text: **Lower Operating Expenses**
  We assess operating expenses in two categories: 
  (cid:129) the cost of wireless handsets and equipment 
  (cid:129) all other expenses involved in day-to-day operations, to service 
  existing subscriber relationships and attract new subscribers. 
  
  The cost of equipment was $50 million lower than last year, or 3%, 
  mainly because fewer existing subscribers upgraded hardware and 
  fewer new customers were added during the year as discussed above. 
  We activated and upgraded fewer devices compared to 2012. 
  
  We activated and upgraded approximately 2.7 million smartphones this 
  year, compared to approximately 2.9 million in 2012. Approximately 
  34% of these were for new subscribers. The decrease was mainly 
  because there was a 10% reduction in hardware upgrades by existing 
  subscribers during the year, which we also believe is at least partly due 
  to the move from three to two year contracts and the associated pricing 
  changes. 
  
  Total customer retention spending (including subsidies on handset 
  upgrades) was $939 million, 0.3% lower than last year. The reduction 
  was mainly because fewer existing subscribers upgraded their hardware 
  as discussed above, which we partially attribute to the recent shift to 
  two year contracts. 