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Revenue Recognition | 6 Months Ended
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Jun. 30, 2023
Revenue from Contract with Customer [Abstract] |
Revenue Recognition | Revenue Recognition We categorize our revenue derived from our operations serving our mass markets customers, primarily within the first three categories listed below, and our revenue derived from our operations servicing our business customers, primarily in the 'Harvest', 'Nurture' and 'Grow' categories listed below: •Other Broadband, under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure; •Voice and Other, under which we derive revenues from (i) providing local and long-distance voice services, professional services, and other ancillary services, (ii) federal broadband and state support programs, and (iii) equipment, IT solutions and other services; •Fiber Broadband, under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure; •Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing ("TDM") voice, private line and other legacy services; •Nurture, which includes our more mature offerings, including primarily ethernet; •Grow, which includes products and services marketed to our business customers that we anticipate will grow, including dark fiber and wavelengths services; and •Affiliate Services, which are communications services that we also provide to external customers. In addition, we provide to our affiliates application development and support services and network support. Reconciliation of Total Revenue to Revenue from Contracts with Customers The following tables provide our total revenue by product and service category as well as 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:
| Three Months Ended June 30, 2023 |  | Three Months Ended June 30, 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)
Other Broadband | $ | 283 |  | (24) |  | 259 |  |  | 326 |  | (27) |  | 299 |
Voice and Other | 150 |  | (4) |  | 146 |  |  | 174 |  | (4) |  | 170 |
Fiber Broadband | 122 |  | (3) |  | 119 |  |  | 114 |  | (3) |  | 111 |
Harvest | 276 |  | (36) |  | 240 |  |  | 288 |  | (41) |  | 247 |
Nurture | 94 |  | (2) |  | 92 |  |  | 107 |  | (2) |  | 105 |
Grow | 39 |  | — |  | 39 |  |  | 40 |  | (3) |  | 37 |
Affiliate Services | 503 |  | (11) |  | 492 |  |  | 583 |  | (12) |  | 571 |
Total revenue | $ | 1,467 |  | (80) |  | 1,387 |  |  | 1,632 |  | (92) |  | 1,540 |
| Six Months Ended June 30, 2023 |  | Six Months Ended June 30, 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)
Other Broadband | $ | 576 |  | (49) |  | 527 |  |  | 660 |  | (55) |  | 605 |
Voice and Other | 306 |  | (8) |  | 298 |  |  | 368 |  | (20) |  | 348 |
Fiber Broadband | 243 |  | (6) |  | 237 |  |  | 224 |  | (6) |  | 218 |
Harvest | 543 |  | (73) |  | 470 |  |  | 575 |  | (82) |  | 493 |
Nurture | 199 |  | (4) |  | 195 |  |  | 219 |  | (4) |  | 215 |
Grow | 78 |  | — |  | 78 |  |  | 78 |  | (6) |  | 72 |
Affiliate Services | 1,063 |  | (22) |  | 1,041 |  |  | 1,164 |  | (23) |  | 1,141 |
Total revenue | $ | 3,008 |  | (162) |  | 2,846 |  |  | 3,288 |  | (196) |  | 3,092 |
____________________________________________________________ (1)Includes regulatory revenue and lease revenue not within the scope of ASC 606. Operating Lease Revenue Qwest leases various data transmission capacity, office facilities, switching facilities and other network sites 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 $78 million and $88 million, respectively, which represents approximately 5% of our operating revenue for both periods. For the six months ended June 30, 2023 and 2022, our gross rental income was $158 million and $176 million, respectively, which represents approximately 5% our operating revenue for both periods. Customer Receivables and Contract Balances The following table provides balances of customer receivables, contract assets and contract liabilities as of June 30, 2023 and December 31, 2022:
| June 30, 2023 |  | December 31, 2022
| (Dollars in millions)
Customer receivables (1) | $ | 295 |  |  | 297 |
Contract assets | 8 |  |  | 9 |
Contract liabilities | 290 |  |  | 343 |
______________________________________________________________________ (1)Reflects gross customer receivables, including gross affiliate receivables, of $322 million and $324 million, net of allowance for credit losses of $27 million at both June 30, 2023 and December 31, 2022, respectively. Contract liabilities consist of 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 in our consolidated balance sheets. During the three and six months ended June 30, 2023, we recognized $10 million and $149 million, respectively, of revenue that was included in contract liabilities of $343 million as of January 1, 2023. During the three and six months ended June 30, 2022, we recognized $14 million and $164 million, respectively, of revenue that was included in contract liabilities of $317 million as of January 1, 2022. Performance Obligations As of June 30, 2023, we expect to recognize approximately $1.8 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 $492 million, $641 million and $644 million, 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 that are not subject to ASC 606. Contract Costs The following tables provide changes in our contract acquisition costs and fulfillment costs:
| Three Months Ended June 30, 2023 |  | Three Months Ended June 30, 2022
| Acquisition Costs |  | Fulfillment Costs |  | Acquisition Costs |  | Fulfillment Costs
| (Dollars in millions)
Beginning Balance | $ | 58 |  |  | $ | 46 |  |  | 63 |  |  | $ | 47 |
Cost Incurred | 13 |  |  | 9 |  |  | 12 |  |  | 10 |
Amortization | (12) |  |  | (10) |  |  | (13) |  |  | (10) |
Ending Balances | 59 |  |  | $ | 45 |  |  | 62 |  |  | 47 |
| Six Months Ended June 30, 2023 |  | Six Months Ended June 30, 2022
| Acquisition Costs |  | Fulfillment Costs |  | Acquisition Costs |  | Fulfillment Costs
| (Dollars in millions)
Beginning Balance | $ | 61 |  |  | $ | 46 |  |  | 64 |  |  | $ | 47 |
Cost incurred | 22 |  |  | 19 |  |  | 25 |  |  | 19 |
Amortization | (24) |  |  | (20) |  |  | (27) |  |  | (19) |
Ending Balances | 59 |  |  | 45 |  |  | 62 |  |  | 47 |
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 communications 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 36 months for mass markets customers and average contract life of 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 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.

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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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