Frontier Communications 2006 Annual Report Download - page 5

CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Our business, under the Frontier name, is primarily with residential customers and, to a lesser extent,
non-residential customers. Our Frontier services include:
• access services,
• local services,
• long distance services,
• data and internet services,
• directory services,
• television services, and
• wireless services
Access services
Switched access services allow other carriers the use of our facilities to originate and terminate their long
distance voice and data traffic. These 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 Federal Communications
Commission (FCC) for interstate services and with the respective state regulatory agency for intrastate services.
In addition, subsidies received from state and federal universal service funds based on the high cost of providing
telephone service to certain rural areas are a part of our access services revenue.
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.
Local services
We provide basic telephone wireline 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 largest incumbent local exchange carriers. We also provide enhanced services to our customers by
offering a number of calling features including call forwarding, conference calling, caller identification,
voicemail and call waiting. All of these local services are billed monthly 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. We also offer packages of communications services. These packages permit customers to bundle their
basic telephone line with their choice of enhanced, long distance, television and internet services for a monthly
fee and/or usage fee depending on the plan.
We intend to continue to increase the penetration of enhanced services. We believe that increased sales of
such services 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 services
will provide us with the opportunity to capture an increased percentage of our customers’ communications
expenditures.
Long distance services
We offer long distance services in our territories to our 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. Long distance network service to and from points outside of our operating territories is provided by
interconnection with the facilities of interexchange carriers, or IXCs. Our long distance services are billed either
as unlimited/fixed number of minutes in advance or on a per minute of use basis, in which case it is billed in
arrears.
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