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Revenue Recognition
 3 Months Ended
Mar. 31, 2025
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 3—Revenue Recognition

Product and Service Categories

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

•Grow, which includes existing and emerging products and services in which we are significantly investing, including our dark fiber and conduit, Edge Cloud, IP, managed security, software-defined wide area networks, Unified Communications and Collaboration, and wavelengths services;

•Nurture, which includes our more mature offerings, including ethernet, and VPN data networks services;

•Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing voice, and private line services; and

•Other, which includes equipment sales, managed and professional service solutions, and other services.

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

•Fiber Broadband, under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure;

•Other Broadband, under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure; and

•Voice and Other, under which we derive revenues from (i) providing local and long-distance voice services, professional services, and other ancillary services, and (ii) federal broadband and state support programs.

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 Accounting Standards Codification "ASC" 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards.
Three Months Ended March 31, 2025
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
Large Enterprise
Grow$416 (87)329 
Nurture203 — 203 
Harvest79 — 79 
Other39 — 39 
Total Large Enterprise Revenue737 (87)650 
Mid-Market Enterprise
Grow259 (7)252 
Nurture165 — 165 
Harvest79 (1)78 
Other10 — 10 
Total Mid-Market Enterprise Revenue513 (8)505 
Public Sector
Grow159 (24)135 
Nurture84 — 84 
Harvest108 — 108 
Other132 — 132 
Total Public Sector Revenue483 (24)459 
Wholesale
Grow265 (75)190 
Nurture177 (6)171 
Harvest260 (34)226 
Other3 — 3 
Total Wholesale Revenue705 (115)590 
International and Other
Grow37 (1)36 
Nurture37 — 37 
Harvest8 — 8 
Other4 — 4 
Total International and Other86 (1)85 
Business Segment by Product Category
Grow1,136 (194)942 
Nurture666 (6)660 
Harvest534 (35)499 
Other188 — 188 
Total Business Segment Revenue2,524 (235)2,289 
Mass Markets Segment by Product Category
Fiber Broadband209 (3)206 
Other Broadband257 (24)233 
Voice and Other192 (9)183 
Total Mass Markets Revenue658 (36)622 
Total Revenue$3,182 (271)2,911 
Three Months Ended March 31, 2024
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
Large Enterprise
Grow$378 (49)329 
Nurture241 — 241 
Harvest103 — 103 
Other43 (1)42 
Total Large Enterprise Revenue765 (50)715 
Mid-Market Enterprise
Grow256 (6)250 
Nurture213 — 213 
Harvest98 (1)97 
Other10 (1)9 
Total Mid-Market Enterprise Revenue577 (8)569 
Public Sector
Grow125 (21)104 
Nurture88 — 88 
Harvest94 (1)93 
Other114 — 114 
Total Public Sector Revenue421 (22)399 
Wholesale
Grow260 (62)198 
Nurture192 (7)185 
Harvest276 (38)238 
Other3 — 3 
Total Wholesale Revenue731 (107)624 
International and Other
Grow40 (1)39 
Nurture42 — 42 
Harvest11 — 11 
Other4 — 4 
Total International and Other97 (1)96 
Business Segment by Product Category
Grow1,059 (139)920 
Nurture776 (7)769 
Harvest582 (40)542 
Other174 (2)172 
Total Business Segment Revenue2,591 (188)2,403 
Mass Markets Segment by Product Category
Fiber Broadband170 (4)166 
Other Broadband315 (28)287 
Voice and Other214 (9)205 
Total Mass Markets Revenue699 (41)658 
Total Revenue$3,290 (229)3,061 
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(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.
Operating Lease Revenue

We lease various dark fiber and conduit, 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 the consolidated statements of operations.

For the three months ended March 31, 2025 and 2024, our gross rental revenue was $262 million and $221 million, respectively, which represented approximately 8% and 7%, respectively, of our operating revenue for the three months ended March 31, 2025 and 2024.

Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets, and contract liabilities:

March 31, 2025December 31, 2024
 (Dollars in millions)
Customer receivables, less allowance of $44 and $50
$1,136 1,193 
Contract assets
18 19 
Contract liabilities
696 733 

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 on our consolidated balance sheets. During the three months ended March 31, 2025, we recognized $294 million of revenue that was included in contract liabilities of $733 million as of January 1, 2025. During the three months ended March 31, 2024, we recognized $300 million of revenue that was included in contract liabilities of $698 million as of January 1, 2024, including contract liabilities that were classified as held for sale.

Performance Obligations

As of March 31, 2025, 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. As of March 31, 2025, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of 2025, 2026, and thereafter was $2.2 billion, $1.9 billion and $2.0 billion, respectively.

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) and (ii) contracts that are classified as leasing arrangements or government assistance that are not subject to ASC 606.
Contract Costs

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

Three Months Ended March 31, 2025
Acquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance
$203 222 
Costs incurred40 51 
Amortization(33)(37)
End of period balance
$210 236 

Three Months Ended March 31, 2024
Acquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance
$182 184 
Costs incurred33 36 
Amortization(33)(31)
End of period balance
$182 189 

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.

We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average contract life of approximately 47 months for Mass Markets customers and 34 months for Business customers. We include amortized fulfillment costs in cost of services and products and amortized acquisition costs in Selling, general and administrative in our consolidated statements of operations. We include the amount of these deferred costs that are anticipated to be amortized in the next 12 months in Other current assets, net on our consolidated balance sheets. We include the amount of deferred costs expected to be amortized beyond the next 12 months in Other liabilities on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.