Revenue Recognition

9 Months Ended

Sep. 30, 2023

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, 2023
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Total
Wireless service	$	15,908	$	—	$	—	$	672	$	—	$	16,580
Business service	—		5,087		—		—		—		5,087
Broadband	—		—		2,667		—		—		2,667
Legacy voice and data	—		—		368		—		69		437
Other	—		—		296		—		45		341
Total Service	15,908		5,087		3,331		672		114		25,112
Equipment	4,784		134		—		320		—		5,238
Total	$	20,692	$	5,221	$	3,331	$	992	$	114	$	30,350

For the three months ended September 30, 2022
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Total
Wireless service	$	15,337	$	—	$	—	$	559	$	3	$	15,899
Business service	—		5,524		—		—		—		5,524
Broadband	—		—		2,429		—		—		2,429
Legacy voice and data	—		—		427		—		88		515
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 nine months ended September 30, 2023
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Total
Wireless service	$	47,136	$	—	$	—	$	1,898	$	—	$	49,034
Business service	—		15,401		—		—		—		15,401
Broadband	—		—		7,755		—		—		7,755
Legacy voice and data	—		—		1,147		—		232		1,379
Other	—		—		919		—		91		1,010
Total Service	47,136		15,401		9,821		1,898		323		74,579
Equipment	14,453		430		—		944		—		15,827
Total	$	61,589	$	15,831	$	9,821	$	2,842	$	323	$	90,406

For the nine months ended September 30, 2022
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Total
Wireless service	$	45,065	$	—	$	—	$	1,583	$	15	$	46,663
Business service	—		16,418		—		—		—		16,418
Broadband	—		—		7,177		—		—		7,177
Legacy voice and data	—		—		1,332		—		313		1,645
Other	—		—		1,011		—		84		1,095
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

Deferred Customer Contract Acquisition and Fulfillment Costs

Costs to acquire and fulfill customer contracts, including commissions on service activations, for our Mobility, 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	2023		2022
Deferred Acquisition Costs
Prepaid and other current assets	$	3,141	$	2,893
Other Assets	3,990		3,913
Total deferred customer contract acquisition costs	$	7,131	$	6,806
Deferred Fulfillment Costs
Prepaid and other current assets	$	2,380	$	2,481
Other Assets	3,935		4,206
Total deferred customer contract fulfillment costs	$	6,315	$	6,687

The following table presents deferred customer contract acquisition and fulfillment cost amortization (primarily included in “Selling, general and administrative” and “Other cost of revenues,” respectively) for the nine months ended:

	September 30,		September 30,
Consolidated Statements of Income	2023		2022
Deferred acquisition cost amortization	$	2,568	$	2,138
Deferred fulfillment cost amortization	2,031		2,000

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., trade-in device credits), 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	2023		2022
Contract asset	$	5,960	$	5,512
Current portion in “Prepaid and other current assets”	3,283		2,941
Contract liability	3,913		4,170
Current portion in “Advanced billings and customer deposits”	3,598		3,816

Our contract asset balances at September 30, 2023 and December 31, 2022 reflect increased promotional equipment sales in our wireless business.

Our beginning of period contract liability recorded as customer contract revenue during 2023 was $3,576.

Remaining Performance Obligations

Remaining performance obligations 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, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $36,686, of which we expect to recognize approximately 63% by the end of 2024, with the balance recognized thereafter.