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Revenue Recognition | 3 Months Ended
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Mar. 31, 2024
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"), 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 sales, managed and professional service 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 voice services, professional services, and other ancillary services, and (ii) federal broadband and state support programs. 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 EMEA business prior to its sales on November 1, 2023. See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information on these divestitures.
| Three Months Ended March 31, 2024 |  | Three Months Ended March 31, 2023
| 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 | $ | 427 |  | (49) |  | 378 |  |  | 421 |  | (50) |  | 371 |
Nurture | 268 |  | — |  | 268 |  |  | 300 |  | — |  | 300 |
Harvest | 119 |  | — |  | 119 |  |  | 139 |  | — |  | 139 |
Other | 44 |  | (1) |  | 43 |  |  | 51 |  | (1) |  | 50 |
Total Large Enterprise Revenue | 858 |  | (50) |  | 808 |  |  | 911 |  | (51) |  | 860 |
Mid-Market Enterprise |  |  |  |  |  |  |
Grow | 207 |  | (6) |  | 201 |  |  | 197 |  | (7) |  | 190 |
Nurture | 188 |  | — |  | 188 |  |  | 219 |  | — |  | 219 |
Harvest | 83 |  | (1) |  | 82 |  |  | 98 |  | (1) |  | 97 |
Other | 8 |  | (1) |  | 7 |  |  | 9 |  | (2) |  | 7 |
Total Mid-Market Enterprise Revenue | 486 |  | (8) |  | 478 |  |  | 523 |  | (10) |  | 513 |
Public Sector |  |  |  |  |  |  |
Grow | 125 |  | (21) |  | 104 |  |  | 117 |  | (19) |  | 98 |
Nurture | 87 |  | — |  | 87 |  |  | 107 |  | — |  | 107 |
Harvest | 94 |  | (1) |  | 93 |  |  | 99 |  | — |  | 99 |
Other | 114 |  | — |  | 114 |  |  | 109 |  | — |  | 109 |
Total Public Sector Revenue | 420 |  | (22) |  | 398 |  |  | 432 |  | (19) |  | 413 |
Wholesale |  |  |  |  |  |  |
Grow | 260 |  | (62) |  | 198 |  |  | 271 |  | (71) |  | 200 |
Nurture | 192 |  | (7) |  | 185 |  |  | 215 |  | (6) |  | 209 |
Harvest | 275 |  | (38) |  | 237 |  |  | 332 |  | (44) |  | 288 |
Other | 3 |  | — |  | 3 |  |  | 5 |  | — |  | 5 |
Total Wholesale Revenue | 730 |  | (107) |  | 623 |  |  | 823 |  | (121) |  | 702 |
International and Other |  |  |  |  |  |  |
Grow | 40 |  | (1) |  | 39 |  |  | 128 |  | (29) |  | 99 |
Nurture | 42 |  | — |  | 42 |  |  | 72 |  | — |  | 72 |
Harvest | 11 |  | — |  | 11 |  |  | 38 |  | — |  | 38 |
Other | 4 |  | — |  | 4 |  |  | 41 |  | — |  | 41 |
Total International and Other | 97 |  | (1) |  | 96 |  |  | 279 |  | (29) |  | 250 |
Business Segment by Product Category |  |  |  |  |  |  |
Grow | 1,059 |  | (139) |  | 920 |  |  | 1,134 |  | (176) |  | 958 |
Nurture | 777 |  | (7) |  | 770 |  |  | 913 |  | (6) |  | 907 |
Harvest | 582 |  | (40) |  | 542 |  |  | 706 |  | (45) |  | 661 |
Other | 173 |  | (2) |  | 171 |  |  | 215 |  | (3) |  | 212 |
Total Business Segment Revenue | 2,591 |  | (188) |  | 2,403 |  |  | 2,968 |  | (230) |  | 2,738 |
Mass Markets Segment by Product Category |  |  |  |  |  |  |
Fiber Broadband | 170 |  | (4) |  | 166 |  |  | 152 |  | (4) |  | 148 |
Other Broadband | 315 |  | (28) |  | 287 |  |  | 369 |  | (33) |  | 336 |
Voice and Other | 214 |  | (9) |  | 205 |  |  | 249 |  | (9) |  | 240 |
Total Mass Markets Revenue | 699 |  | (41) |  | 658 |  |  | 770 |  | (46) |  | 724 |
Total Revenue | $ | 3,290 |  | (229) |  | 3,061 |  |  | 3,738 |  | (276) |  | 3,462 |
_____________________________________________________________________ (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, 2024 and 2023, our gross rental income was $221 million and $269 million, respectively, which represents approximately 7% of our operating revenue for both the three months ended March 31, 2024 and 2023. 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, 2024 and December 31, 2023:
| March 31, 2024 |  | December 31, 2023
| (Dollars in millions)
Customer receivables(1) | $ | 1,289 |  |  | 1,256 |
Contract assets | 26 |  |  | 29 |
Contract liabilities | 710 |  |  | 698 |
______________________________________________________________________ (1)Reflects gross customer receivables of $1.3 billion, net of allowance for credit losses of $60 million, at March 31, 2024 and December 31, 2023. 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, 2024, we recognized $300 million of revenue that was included in contract liabilities of $698 million as of January 1, 2024. 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. Performance Obligations As of March 31, 2024, we expect to recognize approximately $6.9 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, 2024, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of 2024, 2025 and thereafter was $2.3 billion, $2.0 billion and $2.6 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) and (ii) contracts that are classified as leasing arrangements or government assistance that are not subject to ASC 606. Contract Costs The following table provides changes in our contract acquisition costs and fulfillment costs:
| Three Months Ended March 31, 2024 |  | Three Months Ended March 31, 2023
| Acquisition Costs |  | Fulfillment Costs |  | Acquisition Costs |  | Fulfillment Costs
| (Dollars in millions) |  | (Dollars in millions)
Beginning of period balance(1) | $ | 182 |  |  | 184 |  |  | 202 |  |  | 192 |
Costs incurred | 33 |  |  | 36 |  |  | 36 |  |  | 40 |
Amortization | (33) |  |  | (31) |  |  | (41) |  |  | (35) |
Change in contract costs held for sale | — |  |  | — |  |  | (5) |  |  | (15) |
End of period balance(2) | $ | 182 |  |  | 189 |  |  | 192 |  |  | 182 |
______________________________________________________________________ (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)End of period balance for the three months ended March 31, 2023 excludes $11 million of acquisition costs and $15 million of fulfillment costs classified as held for sale related to the EMEA 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. We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average contract life of approximately 50 months for mass markets customers and 35 months for business customers. We include amortized fulfillment costs in cost of services and products and amortized acquisition costs in selling, general and administrative expenses in our consolidated statements of operations. We include the amount of these deferred costs that are anticipated to be amortized in the next twelve months in other current assets on our consolidated balance sheets. We include the amount of deferred costs expected to be amortized beyond the next twelve months in other non-current assets on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs 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 -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-9 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-15 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-12 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479806/606-10-50-13 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 606 -Publisher FASB -URI https://asc.fasb.org//606/tableOfContent + Details
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