Frontier Communications 2004 Annual Report Download - page 5

CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
3
ILEC Services
Our ILEC segment accounted for $2,027.2 million, or 93%, of our total revenues in 2004. Approximately 8% of our 2004
ILEC segment revenues came from federal and state subsidies and approximately 14% from regulated access charges.
Our ILEC business is primarily with residential customers and, to a lesser extent, non-residential customers. Our ILEC
segment principally provides:
• local network services,
• enhanced services,
• network access services,
• long distance,
• data services, and
• directory services.
Local network services. We provide telephone wireline access services to residential and non-residential customers in our
service areas. Our service areas are largely residential and are generally less densely populated than the primary service areas
of the five largest ILECs.
Enhanced services. We provide our ILEC customers a number of calling features including call forwarding, conference
calling, caller identification, voicemail and call waiting. We offer packages of telecommunications services. These packages
permit customers to bundle their basic telephone line with their choice of enhanced, long distance and internet services for a
monthly fee and/or usage depending on the plan.
We intend to increase the penetration of enhanced services. We believe that increased sales of such services in our ILEC
markets will produce revenue with higher operating margins due to the relatively low marginal operating costs necessary to
offer such services. We believe that our ability to integrate these services with other ILEC services will provide us with the
opportunity to capture an increased percentage of our customers' telecommunications expenditures.
Network access services. We provide network access services to other carriers in connection with the use of our facilities to
originate and terminate interstate and intrastate telephone calls. Such services are generally offered on a month-to-month basis
and the service is billed on a minutes-of-use basis. Access charges are based on access rates filed with the FCC for interstate
services and with the respective state regulatory agency for intrastate services.
Revenue is recognized when services are provided to customers or when products are delivered to customers. Monthly
recurring network access service revenue is billed in advance. The unearned portion of this revenue is initially deferred on
our balance sheet and recognized in revenue over the period that the services are provided. Non-recurring network access
service revenue is billed in arrears. The earned but unbilled portion of this revenue is recognized in revenue in the period
that the services are provided.
Long distance. Long distance network service to and from points outside of a telephone company's operating territories is
provided by interconnection with the facilities of interexchange carriers, or IXCs. We offer long distance services in our
territories to our ILEC customers. We believe that many customers prefer the convenience of obtaining their long distance
service through their local telephone company and receiving a single bill.
Data services. We offer data services including internet access via dial up or high-speed internet access, frame relay, ethernet
and asynchronous transfer mode (ATM) switching in portions of our system.
Directory services. Directory services involves the provision of white and yellow page listings of residential and business
directories. We provide this service through a third party contractor who pays us a percentage of revenues realized from the
sale of advertising in these directories. Our directory service also includes “Frontier Pages,” an internet-based directory