Commitments and Contingencies Operating Lease Commitments The Company leases certain circuits, facilities, and equipment used in its operations. Operating lease expense was $18.4 million , $10.7 million and $9.6 million in 2018 , 2017 and 2016 , respectively. Certain facility leases provide for renewal options with fixed rent escalations beyond the initial lease term. At December 31, 2018 , total future minimum lease payments required under operating leases having initial or remaining non-cancellable lease terms the next five years and thereafter are as follows: (dollars in millions) 2019 $ 10.9 2020 9.4 2021 6.1 2022 4.5 2023 3.9 Thereafter 23.7 Total $ 58.5 Other Installment Financing Arrangements Prior to the acquisition of Hawaiian Telcom in July 2018, Hawaiian Telcom had an open dispute related to jointly-owned utility poles. Each of the electric utilities for the four counties in the State of Hawaii had separate agreements with Hawaiian Telcom for the joint ownership and maintenance of utility poles along with other third parties, such as the State of Hawaii. The agreements set forth various circumstances requiring pole removal, installation and replacement and the sharing of costs among the joint pole owners. The agreements allowed for the cost of work done by one joint pole owner to be shared by the other joint pole owners based on the apportionment of costs in the agreements. Generally, the electric utilities had maintained, replaced and installed the majority of the jointly-owned poles and had billed the other joint pole owners for their respective share of the costs. Hawaiian Telcom had a disagreement with the common owner of the utilities in three of the counties in Hawaii regarding the amount the utilities were requesting for their share of the capitalized costs. At the time of the acquisition, Hawaiian Telcom had negotiated a potential resolution of the dispute with the utilities; however, the resolution was pending approval by the Hawaii Public Utilities Commission. In October 2018 the Hawaii Public Utilities Commission approved the resolution. The agreement approved by the Hawaii Public Utilities Commission provided for the transfer of Hawaiian Telcoms ownership responsibility of the poles to Hawaiian Electric Company (HEC) and Hawaiian Telcom to pay a fixed annual fee to HEC for continued use of the poles. The agreement, referred to as the Pole License Agreement, has a duration of 10 years at a fixed rate with two renewal options each for five year terms. Due to the continuing involvement by the Company, this transaction does not meet the requirements to be accounted for as a sale-leaseback, and therefore it has been treated as a financing obligation. As of December 31, 2018, the Company has a liability recorded of $40.1 million related to the payments for the use of the poles for the next 20 years, of which $1.0 million is recognized within "Other current liabilities" in the Consolidated Balance Sheets. The IT Services and Hardware segment entered into an agreement in June 2018 for a building to use in its data center operations. Structural improvements were made to the facility in excess of normal tenant improvements and, as such, we are deemed the accounting owner of the facility. The term of the agreement for the building shell is a duration of 10 years with two renewal options each with a two-year term. As of December 31, 2018, the liability related to the financing arrangement was $4.5 million , which was recognized within "Other noncurrent liabilities" in the Consolidated Balance Sheets. The future minimum payments under the base agreements, as well as the renewal options for each lease which the Company expects to exercise, are as follows: (dollars in millions) 2019 $ 0.8 2020 0.8 2021 3.5 2022 5.8 2023 5.8 Thereafter 58.8 Total minimum financing obligation payments $ 75.5 Trans-Pacific Submarine Cable Commensurate to the acquisition of Hawaiian Telcom, the Company gained access to the SEA-US cable. In August 2014, Hawaiian Telcom joined several other telecommunication companies to form a consortium to build and operate the SEA-US cable. The total system cost was $235.0 million and was primarily composed of a supply contract with the lead contractor. The Company has a fractional ownership in the system and recognizes its fractional share at cost. In addition, the Company constructed a cable landing station in Hawaii and provides cable landing services. The system was completed in August 2017. During 2018, the Company incurred costs of $1.7 million , primarily to the cable contractor for construction, with all such costs capitalized. The Company has excess capacity on its share of the SEA-US cable that it makes available to other carriers for a fee. The Company has contracted and expects to enter into additional IRU agreements with other carriers for use of this excess fiber circuit capacity. The Company may receive up-front payments for services to be delivered over a period of up to 25 years. As of December 31, 2018, the Company has a remaining obligation related to the sale of capacity and other services of $23.0 million , which was previously received in up-front payments. The Company is recognizing revenue for the cable on a straight-line basis over the contract term. The Company recognizes a financing component in accordance with ASC 606 associated with the upfront payments as the contract terms range up to 25 years. Asset Retirement Obligations Asset retirement obligations exist for certain assets. In conjunction with the acquisition of Hawaiian Telcom, the Company recognized certain asset retirement obligations related to underground tanks and environmental remediation that will occur prior to the retirement of certain assets. These obligations are recorded in "Other noncurrent liabilities" in the Consolidated Balance Sheets. Additionally, the Company recognizes certain asset retirement obligations related to data center leases which are recorded in "Accounts payable" in the Consolidated Balance Sheets. The following table presents the activity for the Companys asset retirement obligations: December 31, (dollars in millions) 2018 2017 Balance, beginning of period $ 2.3 $ 1.8 Hawaiian Telcom opening balance sheet adjustment 6.6  Liabilities incurred  0.4 Liabilities settled (0.1 )  Accretion expense 0.3 0.1 Balance, end of period $ 9.1 $ 2.3 Indemnifications During the normal course of business, the Company makes certain indemnities, commitments, and guarantees under which it may be required to make payments in relation to certain transactions. These include (a) intellectual property indemnities to customers in connection with the use, sale, and/or license of products and services, (b) indemnities to customers in connection with losses incurred while performing services on their premises, (c) indemnities to vendors and service providers pertaining to claims based on negligence or willful misconduct of the Company, (d) indemnities involving the representations and warranties in certain contracts, and (e) outstanding letters of credit which totaled $8.2 million as of December 31, 2018 . In addition, the Company has made contractual commitments to several employees providing for payments upon the occurrence of certain prescribed events. The majority of these indemnities, commitments, and guarantees do not provide for any limitation on the maximum potential for future payments that the Company could be obligated to make. As permitted under Ohio law, the Company has agreements whereby the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company's request in such capacity. The term of the indemnification period is for the lifetime of the officer or director. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that limits the Company's exposure and enables the Company to recover a portion of any future amounts paid. As a result of the Company's insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal. The Company has no liabilities recorded for these agreements as of December 31, 2018 or 2017 . Purchase Commitments The Company has noncancellable purchase commitments related to certain goods and services. These agreements typically range from one to three years. As of December 31, 2018 and 2017 , the minimum commitments for these arrangements were approximately $157 million and $205 million , respectively. The Company generally has the right to cancel open purchase orders prior to delivery and to terminate the contracts without cause. Litigation Cincinnati Bell and its subsidiaries are subject to various lawsuits, actions, proceedings, claims and other matters asserted under laws and regulations in the normal course of business. We believe the liabilities accrued for legal contingencies in our consolidated financial statements, as prescribed by GAAP, are adequate in light of the probable and estimable contingencies. However, there can be no assurances that the actual amounts required to satisfy alleged liabilities from various legal proceedings, claims, tax examinations, and other matters, and to comply with applicable laws and regulations, will not exceed the amounts reflected in our consolidated financial statements. As such, costs, if any, that may be incurred in excess of those amounts provided as of December 31, 2018 , cannot be reasonably determined.