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Revenue Recognition
 6 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
We categorize our products and services and related revenue among the following categories:
•Grow, which includes products and services that we anticipate will grow, including our colocation, dark fiber, Edge Cloud services, IP, managed security, software-defined wide area networks ("SD WAN"), secure access service edge ("SASE"), Unified Communications and Collaboration ("UC&C") and wavelengths services;
•Nurture, which includes our more mature offerings, including ethernet and VPN data network services;
•Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing ("TDM") voice, private line and other legacy services;
•Other, which includes equipment sales, IT solutions and other services; and
•Affiliate Services, which include communications services provided to our affiliates that we also provide to our external customers.
From time to time, we may change the categorization of our products and services.
Disaggregated Revenue by Service Offering

The following tables provide disaggregation of revenue from contracts with customers based on service offering for the three and six months ended June 30, 2023 and 2022. It also shows the amount of revenue that is not subject to ASC 606, but is instead governed by other accounting standards. The amounts in the tables below include revenue for the Latin American business prior to it being sold on August 1, 2022. See Note 2—Completed Divestiture of the Latin American Business and Planned Divestiture of European, Middle Eastern and African Business in our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on these divestitures.

Three Months Ended June 30, 2023Three Months Ended June 30, 2022
Total Revenue
Adjustments for Non-ASC 606 Revenue(1)
Total Revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 Revenue(1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Grow$986 (152)834 1,042 (183)859 
Nurture429 (5)424 495 (4)491 
Harvest271 — 271 330 — 330 
Other25 — 25 29 — 29 
Affiliate Services53 (53)— 57 (57)— 
Total revenue$1,764 (210)1,554 1,953 (244)1,709 

Six Months Ended June 30, 2023Six Months Ended June 30, 2022
Total Revenue
Adjustments for Non-ASC 606 Revenue(1)
Total Revenue from Contracts with CustomersTotal Revenue
Adjustments for Non-ASC 606 Revenue(1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Grow$1,959 (314)1,645 2,066 (365)1,701 
Nurture868 (8)860 998 (8)990 
Harvest561 — 561 666 — 666 
Other50 — 50 56 — 56 
Affiliate Services110 (110)— 113 (113)— 
Total revenue$3,548 (432)3,116 3,899 (486)3,413 
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(1) Includes lease revenue which is not within the scope of ASC 606.

Operating Lease Income

We lease various dark fiber, 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 our consolidated statements of operations.

For the three months ended June 30, 2023 and 2022, our gross rental income was $174 million and $203 million, which represents approximately 10% of our operating revenue for both periods. For the six months ended June 30, 2023 and 2022, our gross rental income was $355 million and $406 million, which represents approximately 10% of our operating revenue for both periods.
Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts classified as held for sale as of June 30, 2023 and December 31, 2022:
June 30, 2023December 31, 2022
(Dollars in millions)
Customer receivables (1)
$516 515 
Contract assets (2)
8 13 
Contract liabilities (3)
222 222 
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(1)Reflects gross customer receivables of $533 million and $534 million, net of allowance for credit losses of $17 million and $19 million, at both June 30, 2023 and December 31, 2022. As of June 30, 2023 and December 31, 2022, this amount excludes customer receivables classified as held for sale of $77 million and $76 million, respectively.
(2)As of June 30, 2023 and December 31, 2022, amount excludes contract assets classified as held for sale of $12 million and $16 million, respectively.
(3)As of June 30, 2023 and December 31, 2022, amount excludes contract liabilities classified as held for sale of $62 million and $59 million, respectively.

Contract liabilities are consideration we have received from our customers or billed in advance of providing the goods or services promised in the future. We defer recognizing this consideration 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 and liabilities held for sale in our consolidated balance sheets. During the three and six months ended June 30, 2023, we recognized $19 million and $98 million, respectively, of revenue that was included in contract liabilities of $281 million as of January 1, 2023, including contract liabilities that were classified as held for sale. During the three and six months ended June 30, 2022, we recognized $23 million and $108 million, respectively, of revenue that was included in contract liabilities of $305 million as of January 1, 2022, including contract liabilities that were classified as held for sale.

Performance Obligations

As of June 30, 2023, we expect to recognize approximately $3.8 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of June 30, 2023, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of 2023, 2024 and thereafter was $1.0 billion, $1.4 billion and $1.4 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), (ii) contracts that are classified as leasing arrangements that are not subject to ASC 606 and (iii) the value of unsatisfied performance obligations for contracts which relate to our EMEA business classified as held for sale.
Contract Costs

The following tables provide changes in our contract acquisition costs and fulfillment costs:
Three Months Ended June 30, 2023Three Months Ended June 30, 2022
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance(1)(2)
$74 99 77 100 
Costs incurred10 21 14 22 
Amortization(15)(18)(13)(20)
Change in contract costs held for sale— — — (1)
End of period balance(5)(6)
$69 102 78 101 
Six Months Ended
June 30, 2023		Six Months Ended
June 30, 2022
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance(3)(4)
$76 106 76 99 
Costs incurred27 44 29 43 
Amortization(30)(34)(27)(40)
Change in contract costs held for sale(4)(14)— (1)
End of period balance(5)(6)
$69 102 78 101 
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(1)Beginning of period balance for the three months ended June 30, 2023 excludes $10 million of acquisition costs and $14 million of fulfillment costs classified as held for sale related to the EMEA business.
(2)Beginning of period balance for the three months ended June 30, 2022 excludes no acquisition costs and $27 million of fulfillment costs classified as held for sale (related to the Latin American business, sold in the third quarter of 2022).
(3)Beginning of period balance for the six months ended June 30, 2023 excludes $6 million of acquisition costs and no fulfillment costs classified as held for sale related to the EMEA business.
(4)Beginning of period balance for the six months ended June 30, 2022 excludes no acquisition costs and $27 million of fulfillment costs classified as held for sale (related to the Latin American business, sold in the third quarter of 2022).
(5)End of period balance for the three and six months ended June 30, 2023 excludes $10 million of acquisition costs and $14 million of fulfillment costs classified as held for sale related to the EMEA business.
(6)End of period balance for the three and six months ended June 30, 2022 excludes no acquisition costs and $28 million of fulfillment costs classified as held for sale (related to the Latin American business, sold in the third quarter of 2022).

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.

Deferred acquisition and fulfillment costs are amortized based on the transfer of services on a straight-line basis over the average expected contract life of approximately 35 months for our business customers. Amortized fulfillment costs are included in cost of services and products, and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statements of operations. The amount of these deferred costs that are anticipated to be amortized in the next 12 months are included in other current assets on our consolidated balance sheets. The amount of deferred costs expected to be amortized beyond 12 months is included in other non-current assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on a quarterly basis.