Property, Plant and Equipment

3 Months Ended

Mar. 31, 2012

Property, Plant and Equipment [Abstract]


Note 5.	Property, Plant and Equipment

Property, plant and equipment consists primarily of network equipment and other long-lived assets used to provide service to our subscribers. In the first quarter 2012, we formalized our plans to take off-air roughly one-third, or 9,600 cell sites, of our total Nextel platform by the end of the third quarter 2012. We also expect to complete our transition of customers from the Nextel platform to our Sprint platform by the end of 2013, which should allow us to take off-air the remainder of our Nextel platform sites. As a result, in the first quarter 2012, we revised our estimates of the expected useful lives of certain assets and asset retirement obligations through the end of our estimated benefit period of such assets, which is not expected to extend beyond the end of 2013. The exact timing of the acceleration is dependent upon when the assets are expected to be phased out of service, and accordingly, could result in further revision during the decommissioning period. In addition, increasing data usage driven by more subscribers, a shift to smartphones, and more data usage by subscribers is expected to require additional legacy 3G data capacity equipment that will not be utilized beyond the final deployment of Network Vision's multi-mode technology. As a result, the estimated useful lives of such equipment will be shortened, as compared to similar prior capital expenditures, through the date on which Network Vision equipment is deployed and in-service. The incremental effect of accelerated depreciation expense in 2012 and 2013 is expected to be material to our consolidated financial statements and totaled $543 million, of which the majority related to the Nextel platform, in the first quarter 2012.

In connection with Network Vision, certain spectrum licenses that were not previously placed in service are now being prepared for their intended use. As qualifying activities are performed related to Network Vision, interest expense primarily related to the carrying value of these spectrum licenses is being capitalized to construction in progress within property, plant and equipment. Interest expense capitalized in connection with the construction of long-lived assets totaled $115 million and $99 million for the three-month periods ended March 31, 2012 and 2011, respectively. Construction in progress (including any capitalized interest) associated with Network Vision, which began in 2011, is expected to be depreciated using the straight-line method based on estimated economic useful lives, which are expected to be depreciated over a weighted average useful life of approximately eight years, once the assets are placed in service.

The components of property, plant and equipment, and the related accumulated depreciation were as follows:



	March 31, 2012			December 31, 2011
	(in millions)
Land	$	333		$	333
Network equipment, site costs and related software	37,909			37,600
Buildings and improvements	4,896			4,895
Non-network internal use software, office equipment and other	2,083			2,111
Construction in progress	1,977			1,752
Less accumulated depreciation	(33,698		)	(32,682		)
Property, plant and equipment, net	$	13,500		$	14,009

Asset Impairments

For the three-month period ended March 31, 2012, we recorded asset impairments of $84 million of construction in progress costs consisting of $18 million associated with a decision to change our backhaul architecture in connection with our Network Vision design from microwave to a more cost-effective fiber backhaul and $66 million of capitalized assets specific to the spectrum hosting arrangement that we no longer intend to deploy (see Note 10). There were no items recorded as asset impairments in the first quarter of 2011.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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