Segment Information (Tables)

9 Months Ended

Sep. 30, 2016

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,
	2016			2015		2016		2015
	(Dollars in millions)
Total segment revenues	$	4,078		4,145		12,262		12,500
Total segment expenses	2,200			2,165		6,392		6,376
Total segment income	$	1,878		1,980		5,870		6,124
Total margin percentage	46		%	48	%	48	%	49	%
Business segment:
Revenues	$	2,606		2,636		7,807		7,991
Expenses	1,544			1,528		4,458		4,495
Income	$	1,062		1,108		3,349		3,496
Margin percentage	41		%	42	%	43	%	44	%
Consumer segment:
Revenues	$	1,472		1,509		4,455		4,509
Expenses	656			637		1,934		1,881
Income	$	816		872		2,521		2,628
Margin percentage	55		%	58	%	57	%	58	%

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,
	2016		2015	2016	2015
	(Dollars in millions)
Strategic services
Business high-bandwidth data services (1)	$	744	699	2,235	2,083
Business hosting services (2)	303		324	915	961
Other business strategic services (3)	179		143	521	458
Consumer broadband services (4)	674		658	2,023	1,945
Other consumer strategic services (5)	115		105	340	314
Total strategic services revenues	2,015		1,929	6,034	5,761
Legacy services
Business voice services (6)	601		638	1,834	1,956
Business low-bandwidth data services (7)	339		391	1,057	1,213
Other business legacy services (8)	277		288	844	885
Consumer voice services (6)	605		664	1,854	2,027
Other consumer legacy services (9)	78		81	237	221
Total legacy services revenues	1,900		2,062	5,826	6,302
Data integration
Business data integration	163		153	401	435
Consumer data integration	—		1	1	2
Total data integration revenues	163		154	402	437
Other revenues
High-cost support revenue (10)	171		284	518	550
Other revenue (11)	133		125	401	374
Total other revenues	304		409	919	924
Total revenues	$	4,382	4,554	13,181	13,424

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(1)	Includes MPLS and Ethernet revenue
(2)	Includes colocation, hosting (including cloud hosting and managed hosting) and hosting area network revenue
(3)	Includes primarily broadband, VoIP, video and IT services revenue
(4)	Includes broadband and related services revenue
(5)	Includes video and other revenue
(6)	Includes local and long-distance voice revenue
(7)	Includes private line (including special access) revenue
(8)	Includes UNEs, public access, switched access and other ancillary revenue
(9)	Includes 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,
	2016			2015		2016		2015
	(Dollars in millions)
Total segment income	$	1,878		1,980		5,870		6,124
Other operating revenues	304			409		919		924
Depreciation and amortization	(995		)	(1,048	)	(2,958	)	(3,136	)
Other unassigned operating expenses	(592		)	(685	)	(1,892	)	(2,058	)
Interest expense and other (expense) income, net	(346		)	(327	)	(993	)	(968	)
Income tax expense	(97		)	(124	)	(362	)	(346	)
Net income	$	152		205		584		540