2.2.0.25falsefalse0212 - Disclosure - Commitments and Contingenciestruefalsefalse1falsefalseUSDfalsefalse1/1/2011 - 3/31/2011
USD ($)
$Jan-01-2011_Mar-31-2011http://www.sec.gov/CIK0001442505duration2011-01-01T00:00:002011-03-31T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDUSD$2true0clwr_CommitmentsAndContingenciesAbstractclwrfalsenadurationCommitments and Contingencies.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringCommitments and Contingencies.falsefalse3false0us-gaap_CommitmentsAndContingenciesDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>12. Commitments and Contingencies</b>
</div>
<div align="left">
<div style="font-size: 1pt; margin-top: 6pt; width: 18%; border-top: 0px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
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<td width="96%"></td>
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<tr valign="top">
<td colspan="3">          Future minimum payments under obligations listed below (including all expected optional
renewal periods on operating leases) as of March 31, 2011 are as follows (in thousands):</td>
</tr>
</table>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
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<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Thereafter,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Including All</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2011</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2012</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2013</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2014</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2015</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Renewal Periods</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="27" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Long-term debt obligations
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">4,237,751</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">15,206</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">20,320</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">20,336</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">5,130</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2,947,509</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1,229,250</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest payments
</div></td>
<td> </td>
<td> </td>
<td align="right">3,997,445</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">474,542</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">476,109</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">474,912</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">473,941</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">473,863</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,624,078</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap">
<div style="margin-left:15px; text-indent:-15px">Operating lease obligations<sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">11,760,800</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">268,354</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">408,428</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">413,038</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">416,828</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">421,741</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,832,411</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Spectrum lease obligations
</div></td>
<td> </td>
<td> </td>
<td align="right">6,238,459</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">125,532</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">167,074</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">166,195</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">174,734</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">169,506</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,435,418</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Spectrum service credits
</div></td>
<td> </td>
<td> </td>
<td align="right">107,136</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,030</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,030</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,030</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,030</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,030</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">96,986</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Capital lease obligations<sup style="font-size: 85%; vertical-align: text-top">(2)</sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">135,549</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,144</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13,800</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,123</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">15,129</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12,715</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">69,638</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Signed spectrum agreements
</div></td>
<td> </td>
<td> </td>
<td align="right">7,687</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,687</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Network equipment purchase obligations
</div></td>
<td> </td>
<td> </td>
<td align="right">22,550</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">22,550</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other purchase obligations
</div></td>
<td> </td>
<td> </td>
<td align="right">160,326</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">56,345</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">38,541</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">25,230</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,047</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">11,032</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18,131</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="27" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">26,667,703</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">982,390</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1,126,302</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1,115,864</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">1,098,839</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">4,038,396</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">18,305,912</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="27" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96%"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td>
<td>Includes executory costs of $57.0 million and reflects a reduction to future obligations resulting from the lease termination initiatives implemented
in the first quarter of 2011.</td>
</tr>
<tr style="font-size:3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(2)</sup></td>
<td> </td>
<td>Payments include $57.6 million representing interest.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <b><i>Spectrum and operating lease expense — </i></b>Our commitments for non-cancelable operating
leases consist mainly of leased spectrum license fees, office space, equipment, and leased sites,
including towers and rooftop locations. Certain of the leases provide for minimum lease payments,
additional charges and escalation clauses. Certain of the tower leases specify a minimum number of
new leases to commence by December 31, 2011. Charges apply if these commitments are not satisfied.
Leased spectrum agreements have terms of up to 30 years. Operating leases generally have initial
terms of five years with multiple renewal options for additional five-year terms totaling between
20 and 25 years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Expense recorded related to spectrum and operating leases was as follows (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Three Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>March 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2011</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>2010</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Spectrum lease expense
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">61,188</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">52,541</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of prepaid spectrum licenses
</div></td>
<td> </td>
<td> </td>
<td align="right">13,633</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,150</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total spectrum lease expense
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">74,821</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">66,691</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Operating lease expense
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">140,029</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">91,702</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <b><i>Other spectrum commitments — </i></b>We have commitments to provide Clearwire services to certain
lessors in launched markets, and reimbursement of capital equipment and third-party service
expenditures of the lessors over the term of the lease. We accrue a monthly obligation for the
services and equipment based on the total estimated available service credits divided by the term
of the lease. The obligation is reduced as actual invoices are presented and paid to the lessors.
During the three months ended March 31, 2011 and 2010 we satisfied $2.3 million and $168,000,
respectively, related to these commitments. The maximum remaining commitment at March 31, 2011 is
$107.1 million and is expected to be incurred over the term of the related lease agreements, which
generally range from 15-30 years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     As of March 31, 2011, we have signed agreements to acquire approximately $7.7 million in new
spectrum, subject to closing conditions. These transactions are expected to be completed within the
next twelve months.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <b><i>Network equipment purchase obligations </i></b>- We have purchase commitments with take-or-pay
obligations and/or volume commitments for equipment that are non-cancelable and outstanding
purchase orders for network equipment for which we believe delivery is likely to occur.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <b><i>Other purchase obligations </i></b>- We have purchase obligations that include minimum purchases we
have committed to purchase from suppliers over time and/or unconditional purchase obligations where
we guarantee to make a minimum payment to suppliers for goods and services regardless of whether
suppliers fully deliver them. They include, among other things, agreements for backhaul, subscriber
devices and IT related and other services. In addition, we are party to various arrangements that
are conditional in nature and create an obligation to make payments only upon the occurrence of
certain events, such as the actual delivery and acceptance of products or
services. Because it is not possible to predict the timing or amounts that may be due under
these conditional arrangements, no such amounts have been included in the table above. The table
above also excludes blanket purchase order amounts where the orders are
subject to cancellation or
termination at our discretion or where the quantity of goods or services to be purchased or the
payment terms are unknown because such purchase orders are not firm commitments.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <b><i>Legal proceedings </i></b>— As more fully described below, we are involved in a variety of lawsuits,
claims, investigations and proceedings concerning intellectual property, business practices,
commercial and other matters. We determine whether we should accrue an estimated loss for a
contingency in a particular legal proceeding by assessing whether a loss is deemed probable and can
be reasonably estimated. We reassess our views on estimated losses on a quarterly basis to reflect
the impact of any developments in the matters in which we are involved. Legal proceedings are
inherently unpredictable, and the matters in which we are involved often present complex legal and
factual issues. We vigorously pursue defenses in legal proceedings and engage in discussions where
possible to resolve these matters on terms favorable to us. It is possible, however, that our
business, financial condition and results of operations in future periods could be materially and
adversely affected by increased litigation expense, significant settlement costs and/or unfavorable
damage awards.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On April 22, 2009, a purported class action lawsuit was filed against Clearwire U.S. LLC in
Superior Court in King County, Washington by a group of five plaintiffs from Hawaii, Minnesota,
North Carolina and Washington (Chad Minnick, et al.). The lawsuit generally alleges that we
disseminated false advertising about the quality and reliability of our services; imposed an
unlawful early termination fee, which we refer to as ETF; and invoked unconscionable provisions of
our Terms of Service to the detriment of subscribers. Among other things, the lawsuit seeks a
determination that the alleged claims may be asserted on a class-wide basis; an order declaring
certain provisions of our Terms of Service, including the ETF provision, void and unenforceable; an
injunction prohibiting us from collecting ETFs and further false advertising; restitution of any
early termination fees paid by our subscribers; equitable relief; and an award of unspecified
damages and attorneys’ fees. On May 27, 2009, an amended complaint was filed and served, adding
seven additional plaintiffs, including individuals from New Mexico, Virginia and Wisconsin. On June
2, 2009, plaintiffs served the amended complaint. We removed the action to the United States
District Court for the Western District of Washington. On July 23, 2009, we filed a motion to
dismiss the amended complaint. The Court stayed discovery pending its ruling on the motion. The
Court granted our motion to dismiss in its entirety on February 2, 2010. Plaintiffs filed a notice
of appeal to the Ninth Circuit Court of Appeals. Oral argument before the Ninth Circuit Court of
Appeals took place on November 3, 2010. On March 29, 2011 the Court of Appeals entered an Order
Certifying Question to the Supreme Court of Washington requesting guidance on a question of
Washington state law. The parties will brief the issue in May and June 2011. Once the Washington
Supreme Court issues its opinion, the Court of Appeals will continue considering the appeal of the
District Court’s dismissal of all claims in the First Amended Complaint. On March 31, 2011,
plaintiffs filed with the District Court a Motion for an Indicative Ruling on Whether Court Would
Grant Leave for Filing of Second Amended Complaint, which we refer to as the Motion for Indicative
Ruling, attaching a proposed Second Amended Complaint seeking to add new claims concerning
Clearwire’s customer pre-qualification tool. The Motion was fully briefed as of April 22, 2011.
This case is in the early stages of litigation, its outcome is unknown and an estimate of any
potential loss cannot be made at this time.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On September 1, 2009, we were served with a purported class action lawsuit filed in King
County Superior Court, brought by representative plaintiff Rosa Kwan. The complaint alleges we
placed unlawful telephone calls using automatic dialing and announcing devices and engaged in
unlawful collection practices. It seeks declaratory, injunctive, and/or equitable relief and actual
and statutory damages under federal and state law. On October 1, 2009, we removed the case to the
United States District Court for the Western District of Washington. On October 22, 2009, the Court
issued a stipulated order granting plaintiff until October 29, 2009 to file an Amended Complaint.
The parties further stipulated to allow a Second Amended Complaint, which plaintiffs filed on
December 23, 2009. We then filed a motion to dismiss that was fully briefed on January 15, 2010. On
February 22, 2010 the Court granted our motion to dismiss in part, dismissing certain claims with
prejudice and granting plaintiff leave to further amend the complaint. Plaintiff filed a Third
Amended Complaint adding additional state law claims and joining Bureau of Recovery, a purported
collection agency, as a co-defendant. On January 27, 2011, the court granted the parties’
stipulation allowing plaintiff to file a Fourth Amended Complaint adding two new class
representatives. In response to the Fourth Amended Complaint, on March 3, 2011, Clearwire filed
concurrent motions to (1) compel the newly-added plaintiffs to arbitrate their individual claims or
alternatively, (2) to stay this case pending the United States Supreme Court’s decision in <i>AT&T
Mobility LLC v. Concepcion</i>, No. 09-893. On March 29, 2011, the Court granted the parties’
stipulation to stay the litigation in its entirety pending resolution of <i>Concepcion </i>and vacated all
pretrial and other deadlines including the briefing schedule for class certification. On April 27,
2011, the US Supreme Court decided <i>Concepcion</i>, and as a result, we expect the parties to renew the
motions to compel arbitration. This case is in the early stages of litigation, its outcome is
unknown and an estimate of any potential loss cannot be made at this time.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On November 15, 2010, a purported class action was filed by Angelo Dennings against Clearwire
in the U.S. District Court for the Western District of Washington. The complaint generally alleges
we slow network speeds when network demand is highest and that such network management violates our
agreements with subscribers and is contrary to the company’s advertising and marketing
claims. Plaintiffs also allege that subscribers do not review the Terms of Service prior to
subscribing, and when subscribers cancel service due to network management, we charge an ETF or
restocking fee that they claim is unconscionable under the circumstances.
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<div align="left" style="font-size: 10pt; margin-top: 6pt">The claims asserted
include violations of the Computer Fraud and Abuse Act, breach of contract, breach of the covenant
of good faith and fair dealing and unjust enrichment. Plaintiffs seek class certification;
unspecified damages and restitution; a declaratory judgment that Clearwire’s ETF and restocking fee
are unconscionable under the alleged circumstances; an injunction prohibiting Clearwire from
engaging in alleged deceptive marketing and from charging ETFs; interest; and attorneys’ fees and
costs. On January 13, 2011, Clearwire filed concurrent motions to compel arbitration and in the
alternative, to dismiss the complaint for failure to state a claim upon which relief may be
granted. In response to Clearwire’s motions, Plaintiff abandoned its fraud claim and amended its
complaint on March 3, 2011, adding fourteen additional plaintiffs in eight separate jurisdictions.
Plaintiff further added new claims of violation of Consumer Protection statutes under state laws.
On March 31, 2011, Clearwire filed concurrent motions to (1) compel the newly-added plaintiffs to
arbitrate their individual claims, or alternatively, (2) to stay this case pending the United
States Supreme Court’s decision in <i>AT&T Mobility LLC v. Concepcion</i>, No. 09-893, and (3) to dismiss
the complaint for failure to state a claim upon which relief may be granted. Plaintiffs did not
oppose Clearwire’s motion to stay the litigation pending <i>Concepcion, </i>and the parties stipulated to
stay the litigation. On April 27, 2011, the US Supreme Court decided <i>Concepcion</i>, and as a result,
we expect the parties to renew the motions to compel arbitration. This case is in the early stages
of litigation, its outcome is unknown and an estimate of any potential loss cannot be made at this
time.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On March 30, 2011 Clearwire was served with a purported class action filed in the U.S.
District Court for the Eastern District of California. The case<i>, Newton v. Clearwire, Inc. [sic]</i>
alleges Clearwire’s network management and advertising practices constitute breach of contract,
unjust enrichment, unfair competition under California’s Business and Professions Code Sections
17200 et seq., and violation of California’s Consumers’ Legal Remedies Act. Plaintiff contends
Clearwire’s advertisements of “no speed cap” and “unlimited data” are false and misleading.
Plaintiff alleges Clearwire has breached its contracts with customers by not delivering the
Internet service as advertised. Plaintiff also claims slow data speeds are due to Clearwire’s
network management practices. Plaintiff seeks class certification; declaratory and injunctive
relief; unspecified restitution and/or disgorgement of fees paid for Clearwire service; and
unspecified damages, interest, fees and costs. The court stayed the action pending the
U.S. Supreme Court’s ruling in <i>AT&T Mobility LLC v. Concepcion </i>(Case No. 08-56394). On April 27,
2011, the Court decided <i>Concepcion</i>, triggering the parties’ obligation to file a status report with
the <i>Newton </i>court by May 12, 2011. This case is in the early stages of litigation, its outcome is
unknown and any estimate of any potential loss cannot be made at this time.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On April 18, 2011, Clearwire and Sprint entered into a number of agreements that, among other
things, resolved the ongoing disputes between the parties relating to wholesale pricing terms under
existing commercial agreements. See Note 17, Subsequent Event for additional information on the
agreements signed. Pursuant to the terms of the new agreements, the parties also agreed to withdraw
from pending arbitration proceedings regarding the disputes.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In addition to the matters described above, we are often involved in certain other proceedings
which seek monetary damages and other relief. Based upon information currently available to us,
none of these other claims are expected to have a material adverse effect on our business,
financial condition or results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <b><i>Indemnification agreements </i></b>- We are currently a party to indemnification agreements with
certain officers and each of the members of our Board of Directors. No liabilities have been
recorded in the consolidated balance sheets for any indemnification agreements, because they are
not probable or estimable.
</div>
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