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Revenue Recognition
 6 Months Ended
Jun. 30, 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.

Since 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 tables provide total revenue by segment, sales channel and product category. They also provide 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 June 30, 2022Three Months Ended June 30, 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$184 (71)113 181 (70)111 
IP and Data Services417 — 417 427 — 427 
Fiber Infrastructure224 (35)189 217 (32)185 
Voice and Other171 — 171 186 — 186 
Total IGAM Revenue996 (106)890 1,011 (102)909 
Large Enterprise
Compute and Application Services162 (15)147 174 (15)159 
IP and Data Services385 — 385 396 — 396 
Fiber Infrastructure129 (11)118 130 (12)118 
Voice and Other208 — 208 245 — 245 
Total Large Enterprise Revenue884 (26)858 945 (27)918 
Mid-Market Enterprise
Compute and Application Services34 (7)27 32 (9)23 
IP and Data Services408 (1)407 428 (2)426 
Fiber Infrastructure50 (2)48 50 (2)48 
Voice and Other134 — 134 151 — 151 
Total Mid-Market Enterprise Revenue626 (10)616 661 (13)648 
Wholesale
Compute and Application Services73 (39)34 48 (41)7 
IP and Data Services285 — 285 298 — 298 
Fiber Infrastructure161 (29)132 155 (28)127 
Voice and Other391 (63)328 404 (62)342 
Total Wholesale Revenue910 (131)779 905 (131)774 
Business Segment by Product Category
Compute and Application Services453 (132)321 435 (135)300 
IP and Data Services1,495 (1)1,494 1,549 (2)1,547 
Fiber Infrastructure564 (77)487 552 (74)478 
Voice and Other904 (63)841 986 (62)924 
Total Business Segment Revenue3,416 (273)3,143 3,522 (273)3,249 
Mass Markets Segment by Product Category
Fiber Broadband151 (5)146 130 — 130 
Other Broadband596 (55)541 632 (55)577 
Voice and Other449 (20)429 640 (143)497 
Total Mass Markets Revenue1,196 (80)1,116 1,402 (198)1,204 
Total Revenue$4,612 (353)4,259 4,924 (471)4,453 
Six Months Ended June 30, 2022Six Months Ended June 30, 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$367 (144)223 364 (139)225 
IP and Data Services840 — 840 856 — 856 
Fiber Infrastructure443 (69)374 434 (62)372 
Voice and Other345 — 345 377 — 377 
Total IGAM Revenue1,995 (213)1,782 2,031 (201)1,830 
Large Enterprise
Compute and Application Services325 (29)296 343 (30)313 
IP and Data Services773 — 773 798 — 798 
Fiber Infrastructure242 (24)218 260 (27)233 
Voice and Other421 — 421 497 — 497 
Total Large Enterprise Revenue1,761 (53)1,708 1,898 (57)1,841 
Mid-Market Enterprise
Compute and Application Services67 (14)53 64 (17)47 
IP and Data Services823 (2)821 870 (3)867 
Fiber Infrastructure99 (4)95 106 (4)102 
Voice and Other273 — 273 314 — 314 
Total Mid-Market Enterprise Revenue1,262 (20)1,242 1,354 (24)1,330 
Wholesale
Compute and Application Services121 (79)42 95 (81)14 
IP and Data Services581 — 581 603 — 603 
Fiber Infrastructure315 (56)259 309 (59)250 
Voice and Other782 (127)655 827 (125)702 
Total Wholesale Revenue1,799 (262)1,537 1,834 (265)1,569 
Business Segment by Product Category
Compute and Application Services880 (266)614 866 (267)599 
IP and Data Services3,017 (2)3,015 3,127 (3)3,124 
Fiber Infrastructure1,099 (153)946 1,109 (152)957 
Voice and Other1,821 (127)1,694 2,015 (125)1,890 
Total Business Segment Revenue6,817 (548)6,269 7,117 (547)6,570 
Mass Markets Segment by Product Category
Fiber Broadband296 (10)286 252 — 252 
Other Broadband1,206 (111)1,095 1,280 (110)1,170 
Voice and Other969 (99)870 1,304 (288)1,016 
Total Mass Markets Revenue2,471 (220)2,251 2,836 (398)2,438 
Total Revenue$9,288 (768)8,520 9,953 (945)9,008 
_____________________________________________________________________
(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 June 30, 2022 and 2021, our gross rental income was $334 million and $327 million, respectively, which represents approximately 7% of our operating revenue for both the three months ended June 30, 2022 and 2021. For the six months ended June 30, 2022, and 2021, our gross rental income was $671 million and $659 million, respectively, which represents approximately 7% of our operating revenue for both the six months ended June 30, 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 June 30, 2022 and December 31, 2021:

June 30, 2022December 31, 2021
 (Dollars in millions)
Customer receivables(1)
$1,411 1,493 
Contract assets(2)
64 73 
Contract liabilities(3)
673 680 
______________________________________________________________________
(1)Reflects gross customer receivables of $1.5 billion and $1.6 billion, net of allowance for credit losses of $92 million and $102 million, at June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022 and December 31, 2021, these amounts exclude customer receivables, net reclassified as held for sale of $294 million and $288 million, respectively.
(2)As of both June 30, 2022 and December 31, 2021, these amounts exclude contract assets reclassified as held for sale of $9 million.
(3)As of June 30, 2022 and December 31, 2021, these amounts exclude contract liabilities reclassified as held for sale of $152 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 and six months ended June 30, 2022, we recognized $52 million and $447 million, respectively, 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 and six months ended June 30, 2021, we recognized $58 million and $483 million, respectively, of revenue that was included in contract liabilities of $950 million as of January 1, 2021.

Performance Obligations

As of June 30, 2022, we expect to recognize approximately $6.1 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. We expect to recognize approximately 72% 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 completed or planned divestitures.
Contract Costs

The following tables provide changes in our contract acquisition costs and fulfillment costs:

Three Months Ended June 30, 2022Three Months Ended June 30, 2021
Acquisition Costs(1)
Fulfillment Costs(3)
Acquisition CostsFulfillment Costs
(Dollars in millions)(Dollars in millions)
Beginning of period balance$215 187 279 216 
Costs incurred41 41 45 38 
Amortization(49)(39)(53)(37)
Change in contract costs held for sale1 (1)— — 
End of period balance$208 188 271 217 

Six Months Ended June 30, 2022Six Months Ended June 30, 2021
Acquisition Costs(2)
Fulfillment Costs(3)
Acquisition CostsFulfillment Costs
(Dollars in millions)(Dollars in millions)
Beginning of period balance$222 186 289 216 
Costs incurred84 81 89 75 
Amortization(101)(78)(107)(74)
Change in contract costs held for sale3 (1)— — 
End of period balance$208 188 271 217 
______________________________________________________________________
(1)The beginning and ending balance for the three months ended June 30, 2022 exclude acquisition costs reclassified as held for sale of $32 million and $31 million, respectively.
(2)The beginning and ending balance for the six months ended June 30, 2022 exclude acquisition costs reclassified as held for sale of $34 million and $31 million, respectively.
(3)The beginning and ending balance for the three and six months ended June 30, 2022 exclude fulfillment costs reclassified as held for sale of $32 million and $33 million, respectively.

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.