Business Segment Information

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Business Segment Information [Text Block]

Business Segment Information

For the years ended December 31, 2016, 2015, and 2014, we operated two business segments: Entertainment and Communications and IT Services and Hardware. The closing of our wireless operations, effective March 31, 2015, represented a strategic shift in our business. Therefore, certain wireless assets, liabilities and results of operations are reported as discontinued operations in our financial statements. For further details of Discontinued Operations, see Notes 1 and 16 of Notes to Consolidated Financial Statements.

The Entertainment and Communications segment provides data, video, voice and other services. These services are primarily provided to customers in southwestern Ohio, northern Kentucky and southeastern Indiana. Data includes products such as high-speed internet access, digital subscriber lines, private line, multi-protocol label switching, SONET, dedicated internet access, wavelength, audio conferencing and digital signal. These products are used to transport large amounts of data over private networks. Video services provide our Fioptics customers access to over 400 entertainment channels, over 140 high-definition channels, parental controls, HD DVR and video On-Demand. In addition, we offer features that deliver high customer satisfaction including Fioptics MyTV and a Fioptics live TV streaming application. Voice represents local service, including Fioptics voice lines. It also includes VoIP, long distance, digital trunking, switched access and other value-added services such as caller identification, voicemail, call waiting, and call return. VoIP products provide our customers access to widely disbursed communication platforms and access to cloud based services and hosted unified communications products. Other services consists of revenue generated from wiring projects for business customers, advertising, directory assistance, maintenance and information services.

Entertainment and Communications revenue increased during 2016 and 2015 due to the demand for strategic fiber products more than offsetting legacy copper declines. Operating income for Entertainment and Communications for 2016 was down compared to a year ago due in large part to increased depreciation expense associated with the impact of accelerating construction of our fiber network and reducing the estimated useful life of certain set-top boxes and the related software as we upgrade to new technology. We also reduced the useful life of our copper assets in the fourth quarter of 2015. Operating income decreased during 2015 primarily due to additional operating expenses associated with the continued acceleration of our fiber investment and costs absorbed as a result of shutting down wireless operations. Entertainment and Communications recognized restructuring and severance related charges of $7.7 million in 2016 primarily related to initiatives to reduce costs associated with our legacy copper network. Entertainment and Communications recognized restructuring and severance related charges of $1.6 million in 2015 and reversed restructuring and severance related charges of $0.5 million in 2014. In 2014, Entertainment and Communications recorded an asset impairment charge of $4.6 million related to the abandonment of an internal use software project that was written off in the fourth quarter. There were no impairment charges recorded in 2016 or 2015. Capital expenditures are incurred to expand our Fioptics product suite, upgrade and increase capacity for our internet and data networks, and to maintain our wireline network.

The IT Services and Hardware segment provides a range of fully managed and outsourced IT and telecommunications services along with the sale, installation, and maintenance of major branded IT and telephony equipment. IT Services and Hardware revenue decreased $4.7 million from 2015 as a result of an increase in strategic revenue of $17.7 million in 2016 which was more than offset by the $24.5 million decrease in telecom and IT hardware sales in 2016 compared to the prior year. IT Services and Hardware revenue increased $2.4 million from 2014 to 2015 as a result of an increase of $40.7 million in strategic revenue. This was partially offset by the $35.1 million decrease in telecom and IT hardware sales. Restructuring and severance related charges of $3.3 million were recognized in 2016 primarily related to a reduction in force as customers increased internal IT staff, therefore reducing the need for our professional services. In 2015, restructuring and severance related charges of $2.8 million consisted of employee severance and project related costs for the integration of each segment's business markets and the discontinuation of our advanced cyber-security product offering in the first quarter of 2015. We also abandoned office space in Canada that is no longer in use. There were no restructuring and severance related charges recorded in 2014.

As of December 31, 2016 and 2015, our investment in CyrusOne is included as an asset of the Corporate segment. Deferred tax assets totaling $64.5 million and $182.3 million as of December 31, 2016 and 2015, respectively, are also reported as assets in the Corporate segment.

Our business segment information is as follows:

	Year Ended December 31,
(dollars in millions)	2016			2015			2014
Revenue
Entertainment and Communications	$	768.8		$	743.7		$	740.7
IT Services and Hardware	430.7			435.4			433.0
Intersegment	(13.7		)	(11.3		)	(12.2		)
Total revenue	$	1,185.8		$	1,167.8		$	1,161.5
Intersegment revenue
Entertainment and Communications	$	1.3		$	1.3		$	1.2
IT Services and Hardware	12.4			10.0			11.0
Total intersegment revenue	$	13.7		$	11.3		$	12.2
Operating income
Entertainment and Communications	$	90.6		$	129.9		$	178.9
IT Services and Hardware	23.2			20.6			19.8
Corporate	(20.8		)	(22.5		)	(21.8		)
Total operating income	$	93.0		$	128.0		$	176.9
Expenditures for long-lived assets
Entertainment and Communications	$	272.5		$	269.5		$	163.7
IT Services and Hardware	13.7			14.0			11.9
Corporate	0.2			0.1			0.2
Total expenditures for long-lived assets	$	286.4		$	283.6		$	175.8
Depreciation and amortization
Entertainment and Communications	$	168.6		$	129.2		$	115.7
IT Services and Hardware	13.5			12.3			11.7
Corporate	0.1			0.1			0.2
Total depreciation and amortization	$	182.2		$	141.6		$	127.6
	As of December 31,
(dollars in millions)	2016			2015
Assets
Entertainment and Communications	$	1,093.5		$	982.5
IT Services and Hardware	60.0			58.0
Corporate and eliminations	387.5			405.9
Total assets	$	1,541.0		$	1,446.4

Details of our service and product revenues including eliminations are as follows:

	Year Ended December 31,
(dollars in millions)	2016		2015		2014
Service revenue
Entertainment and Communications	$	763.0	$	735.0	$	728.8
IT Services and Hardware	215.7		198.0		161.4
Total service revenue	$	978.7	$	933.0	$	890.2
Product revenue
Handsets and accessories	$	4.5	$	7.4	$	10.7
Telecom and IT hardware	202.6		227.4		260.6
Total product revenue	$	207.1	$	234.8	$	271.3