Revenue Recognition

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

NOTE 5. REVENUE RECOGNITION

Revenue Categories

The following tables set forth reported revenue by category and by business unit:

For the three months ended September 30, 2022
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Elim.		Total
Wireless service	$	15,256	$	—	$	—	$	559	$	4	$	—	$	15,819
Video service	—		—		—		—		—		—		—
Business service	—		5,524		—		—		—		—		5,524
Broadband	—		—		2,429		—		—		—		2,429
Advertising	81		—		—		—		—		—		81
Legacy voice and data	—		—		427		—		87		—		514
Other	—		—		329		—		35		—		364
Total Service	15,337		5,524		3,185		559		126		—		24,731
Equipment	4,941		144		—		226		1		—		5,312
Total	$	20,278	$	5,668	$	3,185	$	785	$	127	$	—	$	30,043

For the three months ended September 30, 2021
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Elim.		Total
Wireless service	$	14,450	$	—	$	—	$	463	$	29	$	—	$	14,942
Video service	—		—		—		—		2,132		—		2,132
Business service	—		5,765		—		—		—		—		5,765
Broadband	—		—		2,290		—		—		—		2,290
Advertising	77		—		—		—		17		(17)		77
Legacy voice and data	—		—		484		—		98		—		582
Other	—		—		351		—		108		—		459
Total Service	14,527		5,765		3,125		463		2,384		(17)		26,247
Equipment	4,611		173		17		261		17		—		5,079
Total	$	19,138	$	5,938	$	3,142	$	724	$	2,401	$	(17)	$	31,326

For the nine months ended September 30, 2022
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Elim.		Total
Wireless service	$	44,825	$	—	$	—	$	1,583	$	23	$	—	$	46,431
Video service	—		—		—		—		—		—		—
Business service	—		16,418		—		—		—		—		16,418
Broadband	—		—		7,177		—		—		—		7,177
Advertising	240		—		—		—		—		—		240
Legacy voice and data	—		—		1,332		—		242		—		1,574
Other	—		—		1,011		—		147		—		1,158
Total Service	45,065		16,418		9,520		1,583		412		—		72,998
Equipment	15,214		485		—		700		1		—		16,400
Total	$	60,279	$	16,903	$	9,520	$	2,283	$	413	$	—	$	89,398

For the nine months ended September 30, 2021
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Elim.		Total
Wireless service	$	42,667	$	—	$	—	$	1,349	$	66	$	—	$	44,082
Video service	—		—		—				15,423		—		15,423
Business service	—		17,497		—		—		70		—		17,567
Broadband	—		—		6,761		—		—		—		6,761
Advertising	254		—		—		—		136		(136)		254
Legacy voice and data	—		—		1,507		—		334		—		1,841
Other	—		—		1,019		—		393		—		1,412
Total Service	42,921		17,497		9,287		1,349		16,422		(136)		87,340
Equipment	14,187		539		93		694		90		—		15,603
Total	$	57,108	$	18,036	$	9,380	$	2,043	$	16,512	$	(136)	$	102,943

Deferred Customer Contract Acquisition and Fulfillment Costs

Costs to acquire and fulfill customer contracts, including commissions on service activations, for our wireless, business wireline, and consumer wireline services, are deferred and amortized over the contract period or expected customer relationship life, which typically ranges from three years to five years.

The following table presents the deferred customer contract acquisition and fulfillment costs included on our consolidated balance sheets:

	September 30,		December 31,
Consolidated Balance Sheets	2022		2021
Deferred Acquisition Costs
Prepaid and other current assets	$	2,772	$	2,551
Other Assets	3,790		3,247
Total deferred customer contract acquisition costs	$	6,562	$	5,798
Deferred Fulfillment Costs
Prepaid and other current assets	$	2,489	$	2,600
Other Assets	4,252		4,148
Total deferred customer contract fulfillment costs	$	6,741	$	6,748

The following table presents deferred customer contract acquisition and fulfillment cost amortization included in “Other cost of revenue” for the nine months ended:

	September 30,		September 30,
Consolidated Statements of Income	2022		20211
Deferred acquisition cost amortization	$	2,138	$	2,266
Deferred fulfillment cost amortization	2,000		3,285
1Includes deferred acquisition amortization of $409 and deferred fulfillment cost amortization of $1,162 from our separated Video business for the nine months ended September 30, 2021.

Contract Assets and Liabilities

A contract asset is recorded when revenue is recognized in advance of our right to bill and receive consideration. The contract asset will decrease as services are provided and billed. For example, when installment sales include promotional discounts (e.g., “buy one get one free”) the difference between revenue recognized and consideration received is recorded as a contract asset to be amortized over the contract term.

Our contract assets primarily relate to our wireless businesses. Promotional equipment sales where we offer handset credits, which are allocated between equipment and service in proportion to their standalone selling prices, when customers commit to a specified service period result in additional contract assets recognized. These contract assets will amortize over the service contract period, resulting in lower future service revenue.

When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Reductions in the contract liability will be recorded as we satisfy the performance obligations.

The following table presents contract assets and liabilities on our consolidated balance sheets:

	September 30,		December 31,
Consolidated Balance Sheets	2022		2021
Contract asset	$	5,047	$	4,389
Current portion in “Prepaid and other current assets”	2,827		2,582
Contract liability	3,938		4,133
Current portion in “Advanced billings and customer deposits”	3,597		3,766

Our contract asset balances for the quarter ended September 30, 2022 and December 31, 2021 reflect increased promotional equipment sales in our wireless business. We expect the amortization of these promotional costs to increase throughout 2022 and the contract asset to flatten in 2023.

Our beginning of period contract liability recorded as customer contract revenue during 2022 was $3,527.

Remaining Performance Obligations

Remaining performance obligations primarily relate to our Communications segment and represent services we are required to provide to customers under bundled or discounted arrangements, which are satisfied as services are provided over the contract term. In determining the transaction price allocated, we do not include non-recurring charges and estimates for usage, nor do we consider arrangements with an original expected duration of less than one year, which are primarily prepaid wireless and residential internet agreements.

Remaining performance obligations associated with business contracts reflect recurring charges billed, adjusted to reflect estimates for sales incentives and revenue adjustments. Performance obligations associated with wireless contracts are estimated using a portfolio approach in which we review all relevant promotional activities, calculating the remaining performance obligation using the average service component for the portfolio and the average device price. As of September 30, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $34,309, of which we expect to recognize approximately 70% by the end of 2023, with the balance recognized thereafter.