Cincinnati Bell 2013 Annual Report Download - page 160

are billed monthly in arrears. Wireline bills service revenue in regular monthly cycles, which are spread
throughout the days of the month. As the last day of each billing cycle rarely coincides with the end of the
reporting period for usage-based services such as long distance and switched access, we must estimate service
revenues earned but not yet billed. These estimates are based upon historical usage, and we adjust these estimates
during the period in which actual usage is determinable, typically in the following reporting period.
Initial billings for Wireline service connection and activation are deferred and amortized into revenue on a
straight-line basis over the average customer life. The associated connection and activation costs, to the extent of
the upfront fees, are also deferred and amortized on a straight-line basis over the average customer life.
Pricing of local voice services is generally subject to oversight by both state and federal regulatory
commissions. Such regulation also covers services, competition, and other public policy issues. Various
regulatory rulings and interpretations could result in increases or decreases to revenue in future periods.
Wireless — Postpaid wireless and reciprocal compensation are billed monthly in arrears. Wireless bills
service revenue in regular monthly cycles, which are spread throughout the days of the month. As the last day of
each billing cycle rarely coincides with the end of the reporting period for usage-based services such as postpaid
wireless, we estimate service revenues earned but not yet billed. Our estimates are based upon historical usage,
and we adjust these estimates during the period in which actual usage is determinable, typically in the following
reporting period.
Revenue from prepaid wireless service, which is collected in advance, is not recognized upon billing or cash
receipt, but rather is deferred until the service is provided.
Wireless handset revenue and the related activation revenue are recognized when the products are delivered
to and accepted by the customer, as this is considered to be a separate earnings process from the sale of wireless
services. Wireless equipment costs are also recognized upon handset sale and are generally in excess of the
related handset and activation revenue. Revenue from termination fees is recognized when collection is deemed
reasonably assured.
IT Services and Hardware — Professional services, including product installations, are recognized as the
service is provided. Maintenance services on telephony equipment are deferred and recognized ratably over the
term of the underlying customer contract, generally one to four years.
Equipment revenue is recognized upon the completion of our contractual obligations, such as shipment,
delivery, installation, or customer acceptance. Installation service revenue is generally recognized when
installation is complete. We have vendor specific evidence of selling price for installation services, as we sell
these services on a standalone basis.
The Company is a reseller of IT and telephony equipment. For these transactions, we consider the gross
versus net revenue recording criteria of ASC 605. Based on this criteria, these equipment revenues and associated
costs have generally been recorded on a gross basis, rather than recording the revenues net of the associated
costs. Vendor rebates are earned on certain equipment sales. When the rebate is earned and the amount is
determinable, we recognize the rebate as an offset to cost of products sold.
Data Center Colocation — During the period of time in which we included the accounts of CyrusOne in our
consolidated financial statements, data center colocation rentals were generally billed monthly in advance and
some contracts had escalating payments over the non-cancellable term of the contract. If rents escalated without
the lessee gaining access to or control over additional leased space or power, and the lessee took possession of, or
controlled the physical use of the property (including all contractually committed power) at the beginning of the
lease term, the rental payments by the lessee were recognized as revenue on a straight-line basis over the term of
the lease. If rents escalated because the lessee gained access to and control over additional leased space or power,
revenue was recognized in proportion to the additional space or power in the years that the lessee had control
over the use of the additional space or power. The excess of revenue recognized over amounts contractually due
is recognized in other current and noncurrent assets in the accompanying Consolidated Balance Sheets.
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Form 10-K Part II Cincinnati Bell Inc.