Segment Information (Tables)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Schedule of segment results

The results of our business and consumer segments are summarized below:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014 (1)		2015		2014 (1)
	(Dollars in millions)
Total segment revenues	$	4,145		4,264		12,500		12,836
Total segment expenses	2,163			2,161		6,378		6,374
Total segment income	$	1,982		2,103		6,122		6,462
Total margin percentage	48		%	49	%	49	%	50	%
Business:
Revenues	$	2,636		2,773		7,992		8,336
Expenses	1,541			1,549		4,550		4,568
Income	$	1,095		1,224		3,442		3,768
Income margin percentage	42		%	44	%	43	%	45	%
Consumer:
Revenues	$	1,509		1,491		4,508		4,500
Expenses	622			612		1,828		1,806
Income	$	887		879		2,680		2,694
Income margin percentage	59		%	59	%	59	%	60	%

______________________________________________________________________

⁽¹⁾  Reflects the recasting of segment results discussed in the next section entitled "Recent Changes in Segment Reporting."

Schedule of operating revenues by products and services

Our operating revenue detail for our products and services consisted of the following categories:

	Three Months Ended September 30,			Nine Months Ended September 30,
	2015		2014	2015	2014
	(Dollars in millions)
Strategic services
Business high-bandwidth data services (1)	$	699	655	2,083	1,904
Business low-bandwidth data services (2)	506		574	1,555	1,792
Business hosting services (3)	324		331	961	988
Other business strategic services (4)	27		30	113	55
Consumer high-speed Internet services (5)	658		616	1,945	1,847
Other consumer strategic services (6)	105		96	314	276
Total strategic services revenues	2,319		2,302	6,971	6,862
Legacy services
Business legacy voice services (7)	638		692	1,958	2,103
Other business legacy services (8)	290		307	890	951
Consumer legacy voice services (7)	664		707	2,027	2,170
Other consumer legacy services (9)	81		71	220	204
Total legacy services revenues	1,673		1,777	5,095	5,428
Data integration
Business data integration	152		184	432	543
Consumer data integration	1		1	2	3
Total data integration revenues	153		185	434	546
Other revenues
High cost support revenue (10)	284		134	550	400
Other revenue (11)	125		116	374	357
Total other revenues	409		250	924	757
Total revenues	$	4,554	4,514	13,424	13,593

______________________________________________________________________ 

(1)	Includes MPLS and Ethernet revenue
(2)	Includes private line and high-speed Internet revenue
(3)	Includes colocation, hosting (including cloud hosting and managed hosting) and hosting area network revenue
(4)	Includes primarily VoIP, video and IT services revenue
(5)	Includes high-speed Internet and related services revenue
(6)	Includes video and Verizon wireless revenue
(7)	Includes local and long-distance voice revenue
(8)	Includes UNEs, public access and other ancillary revenue
(9)	Includes switched access and other ancillary revenue
(10)	Includes CAF Phase 1, CAF Phase 2 and federal and state USF support revenue
(11)	Includes USF surcharges

Reconciliation of operating profit (loss) from segments to consolidated net income

The following table reconciles segment income to net income:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015		2014
	(Dollars in millions)
Total segment income	$	1,982		2,103		6,122		6,462
Other operating revenues	409			250		924		757
Depreciation and amortization	(1,048		)	(1,097	)	(3,136	)	(3,297	)
Other unassigned operating expenses	(687		)	(637	)	(2,056	)	(1,995	)
Other expense, net	(327		)	(320	)	(968	)	(974	)
Income tax expense	(124		)	(111	)	(346	)	(369	)
Net income	$	205		188		540		584