6
Accounting for income taxes 5
Other* 4
Revenue 4
Accounting for leases 3
* Other includes payroll/commissions cycle, automated controls, and treasury cycle.

Chart sums greater than the number of respondents as multiple responses were allowed.
Regarding reported material weaknesses, the carriers reported deficiencies in

the areas of income taxes, insufficient accounting staff, financial reporting, lease
accounting and fixed assets. The chart below represents the sources that led to
material weaknesses.
Source of material weaknesses
Accounting for income taxes 5
Accounting expertise/resources 3
Financial reporting 3
Accounting for leases 3
Fixed assets 2
*Other 2
* Other includes ITGCs and revenues.

Chart sums greater than the number of respondents as multiple responses were allowed.

In the recent past, much discussion has been devoted to implementing AS
5, and to how the implementation of this auditing standard would impact the
resources devoted to Section 404 compliance. In 2007, the Securities and
Exchange Commission unanimously approved AS 5, as amended on May 24,
2007. The 2007 North American Wireless Survey asked respondents to rank
the elements and factors related to AS 5 that would affect their approach to
Section 404 compliance the most significantly. Conversely, this year we asked
for the elements and factors that resulted in the largest change to the responding
companies Section 404-approach. The outcomes are depicted in the chart below.
Change with largest impact due to AS 5
36%
28%
18%
9% 9%
Level of judgment History of Nature of Emphasis on Overall

required to record prior year the activities effective entity materiality of
transactions deficiencies performed level controls account balance
Last year, we asked wireless carriers in which areas they believed efficiency benefits
from AS 5 would occur. Consequently, this year we asked how the responding
companies realized efficiencies. The companies expected greater efficiency,
but the reduction in the number of key controls was much greater than they
expected. The chart below indicates the ranking in the areas of efficiency gains.
Most important source of realized AS 5 efficiencies
58%
18%
8% 8% 8%
Reduction in Reduction in Reduction in Reduction in Reduction in

external audit external audit hrs the individual nature, timing & number of key
hours reliance, reliance, control process level extent of testing controls
walkthroughs environment

SEC reviews
The Securities and Exchange Commissions’ (SEC) Division of Corporate Finance
continues to perform extensive reviews of regulatory filings. This year the survey
results showed 47% of the responding and eligible wireless companies (the SEC
registrants) received a comment letter from the SEC in the last three years. In
the 2007 North American Wireless Survey approximately 85% of the responding
companies had received a comment letter.
SFAS 144/IAS 36 (impairment of long-lived assets), revenue recognition, fair

value measurement and stock-based compensation were among the accounting
topics that the SEC addressed most frequently.
In addition, individual responding companies received comment letters related to

the following topics:
• SFAS 142/IAS 38 or the equivalent—goodwill/intangible assets

• SFAS 143/IFRS 3 or the equivalent—asset retirement obligations
• GAAP/Non-GAAP measures
• Segment reporting
• Multiple elements or bundled arrangements
• Joint venture/variable interest entities (FIN 46)/consolidation
• Accounting for derivatives instruments
• Amortization of customer list
• IFRS/US GAAP differences
• Corporate disclosure policies
• Allowance for doubtful accounts/accounts receivable
• Management Discussion and Analysis (MD&A)
• Accelerated share repurchase
No responding companies had to restate related to these comment letters.

As depicted in the chart below, most respondents describe the regulatory
oversight/regime in their home country to be at least moderately involved.
In addition, most responding carriers feel that the regulatory oversight is
consistent among competitors.
Description of the regulatory oversight in the country
27%
40%
Involved
33% Very involved
Moderately involved

Contact information
For more information about this publication or to inquire
about participating in a future survey, please contact:
Pierre-Alain Sur, Partner Paul Rees, Partner

PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP
900 South Shackleford Road, Suite 505 1 Embankment Place
Little Rock, AR 72211 London, United Kingdom
501.907.8085 44 (20) 7213 4644
[email protected] [email protected]
To request additional copies of this publication, contact

Shara Slattery by e-mail at [email protected].
About PricewaterhouseCoopers
PricewaterhouseCoopers’ Entertainment, Media and Communications industry
practice delivers a complete range of professional services to telecom, cable,
satellite, Internet, media, and entertainment service providers across the globe.
The group provides industry-focused assurance, tax, and advisory services to
build public trust and enhance value for its clients and their stakeholders.
Drawing on our accumulated experience, we anticipate and meet the challenges

of global regulatory change, and help our clients deal with the impact of industry
convergence. We continue to add measurable value to our client relationships
through our leadership and innovation, which are evident in our evolving services
and products. With thousands of practitioners around the world, we are always
close at hand to provide industry specialist expertise and resources.

Of further interest
Communications review
PwC’s quarterly journal for telecom, cable, satellite and Internet executives
that showcases some of the best global practices and leading-edge thinking
regarding management and financial issues in the communications industry. To
view or download the pdf file, please visit www.pwc.com/communications and
click on the publication link.
CommunicationsDirect News
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Subscribe today to start receiving daily or weekly updates on the latest
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CommunicationsDirect News provides you with updates selected from
more than a dozen news sources. For research needs, utilize the site to
search for content on more than 40 industry sites. See it for yourself, visit
www.communicationsdirectnews.com.
Entertainment & Media Outlook: 2008–2012

Created by top minds from PricewaterhouseCoopers’ Entertainment, Media and
Communications (EMC) practice, in conjunction with economic forecasting firm
Wilkofsky Gruen Associates, this ninth edition of the Outlook provides an in-
depth global analyses and five-year growth projections for 15 industry segments.
The Outlook includes an overview of the global entertainment and media market
as well as in-depth coverage of the market in the US, Europe, the Middle East,
Asia/Pacific, Latin America, and Canada. All orders can be placed through PwC’s
Outlook Web site at www.pwc.com/outlook.
Convergence monitor: Personal mobility

The third in a series of global surveys of PwC staff from 20 territories, the
Convergence Monitor is aimed at understanding consumer preferences and
interest in buying and using various converged services. The report focuses
on which devices and applications people are using today, how they are using
them, and what they would like to have in the future. To download the PDF, visit
www.pwc.com/monitor.
How consumer conversation will transform business

This report examines how new technologies and new methodologies are
transforming a new source of consumer data—the customer’s thoughts,
intentions and innovative ideas obtained from conversations found in blogs,
message boards, phone calls and other interactive media—into a dramatically
deeper understanding of consumers. www.pwc.com/convergence.
PricewaterhouseCoopers 2008 Global Wireless Industry Survey

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Beyond the horizon
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Entertainment, media and communications

Beyond the horizon*

About this survey

You can access our worldwide office directory at www.pwc.com.

We are pleased to publish the first annual

The survey has become a resource for many wireless

PricewaterhouseCoopers 2008 Global Wireless Industry Survey |1

Revenue and performance measures

2 | Beyond the horizon

Property, plant and equipment

Legal and regulatory

PricewaterhouseCoopers 2008 Global Wireless Industry Survey |3

The 2008 Global Wireless Industry Survey results

Names of participating companies

Company type and subscriber base

Annual service revenue

PricewaterhouseCoopers 2008 Global Wireless Industry Survey |5

Names of participating companies

United States Canada

AT&T Mobility Rogers Wireless

Centennial Communications Saskatchewan Telephone

Leap Wireless TELUS Mobility

Sprint/Nextel Rest of world

U.S. Cellular KPN International

Verizon Wireless Oi Movel

Smart Communications, Inc.

6 | Beyond the horizon

The responding companies prepare their financial statements under various

Accounting principle followed

* Other Includes Brazilian, Indonesian, and Philippine GAAP.

PricewaterhouseCoopers 2008 Global Wireless Industry Survey |7

The chart below shows the responding companies’ reported subscribers as of

Subscribers as of March 31, 2008

The industry continues to experience subscriber growth as more people are

8 | Beyond the horizon

Annual service revenue

Less than $500 million

PricewaterhouseCoopers 2008 Global Wireless Industry Survey |9

Full-time employees (Carriers with revenue > $5.0 billion)

5,001 - 10,000 employees

Full-time employees (Carriers with revenue < $5.0 billion)

Fewer than 1,000 employees

10 | Beyond the horizon

Average number of employees per functional position

Average number of employees

Average number of employees per functional position

Average number of employees

PricewaterhouseCoopers 2008 Global Wireless Industry Survey | 11

Company-owned retail stores and kiosk locations

12 | Beyond the horizon

No responses were received in the 1 - 499 and 5,000 - 9,999 categories.

The average number of reseller/retail stores (third-party companies) that sell

Franchise locations represent a branded store that is independently owned by

PricewaterhouseCoopers 2008 Global Wireless Industry Survey | 13

Customer care activity via internet transactions

No responses were received in the 76% - 100%.

Customer care activity via Interactive Voice Response (IVR)

1% - 10% of customer care via IVR

14 | Beyond the horizon

PricewaterhouseCoopers 2008 Global Wireless Industry Survey | 15

* Other Includes Brazilian, Indonesian, and Philippine GAAP.