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Segment Information | 3 Months Ended
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Mar. 31, 2021
Segment Reporting [Abstract] |
Segment Information | Segment Information Jeff Storey, our chief operating decision maker ("CODM"), made changes to our segment and customer-facing sales channel reporting categories beginning in 2021 to align with operational changes designed to better support our customers. Following these changes, we now report two segments: Business and Mass Markets. The Business segment includes four sales channels: International and Global Accounts, Large Enterprise, Mid-Market Enterprise and Wholesale. These changes also include both the creation of new product categories and the realignment of products and services within previously reported product categories to better reflect product life cycles and our go-to-market approach. For Business segment revenue, we report the following product categories: Compute and Application Services, IP and Data Services, Fiber Infrastructure Services and Voice and Other, by the sales channels outlined above. For Mass Markets segment revenue, we report the following product categories: Consumer Broadband, SBG Broadband, Voice and Other and CAF II. See detailed descriptions of these product and service categories in Note 3—Revenue Recognition. As described in more detail below, our segments are managed based on the direct costs of providing services to their customers and the associated selling, general and administrative costs (primarily salaries and commissions). Shared costs are managed separately and included in "Operations and Other" in the tables below. As referenced above, we reclassified certain prior period amounts to conform to the current period presentation. See Note 1— Background for additional detail on these changes. At March 31, 2021, we had the following two reportable segments: •Business Segment: Under our Business segment, we provide our products and services under four distinct sales channels to meet the needs of our enterprise and commercial customers; and •Mass Markets Segment: Under our Mass Markets segment, we provide products and services to consumer and small business customers. The following tables summarize our segment results for the three months ended March 31, 2021 and 2020, based on the segment categorization we were operating under at March 31, 2021.
| Three Months Ended March 31, 2021
| Business | Mass Markets | Total Segments | Operations and Other | Total
| (Dollars in millions)
Revenue | $ | 3,595 |  | 1,434 |  | 5,029 |  | — |  | 5,029 |
Expenses: |  |  |  |  |
Cost of services and products | 881 |  | 43 |  | 924 |  | 1,212 |  | 2,136 |
Selling, general and administrative | 306 |  | 133 |  | 439 |  | 317 |  | 756 |
Less: share-based compensation | — |  | — |  | — |  | (20) |  | (20) |
Total expense | 1,187 |  | 176 |  | 1,363 |  | 1,509 |  | 2,872 |
Total adjusted EBITDA | $ | 2,408 |  | 1,258 |  | 3,666 |  | (1,509) |  | 2,157 |
| Three Months Ended March 31, 2020
| Business | Mass Markets | Total Segments | Operations and Other | Total
| (Dollars in millions)
Revenue | $ | 3,737 |  | 1,491 |  | 5,228 |  | — |  | 5,228 |
Expenses: |  |  |  |  |
Cost of services and products | 907 |  | 49 |  | 956 |  | 1,279 |  | 2,235 |
Selling, general and administrative | 342 |  | 140 |  | 482 |  | 371 |  | 853 |
Less: share-based compensation | — |  | — |  | — |  | (69) |  | (69) |
Total expense | 1,249 |  | 189 |  | 1,438 |  | 1,581 |  | 3,019 |
Total adjusted EBITDA | $ | 2,488 |  | 1,302 |  | 3,790 |  | (1,581) |  | 2,209 |
Revenue and Expenses Our segment revenue includes all revenue from our two segments as described in more detail above. Our segment revenue is based upon each customer's classification. We report our segment revenue based upon all services provided to that segment's customers. Our segment expenses include specific cost of service expenses incurred as a direct result of providing services and products to segment customers, along with selling, general and administrative expenses that are directly associated with specific segment customers or activities. The following items are excluded from our segment results, because they are centrally managed and not monitored by or reported to our CODM by segment: •network expenses not incurred as a direct result of providing services and products to segment customers; •centrally managed expenses such as Operations, Finance, Human Resources, Legal, Marketing, Product Management and IT, which are reported as "Operations and Other"; •depreciation and amortization expense or impairments; •interest expense, because we manage our financing on a consolidated basis and have not allocated assets or debt to specific segments; •stock-based compensation; and •other income and expense items are not monitored as a part of our segment operations. The following table reconciles total segment adjusted EBITDA to net income (loss):
| Three Months Ended March 31,
| 2021 |  | 2020
| (Dollars in millions)
Total segment adjusted EBITDA | $ | 3,666 |  |  | 3,790 |
Depreciation and amortization | (1,150) |  |  | (1,160) |
Other operating expenses | (1,509) |  |  | (1,581) |
Stock-based compensation | (20) |  |  | (69) |
Operating income | 987 |  |  | 980 |
Total other expense, net | (355) |  |  | (547) |
Income before income taxes | 632 |  |  | 433 |
Income tax expense | 157 |  |  | 119 |
Net income | $ | 475 |  |  | 314 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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