Commitments and contingencies:

12 Months Ended

Dec. 31, 2021

Commitments and contingencies:

Commitments and contingencies:

6. Commitments and contingencies:

Current and potential litigation

In accordance with the accounting guidance for contingencies, the Company accrues its estimate of a contingent liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Where it is probable that a liability has been incurred and there is a range of expected loss for which no amount in the range is more likely than any other amount, the Company accrues at the low end of the range. The Company reviews its accruals at least quarterly and adjusts them to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. The Company has taken certain positions related to its obligations for leased circuits for which it is reasonably possible could result in a loss of up to $3.6 million in excess of the amount accrued at December 31, 2021. The Company is also engaged in litigation in Virginia in which a former provider of transoceanic capacity to the Company is seeking approximately $0.6 million for alleged unpaid fees and the Company’s early termination of the arrangement. The complaint was filed in December 2021 in the Circuit Court of Fairfax County, Virginia. The Company is contesting its obligation to pay these amounts.

The Company was engaged in an arbitration proceeding in Spain in which a former provider of optical fiber to the Company was seeking approximately $9 million for the Company’s early termination of the optical fiber leases, which amount the Company accrued in 2015. The Company counterclaimed for damages and contested its obligation to pay the termination liability. The arbitration was being conducted by the Civil and Commercial Arbitration Court (CIMA) in Madrid, Spain. On October 25, 2021, CIMA issued its decision, awarding the former provider approximately $0.7 million and rejecting the Company’s counterclaims. Both parties had until (i) November 4, 2021 to request clarifications from CIMA regarding clerical or mathematical errors, unaddressed claims or other minor issues and (ii) two months from the later of the date of the award or a subsequent clarifying order from CIMA to file a court action before the High Court of Justice of Madrid to annul the award. The Company’s policy is to not record the impact of legal proceedings until all appeals have been exhausted or legal counsel has advised that any further appeal will likely not change the outcome of the matter. The appeal period has lapsed and the Company decided to pay the provider the $0.7 million award amount in the first quarter of 2022. As a result, the Company recorded a gain on lease termination of $7.4 million in the year ended December 31, 2021.

In the ordinary course of business the Company is involved in other legal activities and claims. Because such matters are subject to many uncertainties and the outcomes are not predictable with assurance, the liability related to these legal actions and claims cannot be determined with certainty. Management does not believe that such claims and actions will have a material impact on the Company’s financial condition or results of operations. Judgment is required in estimating the ultimate outcome of any dispute resolution process, as well as any other amounts that may be incurred to conclude the negotiations or settle any litigation. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.

Network equipment sites and data center facilities

The Company enters into leases for network equipment sites and for space in data center facilities. Future minimum annual payments under these arrangements are as follows (in thousands):

For the year ending December 31,
2022	$	24,740
2023		12,225
2024		8,450
2025		6,112
2026		4,711
Thereafter		1,872
	$	58,110

Expenses related to these arrangements were $22.0 million in 2021, $21.0 million in 2020 and $20.6 million in 2019.

Unconditional purchase obligations

Unconditional purchase obligations for equipment and services totaled $19.4 million at December 31, 2021. As of December 31, 2021, the Company had also committed to additional dark fiber IRU finance and operating lease agreements totaling $24.7 million in future payments to be paid over periods of up to 20 years. These obligations begin when the related fiber is accepted, which is generally expected to occur in 2022. Future minimum payments under these obligations are $2.9 million, $1.0 million, $1.0 million, $1.0 million and $1.0 million for the years ending December 31, 2022 to December 31, 2026, respectively, and $17.8 million, thereafter.

Defined contribution plan

The Company sponsors a 401(k) defined contribution plan that provides for a Company matching payment. The Company matching payments were paid in cash and were $0.9 million for 2021, $0.9 million for 2020 and $0.8 million for 2019.