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Revenue Recognition | 3 Months Ended
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Mar. 31, 2023
Revenue from Contract with Customer [Abstract] |
Revenue Recognition | Revenue Recognition Product and Service Categories We categorize our products and services revenue among the following categories for the Business segment: •Grow, which includes products and services that we anticipate will grow, including our 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 networks services; •Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing ("TDM") voice, private line and other legacy services; and •Other, which includes equipment, IT solutions and other services. We categorize our products and services revenue among the following categories for the Mass Markets segment: •Fiber Broadband, under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure; •Other Broadband, under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure; and •Voice and Other, under which we derive revenues from (i) providing local and long-distance services, professional services, and other ancillary services, and (ii) federal broadband and state support payments. Reconciliation of Total Revenue to Revenue from Contracts with Customers The following table provides total revenue by segment, sales channel and product category. It also provides the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards. The amounts in the table below include revenue for the Latin American and ILEC businesses prior to their sales on August 1, 2022 and October 3, 2022, respectively. See Note 2—Divestitures of the Latin American and ILEC Businesses and Planned Divestiture of the EMEA 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 March 31, 2023 |  | Three Months Ended March 31, 2022
| Total Revenue | Adjustments for Non-ASC 606 revenue (1) | Total revenue from Contracts with Customers |  | Total Revenue | Adjustments for Non-ASC 606 revenue (1) | Total revenue from Contracts with Customers
| (Dollars in millions)
Business Segment by Sales Channel and Product Category |  |  |  |  |  |  |
Large Enterprise |  |  |  |  |  |  |
Grow | $ | 550 |  | (79) |  | 471 |  |  | 653 |  | (103) |  | 550 |
Nurture | 375 |  | — |  | 375 |  |  | 454 |  | — |  | 454 |
Harvest | 207 |  | — |  | 207 |  |  | 276 |  | — |  | 276 |
Other | 62 |  | (1) |  | 61 |  |  | 59 |  | (2) |  | 57 |
Total Large Enterprise Revenue | 1,194 |  | (80) |  | 1,114 |  |  | 1,442 |  | (105) |  | 1,337 |
Mid-Market Enterprise |  |  |  |  |  |  |
Grow | 196 |  | (7) |  | 189 |  |  | 185 |  | (8) |  | 177 |
Nurture | 211 |  | — |  | 211 |  |  | 241 |  | — |  | 241 |
Harvest | 100 |  | (1) |  | 99 |  |  | 140 |  | (2) |  | 138 |
Other | 8 |  | (2) |  | 6 |  |  | 7 |  | — |  | 7 |
Total Mid-Market Enterprise Revenue | 515 |  | (10) |  | 505 |  |  | 573 |  | (10) |  | 563 |
Public Sector |  |  |  |  |  |  |
Grow | 116 |  | (19) |  | 97 |  |  | 115 |  | (27) |  | 88 |
Nurture | 106 |  | — |  | 106 |  |  | 131 |  | — |  | 131 |
Harvest | 99 |  | — |  | 99 |  |  | 124 |  | (1) |  | 123 |
Other | 109 |  | — |  | 109 |  |  | 109 |  | — |  | 109 |
Total Public Sector Revenue | 430 |  | (19) |  | 411 |  |  | 479 |  | (28) |  | 451 |
Wholesale |  |  |  |  |  |  |
Grow | 266 |  | (71) |  | 195 |  |  | 233 |  | (67) |  | 166 |
Nurture | 213 |  | (6) |  | 207 |  |  | 267 |  | (7) |  | 260 |
Harvest | 333 |  | (44) |  | 289 |  |  | 407 |  | (58) |  | 349 |
Other | 5 |  | — |  | 5 |  |  | — |  | — |  | — |
Total Wholesale Revenue | 817 |  | (121) |  | 696 |  |  | 907 |  | (132) |  | 775 |
Business Segment by Product Category |  |  |  |  |  |  |
Grow | 1,128 |  | (176) |  | 952 |  |  | 1,186 |  | (205) |  | 981 |
Nurture | 905 |  | (6) |  | 899 |  |  | 1,093 |  | (7) |  | 1,086 |
Harvest | 739 |  | (45) |  | 694 |  |  | 947 |  | (61) |  | 886 |
Other | 184 |  | (3) |  | 181 |  |  | 175 |  | (2) |  | 173 |
Total Business Segment Revenue | 2,956 |  | (230) |  | 2,726 |  |  | 3,401 |  | (275) |  | 3,126 |
Mass Markets Segment by Product Category |  |  |  |  |  |  |
Fiber Broadband | 152 |  | (4) |  | 148 |  |  | 145 |  | (5) |  | 140 |
Other Broadband | 369 |  | (33) |  | 336 |  |  | 610 |  | (56) |  | 554 |
Voice and Other | 261 |  | (9) |  | 252 |  |  | 520 |  | (79) |  | 441 |
Total Mass Markets Revenue | 782 |  | (46) |  | 736 |  |  | 1,275 |  | (140) |  | 1,135 |
Total Revenue | $ | 3,738 |  | (276) |  | 3,462 |  |  | 4,676 |  | (415) |  | 4,261 |
_____________________________________________________________________ (1)Includes regulatory revenue and lease revenue not within the scope of ASC 606. Operating Lease Income Lumen Technologies leases 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 March 31, 2023 and 2022, our gross rental income was $269 million and $337 million, respectively, which represents approximately 7% of our operating revenue for both the three months ended March 31, 2023 and 2022. 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 March 31, 2023 and December 31, 2022:
| March 31, 2023 |  | December 31, 2022
| (Dollars in millions)
Customer receivables(1) | $ | 1,374 |  |  | 1,424 |
Contract assets(2) | 30 |  |  | 34 |
Contract liabilities(3) | 675 |  |  | 656 |
______________________________________________________________________ (1)Reflects gross customer receivables of $1.4 billion and $1.5 billion, net of allowance for credit losses of $72 million and $73 million, at March 31, 2023 and December 31, 2022, respectively. These amounts exclude customer receivables, net, classified as held for sale of $85 million at March 31, 2023 and $76 million at December 31, 2022 related to the EMEA business. (2)These amounts exclude contract assets classified as held for sale of $13 million at March 31, 2023 and $16 million at December 31, 2022 related to the EMEA business. (3)These amounts exclude contract liabilities classified as held for sale of $57 million at March 31, 2023 and $59 million at December 31, 2022 related to the EMEA business. Contract liabilities are consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue 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 on our consolidated balance sheets. During the three months ended March 31, 2023, we recognized $305 million of revenue that was included in contract liabilities of $715 million as of January 1, 2023, including contract liabilities that were classified as held for sale. During the three months ended March 31, 2022, we recognized $395 million of revenue that was included in contract liabilities of $841 million as of January 1, 2022, including contract liabilities that were classified as held for sale. Performance Obligations As of March 31, 2023, we expect to recognize approximately $7.8 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of March 31, 2023, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of 2023, 2024 and thereafter was $2.4 billion, $1.9 billion and $3.5 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 or government assistance that are not subject to ASC 606, and (iii) the value of unsatisfied performance obligations for contracts which relate to our planned divestiture of the EMEA business. Contract Costs The following table provides changes in our contract acquisition costs and fulfillment costs:
| Three Months Ended March 31, 2023 |  | Three Months Ended March 31, 2022
| Acquisition Costs |  | Fulfillment Costs |  | Acquisition Costs |  | Fulfillment Costs
| (Dollars in millions) |  | (Dollars in millions)
Beginning of period balance(1)(2) | $ | 202 |  |  | 192 |  |  | 222 |  |  | 186 |
Costs incurred | 36 |  |  | 40 |  |  | 43 |  |  | 40 |
Amortization | (41) |  |  | (35) |  |  | (52) |  |  | (39) |
Change in contract costs held for sale | (5) |  |  | (15) |  |  | 2 |  |  | — |
End of period balance(3)(4) | $ | 192 |  |  | 182 |  |  | 215 |  |  | 187 |
______________________________________________________________________ (1)Beginning of period balance for the three months ended March 31, 2023 excludes $6 million of acquisition costs and no fulfillment costs classified as held for sale related to the EMEA business. (2)Beginning of period balance for the three months ended March 31, 2022 excludes acquisition costs and fulfillment costs classified as held for sale of $34 million and $32 million, respectively (related to both the Latin American business and the ILEC business). (3)End of period balance for the three months ended March 31, 2023 excludes $11 million of acquisition costs and $15 million fulfillment costs classified as held for sale related to the EMEA business. (4)End of period balance for the three months ended March 31, 2022 excludes acquisition costs and fulfillment costs classified as held for sale of $32 million and $32 million, respectively (related to both the Latin American business and the ILEC business). 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 contract life of approximately 36 months for mass markets customers and 33 months for 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 the next twelve months is included in other noncurrent assets on our consolidated balance sheets. Deferred acquisition and fulfillment costs are assessed for impairment on a quarterly basis.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI https://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 + Details
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