Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

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. The amounts in the tables below include the Latin American business revenues prior to it being sold on August 1, 2022.


	Three Months Ended September 30, 2022				Three Months Ended September 30, 2021
	Total Revenue		Adjustments for Non-ASC 606 revenue (1)	Total revenue from Contracts with Customers	Total 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	$	154	(47)	107	183	(71)	112
IP and Data Services	350		—	350	431	—	431
Fiber Infrastructure	199		(33)	166	231	(33)	198
Voice and Other	150		—	150	182	—	182
Total IGAM Revenue	853		(80)	773	1,027	(104)	923

Large Enterprise
Compute and Application Services	148		(16)	132	172	(15)	157
IP and Data Services	378		—	378	394	—	394
Fiber Infrastructure	117		(11)	106	143	(11)	132
Voice and Other	201		—	201	233	—	233
Total Large Enterprise Revenue	844		(27)	817	942	(26)	916

Mid-Market Enterprise
Compute and Application Services	35		(7)	28	30	(8)	22
IP and Data Services	406		(1)	405	421	(1)	420
Fiber Infrastructure	49		(2)	47	50	(2)	48
Voice and Other	128		—	128	147	—	147
Total Mid-Market Enterprise Revenue	618		(10)	608	648	(11)	637

Wholesale
Compute and Application Services	62		(39)	23	46	(39)	7
IP and Data Services	283		—	283	297	—	297
Fiber Infrastructure	165		(28)	137	154	(30)	124
Voice and Other	392		(62)	330	394	(63)	331
Total Wholesale Revenue	902		(129)	773	891	(132)	759

Business Segment by Product Category
Compute and Application Services	399		(109)	290	431	(133)	298
IP and Data Services	1,417		(1)	1,416	1,543	(1)	1,542
Fiber Infrastructure	530		(74)	456	578	(76)	502
Voice and Other	871		(62)	809	956	(63)	893
Total Business Segment Revenue	3,217		(246)	2,971	3,508	(273)	3,235

Mass Markets Segment by Product Category
Fiber Broadband	160		(4)	156	135	—	135
Other Broadband	580		(55)	525	619	(56)	563
Voice and Other	433		(26)	407	625	(143)	482
Total Mass Markets Revenue	1,173		(85)	1,088	1,379	(199)	1,180

Total Revenue	$	4,390	(331)	4,059	4,887	(472)	4,415


	Nine Months Ended September 30, 2022				Nine Months Ended September 30, 2021
	Total revenue		Adjustments for non-ASC 606 revenue (1)	Total revenue from contracts with customers	Total 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	$	521	(191)	330	547	(210)	337
IP and Data Services	1,190		—	1,190	1,287	—	1,287
Fiber Infrastructure	642		(102)	540	665	(95)	570
Voice and Other	495		—	495	559	—	559
Total IGAM Revenue	2,848		(293)	2,555	3,058	(305)	2,753

Large Enterprise
Compute and Application Services	473		(45)	428	515	(45)	470
IP and Data Services	1,151		—	1,151	1,192	—	1,192
Fiber Infrastructure	359		(35)	324	403	(38)	365
Voice and Other	622		—	622	730	—	730
Total Large Enterprise Revenue	2,605		(80)	2,525	2,840	(83)	2,757

Mid-Market Enterprise
Compute and Application Services	102		(21)	81	94	(25)	69
IP and Data Services	1,229		(3)	1,226	1,291	(4)	1,287
Fiber Infrastructure	148		(6)	142	156	(6)	150
Voice and Other	401		—	401	461	—	461
Total Mid-Market Enterprise Revenue	1,880		(30)	1,850	2,002	(35)	1,967

Wholesale
Compute and Application Services	183		(118)	65	141	(120)	21
IP and Data Services	864		—	864	900	—	900
Fiber Infrastructure	480		(84)	396	463	(89)	374
Voice and Other	1,174		(189)	985	1,221	(188)	1,033
Total Wholesale Revenue	2,701		(391)	2,310	2,725	(397)	2,328

Business Segment by Product Category
Compute and Application Services	1,279		(375)	904	1,297	(400)	897
IP and Data Services	4,434		(3)	4,431	4,670	(4)	4,666
Fiber Infrastructure	1,629		(227)	1,402	1,687	(228)	1,459
Voice and Other	2,692		(189)	2,503	2,971	(188)	2,783
Total Business Segment Revenue	10,034		(794)	9,240	10,625	(820)	9,805

Mass Markets Segment by Product Category
Fiber Broadband	456		(14)	442	387	—	387
Other Broadband	1,786		(166)	1,620	1,899	(166)	1,733
Voice and Other	1,402		(125)	1,277	1,929	(431)	1,498
Total Mass Markets Revenue	3,644		(305)	3,339	4,215	(597)	3,618

Total Revenue	$	13,678	(1,099)	12,579	14,840	(1,417)	13,423

_____________________________________________________________________

(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.

Contract with Customer, Asset and Liability

The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts classified as held for sale, as of September 30, 2022 and December 31, 2021:


	September 30, 2022		December 31, 2021
	(Dollars in millions)
Customer receivables(1)	$	1,407	1,493
Contract assets(2)	56		73
Contract liabilities(3)	714		680

______________________________________________________________________

(1)Reflects gross customer receivables of $1.5 billion and $1.6 billion, net of allowance for credit losses of $84 million and $102 million, at September 30, 2022 and December 31, 2021, respectively. These amounts exclude customer receivables, net, classified as held for sale of $175 million at September 30, 2022 (related to the ILEC business) and $288 million at December 31, 2021 (related to both the Latin American business and the ILEC business).

(2)These amounts exclude contract assets classified as held for sale of $7 million at September 30, 2022 (related to the ILEC business) and $9 million at December 31, 2021 (related to both the Latin American business and the ILEC business).

(3)These amounts exclude contract liabilities classified as held for sale of $76 million at September 30, 2022 (related to the ILEC business) and $161 million at December 31, 2021 (related to both the Latin American business and the ILEC business).

Capitalized Contract Cost

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


	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021
	Acquisition Costs		Fulfillment Costs	Acquisition Costs	Fulfillment Costs
	(Dollars in millions)			(Dollars in millions)
Beginning of period balance(1)	$	208	188	271	217
Costs incurred	45		38	43	37
Amortization	(49)		(35)	(51)	(37)
Change in contract costs held for sale	3		(2)	(35)	(31)
End of period balance(2)	$	207	189	228	186


	Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021
	Acquisition Costs		Fulfillment Costs	Acquisition Costs	Fulfillment Costs
	(Dollars in millions)			(Dollars in millions)
Beginning of period balance(3)	$	222	186	289	216
Costs incurred	129		119	132	112
Amortization	(150)		(113)	(158)	(111)
Change in contract costs held for sale	6		(3)	(35)	(31)
End of period balance(2)	$	207	189	228	186

______________________________________________________________________

(1)Beginning of period balance for the three months ended September 30, 2022 excludes acquisition costs and fulfillment costs classified as held for sale of $31 million and $33 million, respectively (related to both the Latin American business and the ILEC business).

(2)Ending of period balance for the three and nine months ended September 30, 2022 excludes acquisition costs and fulfillment costs classified as held for sale of $28 million and $35 million, respectively, related to the ILEC business. Ending of period balance for the three and nine months ended September 30, 2021 excludes acquisition costs and fulfillment costs classified as held for sale of $35 million and $31 million, respectively (related to both the Latin American business and the ILEC business).

(3)Beginning of period balance for the nine months ended September 30, 2022 excludes acquisition costs and fulfillment costs classified as held for sale of $34 million and $32 million, respectively (related to both the Latin American business and the ILEC business).