Frontier Communications 2005 Annual Report Download - page 7

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5
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Data and internet 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 directories of residential and business
listings. We provide this service through a third-party contractor and are paid a percentage of revenues from the sale
of advertising in these directories. Our directory service also includes “Frontier Pages,” an internet-based directory
service which generates advertising revenue. We recognize the revenue from these services over the life of the
related white or yellow pages book.
Television services
During 2005, we began offering a television product in partnership with Echostar’s DISH Network. We provide
access to all-digital television channels featuring movies, sports, news, music, and high-definition TV programming.
We offer packages that include 60, 120 or 180 channels, high-definition channels, family channels and ethnic
channels.
Wireless and VOIP services
During 2006, we expect to begin offering wireless data and voice services and commercial voice over internet
protocol (VOIP) solutions in certain markets. Our wireless data and VOIP services utilize technologies that are
relatively new, and we depend to some degree on the representations of equipment vendors, lab testing and the
experiences of others who have been successful at deploying these new technologies. In addition, our success in
offering wireless voice service will, to a great extent, be determined by the relationships we are developing with both
wireless carriers and third-party wireless support organizations, and is also dependent on their capabilities.
The following table sets forth certain information with respect to our revenue generating units (RGUs), which
consists of access lines plus high-speed internet subscribers, as of December 31, 2005 and 2004.
Frontier RGUs at December 31,
State 2005 2004
New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 994,600 1,029,700
Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293,600 289,300
Arizona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191,400 182,000
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,100 179,400
West Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169,100 165,000
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,200 128,600
Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,500 104,500
Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,600 77,600
Iowa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,900 62,100
Nebraska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,500 54,400
All other states (13) . . . . . . . . . . . . . . . . . . . . . . . . . . . 264,400 260,400
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,529,900 2,533,000
Change in the number of our access lines is important to our revenue and profitability. We have lost access
lines primarily because of competition, changing consumer behavior, economic conditions, changing technology
and because some customers disconnect second lines when they add high-speed internet service. We lost approximately
102,000 access lines during the year ended December 31, 2005, but added over 99,000 high-speed internet subscribers
during this same period. The loss of lines during 2005 was primarily among residential customers. The non-
residential line losses were principally in Rochester, New York, while the residential losses were throughout our
markets. We expect to continue to lose access lines but to increase high-speed internet subscribers during 2006. A
continued loss of access lines, combined with increased competition and the other factors discussed in MD&A, may
cause our profitability and cash flows to decrease during 2006.