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Revenue Recognition
 9 Months Ended
Sep. 30, 2025
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 4—Revenue Recognition

Product and Service Categories

We categorize our products and services revenue among the following categories for the Business segment:

•Grow, which includes existing and emerging products and services in which we are significantly investing, including our dark fiber and conduit, Edge Cloud, IP, managed security, software-defined wide area networks, Unified Communications and Collaboration, 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 voice and private line 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 tables provide total revenue by segment, sales channel and product category. They also provide the amount of revenue that is not subject to Accounting Standards Codification ("ASC") 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards.

Three Months Ended September 30, 2025Nine Months Ended September 30, 2025
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)
Business Segment by Sales Channel and Product Category
Large Enterprise
Grow$451 (101)350 1,294 (279)1,015 
Nurture192 — 192 587 — 587 
Harvest72 — 72 226 — 226 
Other37 — 37 114 — 114 
Total Large Enterprise Revenue752 (101)651 2,221 (279)1,942 
Mid-Market Enterprise
Grow260 (7)253 779 (19)760 
Nurture146 — 146 465 — 465 
Harvest71 (1)70 227 (3)224 
Other11 — 11 30 — 30 
Total Mid-Market Enterprise Revenue488 (8)480 1,501 (22)1,479 
Public Sector
Grow151 (25)126 450 (73)377 
Nurture79 — 79 246 — 246 
Harvest112 — 112 357 — 357 
Other136 — 136 394 — 394 
Total Public Sector Revenue478 (25)453 1,447 (73)1,374 
Wholesale
Grow261 (73)188 788 (217)571 
Nurture160 (6)154 507 (18)489 
Harvest236 (34)202 754 (107)647 
Other1 — 1 4 — 4 
Total Wholesale Revenue658 (113)545 2,053 (342)1,711 
International and Other
Grow37 (1)36 112 (3)109 
Nurture34 — 34 106 — 106 
Harvest6 — 6 21 — 21 
Other3 — 3 9 — 9 
Total International and Other80 (1)79 248 (3)245 
Business Segment by Product Category
Grow1,160 (207)953 3,423 (591)2,832 
Nurture611 (6)605 1,911 (18)1,893 
Harvest497 (35)462 1,585 (110)1,475 
Other188 — 188 551 — 551 
Total Business Segment Revenue2,456 (248)2,208 7,470 (719)6,751 
Mass Markets Segment by Product Category
Fiber Broadband225 (3)222 651 (9)642 
Other Broadband230 (23)207 732 (71)661 
Voice and Other176 (7)169 508 24 532 
Total Mass Markets Revenue631 (33)598 1,891 (56)1,835 
Total Revenue$3,087 (281)2,806 9,361 (775)8,586 

Three Months Ended September 30, 2024Nine Months Ended September 30, 2024
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)
Business Segment by Sales Channel and Product Category
Large Enterprise
Grow$390 (73)317 1,145 (183)962 
Nurture234 — 234 710 — 710 
Harvest94 — 94 293 — 293 
Other43 — 43 127 (1)126 
Total Large Enterprise Revenue761 (73)688 2,275 (184)2,091 
Mid-Market Enterprise
Grow257 (6)251 770 (19)751 
Nurture186 — 186 599 — 599 
Harvest89 (1)88 282 (3)279 
Other10 (4)6 30 (5)25 
Total Mid-Market Enterprise Revenue542 (11)531 1,681 (27)1,654 
Public Sector
Grow133 (21)112 386 (62)324 
Nurture87 — 87 263 — 263 
Harvest87 (1)86 273 (3)270 
Other123 — 123 378 — 378 
Total Public Sector Revenue430 (22)408 1,300 (65)1,235 
Wholesale
Grow259 (73)186 782 (211)571 
Nurture183 (6)177 561 (20)541 
Harvest268 (35)233 819 (110)709 
Other2 — 2 7 — 7 
Total Wholesale Revenue712 (114)598 2,169 (341)1,828 
International and Other
Grow38 (1)37 116 (3)113 
Nurture39 — 39 122 — 122 
Harvest12 — 12 33 — 33 
Other3 — 3 10 — 10 
Total International and Other92 (1)91 281 (3)278 
Business Segment by Product Category
Grow1,077 (174)903 3,199 (478)2,721 
Nurture729 (6)723 2,255 (20)2,235 
Harvest550 (37)513 1,700 (116)1,584 
Other181 (4)177 552 (6)546 
Total Business Segment Revenue2,537 (221)2,316 7,706 (620)7,086 
Mass Markets Segment by Product Category
Fiber Broadband190 (3)187 541 (10)531 
Other Broadband283 (25)258 896 (80)816 
Voice and Other211 (5)206 636 (23)613 
Total Mass Markets Revenue684 (33)651 2,073 (113)1,960 
Total Revenue$3,221 (254)2,967 9,779 (733)9,046 
____________________________________________________________________
(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.

Operating Lease Revenue

We lease various dark fiber and conduit, 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 the consolidated statements of operations.

For the three months ended September 30, 2025 and 2024, our gross rental revenue was $272 million and $250 million, respectively, which represented approximately 9% and 8%, respectively, of our operating revenue for the three months ended September 30, 2025 and 2024. For the nine months ended September 30, 2025 and 2024, our gross rental revenue was $799 million and $711 million, respectively, which represented approximately 9% and 7%, respectively, of our operating revenue for the nine months ended September 30, 2025 and 2024.
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:

September 30, 2025December 31, 2024
 (Dollars in millions)
Customer receivables, less allowance of $42 and $50(1)
$1,215 1,193 
Contract assets
30 19 
Contract liabilities(2)
675 733 
______________________________________________________________________
(1)    As of September 30, 2025, this amount excluded $13 million of customer receivables, net associated with the disposal group classified as held for sale.
(2)     As of September 30, 2025, this amount excluded $33 million of contract liabilities associated with the disposal group classified as held for sale.

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 and nine months ended September 30, 2025, we recognized $60 million and $425 million, respectively, of revenue that was included in contract liabilities of $733 million as of January 1, 2025, including contract liabilities that were classified as held for sale. During the three and nine months ended September 30, 2024, we recognized $47 million and $390 million of revenue that was included in contract liabilities of $698 million as of January 1, 2024.

Performance Obligations

As of September 30, 2025, we expect to recognize approximately $5.9 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of September 30, 2025, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of 2025, 2026, and thereafter was $880 million, $2.4 billion and $2.7 billion, respectively.

These amounts exclude (i) the value of unsatisfied performance obligations for contracts for which we recognize revenue in amounts for 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 the disposal group classified as held for sale.
Contract Costs

The following tables provide changes in our contract acquisition costs and fulfillment costs:

Three Months Ended September 30, 2025Nine Months Ended September 30, 2025

Acquisition Costs
Fulfillment Costs
Acquisition Costs
Fulfillment Costs
(Dollars in millions)(Dollars in millions)
Balance at beginning of period(1)
$210 241 203 222 
Costs incurred34 57 106 166 
Amortization(30)(41)(95)(117)
Change in contract costs held for sale— (3)— (17)
Balance at end of period(2)
$214 254 214 254 
______________________________________________________________________
(1)    The beginning balance for the three months ended September 30, 2025 excluded $14 million of fulfillment costs associated with the disposal group classified as held for sale.
(2)    The ending balance for both the three and nine months ended September 30, 2025 excluded fulfillment costs associated with the disposal group classified as held for sale of $17 million.

Three Months Ended September 30, 2024Nine Months Ended September 30, 2024
Acquisition CostsFulfillment CostsAcquisition CostsFulfillment Costs
(Dollars in millions)(Dollars in millions)
Balance at beginning of period
$185 204 182 184 
Costs incurred36 41 104 126 
Amortization(32)(36)(97)(101)
Balance at end of period
$189 209 189 209 

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 47 months for Mass Markets customers and 34 months for Business customers. We include amortized fulfillment costs in cost of services and products and amortized acquisition costs in Selling, general and administrative in our consolidated statements of operations. We include the amount of these deferred costs that are anticipated to be amortized in the next 12 months in Other current assets, net on our consolidated balance sheets. We include the amount of deferred costs expected to be amortized beyond the next 12 months in Other assets, net on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.