Frontier Communications 2005 Annual Report Download - page 36

34
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Local Services
Local services revenue for the year ended December 31, 2005 decreased $21.4 million or 3% as compared with
the prior year. This decline is comprised of $18.8 million related to the continued loss of access lines and $4.0 million
related to a reserve associated with state rate of return limitations on earnings. Enhanced services revenue increased
$5.9 million, as compared with the prior year, primarily due to sales of additional product packages. Economic
conditions or increasing competition could make it more difficult to sell our packages and bundles and cause us to lower
our prices for those products and services, which would adversely affect our revenues and profitability and cash flow.
Local services revenue for the year ended December 31, 2004 decreased $7.8 million or 1% as compared with
the prior year. Local revenue decreased $17.9 million primarily due to $4.7 million related to continued losses of
access lines, $2.2 million as a result of refunds to customers because of state earnings limitations, the termination of
an operator services contract of $3.4 million, $3.5 million in decreased local measured service revenue and a decline
of $2.0 million in certain business services revenue. Enhanced services revenue increased $10.1 million, primarily
due to sales of additional product packages.
Long Distance Services
Long distance services revenue for the year ended December 31, 2005 decreased $14.1 million or 8%, as
compared with the prior year primarily due to a decline in the average rates we bill for long distance services. Our
long distance minutes of use increased slightly during 2005. Our long distance revenues may continue to decrease
in the future due to lower rates and/or minutes of use. Competing services such as wireless, VOIP, and cable
telephony are resulting in a loss of customers, minutes of use and further declines in the rates we charge our customers.
We expect these factors will continue to adversely affect our long distance revenues during 2006.
Long distance services revenue for the year ended December 31, 2004 decreased $15.8 million or 8%, as
compared with the prior year primarily due to a decline in the average rate per minute. Our long distance minutes of
use increased during 2004.
Data and Internet Services
Data and internet services revenue for the years ended December 31, 2005 and 2004 increased $36.8 million,
or 27%, and $30.8 million, or 29%, respectively, as compared with the prior year primarily due to growth in data and
high-speed internet services.
Directory Services
Directory revenue for the years ended December 31, 2005 and 2004 increased $2.5 million, or 2%, and $3.7
million, or 3%, respectively, as compared with the prior year due to growth in yellow pages advertising.
Other
Other revenue for the year ended December 31, 2005 increased $7.2 million, or 8%, compared with the prior
year primarily due to a $4.8 million decrease in bad debt expense and sales of television service.
Other revenue for the year ended December 31, 2004 increased $4.4 million or 6%, as compared with the prior
year primarily due to a $4.1 million carrier dispute settlement, a decline in bad debt expense of $3.2 million and an
increase in service activation revenue of $2.5 million, partially offset by decreases of $3.6 million in sales of customer
premise equipment (CPE) and $1.5 million in call center services revenue.
ELI
ELI revenue for the year ended December 31, 2005 increased $3.1 million, or 2%, primarily due to increased
demand and growth in local and data services. For the year ended December 31, 2004, ELI revenue decreased $9.4
million, or 6%, primarily due to lower demand and prices for long-haul services and lower reciprocal compensation
revenues.