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Revenue Recognition
 3 Months Ended
Mar. 31, 2022
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Product and Service Categories

We categorize our products and services revenue among the following categories for the Business segment:

•Compute and Application Services, which include our Edge Cloud services, IT solutions, Unified Communications and Collaboration ("UC&C"), data center, content delivery network ("CDN") and Managed Security services;

•IP and Data Services, which include Ethernet, IP, and VPN data networks, including software-defined wide area networks ("SD WAN") based services, Dynamic Connections and Hyper WAN;

•Fiber Infrastructure Services, which include dark fiber, optical services and equipment; and

•Voice and Other, which include Time Division Multiplexing ("TDM") voice, private line and other legacy services.

Beginning in the first quarter of 2022, we have categorized our products and services revenue among the following categories for the Mass Markets segment:

•Fiber Broadband, which includes high speed fiber-based broadband services to residential and small business customers;

•Other Broadband, which primarily includes lower speed copper-based broadband services to residential and small business customers; and

•Voice and Other, which includes revenues from (i) providing local and long-distance services, professional services, and other ancillary services, and (ii) federal broadband and state support payments.

Reconciliation of Total Revenue to Revenue from Contracts with Customers

The following table provides total revenue by segment, sales channel and product category. It also provides the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards:
Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Total revenue
Adjustments for non-ASC 606 revenue (1)
Total revenue from contracts with customersTotal revenue
Adjustments for non-ASC 606 revenue (1)
Total revenue from contracts with customers
(Dollars in millions)
Business Segment by Sales Channel and Product Category
International and Global Accounts ("IGAM")
Compute and Application Services$183 (73)110 183 (69)114 
IP and Data Services423 — 423 429 — 429 
Fiber Infrastructure219 (34)185 217 (30)187 
Voice and Other174 — 174 191 — 191 
Total IGAM Revenue999 (107)892 1,020 (99)921 
Large Enterprise
Compute and Application Services163 (14)149 169 (15)154 
IP and Data Services388 — 388 402 — 402 
Fiber Infrastructure113 (13)100 130 (15)115 
Voice and Other213 — 213 252 — 252 
Total Large Enterprise Revenue877 (27)850 953 (30)923 
Mid-Market Enterprise
Compute and Application Services33 (7)26 32 (8)24 
IP and Data Services415 (1)414 442 (1)441 
Fiber Infrastructure49 (2)47 56 (2)54 
Voice and Other139 — 139 163 — 163 
Total Mid-Market Enterprise Revenue636 (10)626 693 (11)682 
Wholesale
Compute and Application Services48 (40)8 47 (40)7 
IP and Data Services296 — 296 305 — 305 
Fiber Infrastructure154 (27)127 154 (31)123 
Voice and Other391 (64)327 423 (63)360 
Total Wholesale Revenue889 (131)758 929 (134)795 
Business Segment by Product Category
Compute and Application Services427 (134)293 431 (132)299 
IP and Data Services1,522 (1)1,521 1,578 (1)1,577 
Fiber Infrastructure535 (76)459 557 (78)479 
Voice and Other917 (64)853 1,029 (63)966 
Total Business Segment Revenue3,401 (275)3,126 3,595 (274)3,321 
Mass Markets Segment by Product Category
Fiber Broadband145 (5)140 122 — 122 
Other Broadband610 (56)554 648 (55)593 
Voice and Other520 (79)441 664 (145)519 
Total Mass Markets Revenue1,275 (140)1,135 1,434 (200)1,234 
Total Revenue$4,676 (415)4,261 5,029 (474)4,555 
_____________________________________________________________________
(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.
Operating Lease Income

Lumen Technologies leases various dark fiber, office facilities, colocation facilities, switching facilities, other network sites and service equipment to third parties under operating leases. Lease and sublease income are included in operating revenue in our consolidated statements of operations.

For the three months ended March 31, 2022 and 2021, our gross rental income was $337 million and $332 million, respectively, which represents approximately 7% of our operating revenue for both the three months ended March 31, 2022 and 2021.

Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts reclassified as held for sale, as of March 31, 2022 and December 31, 2021:

March 31, 2022December 31, 2021
 (Dollars in millions)
Customer receivables(1)
$1,365 1,493 
Contract assets(2)
70 73 
Contract liabilities(3)
671 680 
______________________________________________________________________
(1)Reflects gross customer receivables of $1.5 billion and $1.6 billion, net of allowance for credit losses of $99 million and $102 million, at March 31, 2022 and December 31, 2021, respectively. As of March 31, 2022 and December 31, 2021, these amounts exclude customer receivables, net reclassified as held for sale of $260 million and $288 million, respectively.
(2)As of March 31, 2022 and December 31, 2021, these amounts exclude contract assets reclassified as held for sale of $9 million as of both periods.
(3)As of March 31, 2022 and December 31, 2021, these amounts exclude contract liabilities reclassified as held for sale of $154 million and $161 million, respectively.

Contract liabilities are consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which typically ranges from one to five years depending on the service. Contract liabilities are included within deferred revenue in our consolidated balance sheets. During the three months ended March 31, 2022, we recognized $395 million of revenue that was included in contract liabilities of $841 million as of January 1, 2022, including contract liabilities that were classified as held for sale. During the three months ended March 31, 2021, we recognized $425 million of revenue that was included in contract liabilities of $950 million as of January 1, 2021.

Performance Obligations

As of March 31, 2022, our estimated revenue expected to be recognized in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied is approximately $5.8 billion. We expect to recognize approximately 76% of this revenue through 2024, with the balance recognized thereafter.

These amounts exclude (i) the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed), (ii) contracts that are classified as leasing arrangements or government assistance that are not subject to ASC 606 and (iii) the value of unsatisfied performance obligations for contracts which relate to our planned divestitures.
Contract Costs

The following table provides changes in our contract acquisition costs and fulfillment costs:

Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Acquisition Costs(1)
Fulfillment Costs(2)
Acquisition CostsFulfillment Costs
(Dollars in millions)(Dollars in millions)
Beginning of period balance$222 186 289 216 
Costs incurred43 40 44 37 
Amortization(52)(39)(54)(37)
Change in contract costs held for sale2 — — — 
End of period balance$215 187 279 216 
______________________________________________________________________
(1)The beginning and ending balance for the three months ended March 31, 2022 exclude acquisition costs reclassified as held for sale of $34 million and $32 million, respectively.
(2)Both the beginning and ending balance for the three months ended March 31, 2022 exclude fulfillment costs reclassified as held for sale of $32 million.

Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of services to customers, including labor and materials consumed for these activities.

Deferred acquisition and fulfillment costs are amortized based on the transfer of services on a straight-line basis over the average contract life of approximately 32 months for mass markets customers and 30 months for business customers. Amortized fulfillment costs are included in cost of services and products and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statements of operations. The amount of these deferred costs that are anticipated to be amortized in the next 12 months are included in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond the next twelve months is included in other non-current assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on an annual basis.