Frontier Communications 2009 Annual Report Download - page 47

Local Services
Local services revenue for 2009 decreased $67.0 million, or 8%, to $781.4 million as compared with 2008,
primarily due to the continued loss of access lines that accounted for $41.9 million of the decline and a
reduction in all other related services revenue of $25.1 million. Enhanced services revenue in 2009 decreased
$14.7 million, as compared with 2008, primarily due to a decline in access lines and a shift in customers
purchasing our unlimited voice communications packages with features included in the bundle instead of
purchasing individual features.
Local services revenue for 2008 decreased $27.4 million, or 3%, to $848.4 million as compared to 2007.
Local services revenue for 2008 increased $20.4 million as a result of the CTE and GVN acquisitions, and
legacy Frontier operations decreased $47.8 million, or 6%, as compared to 2007, primarily due to the continued
loss of access lines which accounted for $40.4 million of the decline and a reduction in all other related
services of $7.4 million. Enhanced services revenue for 2008, excluding the impact of the CTE and GVN
acquisitions for 2008 and 2007, decreased $5.6 million, or 3%, as compared to 2007, primarily due to a decline
in access lines and a shift in customers purchasing our unlimited voice communications packages instead of
individual features. Rate increases that were effective August 2007 resulted in a favorable 2008 impact of $3.0
million.
Data and Internet Services
Data and internet services revenue for 2009 increased $31.3 million, or 5%, to $636.9 million as compared
with 2008, primarily due to the overall growth in the number of HSI subscribers and high-capacity internet and
ethernet circuits purchased by customers. As of December 31, 2009, the number of the Company’s HSI
subscribers had increased by approximately 56,000, or 10%, since December 31, 2008. We have used
“aspirational gifts” or promotional credits to drive growth in HSI subscribers. Data and internet services also
includes revenue from data transmission services to other carriers and high-volume commercial customers with
dedicated high-capacity Internet and ethernet circuits. Revenue from these dedicated high-capacity circuits
increased $7.3 million in 2009, as compared with 2008, primarily due to growth in the number of those circuits.
Data and internet services revenue for 2008 increased $61.9 million, or 11%, to $605.6 million as
compared to 2007. Data and internet services revenue for 2008 increased $24.6 million as a result of the CTE
and GVN acquisitions, and legacy Frontier operations increased $37.3 million, or 8%, as compared to 2007,
primarily due to the overall growth in the number of HSI subscribers. As of December 31, 2008, the number of
the Company’s HSI subscribers increased by approximately 57,100, or 11%, since December 31, 2007.
Revenue from dedicated high-capacity circuits, including the impact of $10.5 million attributable to the CTE
and GVN acquisitions, increased $26.9 million in 2008, as compared to 2007, primarily due to growth in the
number of those circuits.
In February 2009, the President signed into law an economic stimulus package, ARRA, that includes $7.2
billion in funding, through grants and loans, for new broadband investment and adoption in unserved and
underserved communities. We filed applications for the first round of stimulus funding in West Virginia, but
were notified in February 2010 that we were not selected. The federal agencies responsible for administering
the programs released rules and evaluation criteria for the second round of funding, with applications due by
March 15, 2010. The Company will evaluate opportunities but has not made a decision on whether it will apply
for any funding in this round.
Access Services
Access services revenue for 2009 decreased $45.1 million, or 11%, to $359.6 million as compared with
2008. Switched access revenue in 2009 of $246.3 million decreased $38.6 million, or 14%, as compared with
2008, primarily due to the impact of a decline in minutes of use related to access line losses and the
displacement of minutes of use by wireless, email and other communications services. Access services revenue
includes subsidy payments we receive from federal and state agencies, including surcharges billed to customers
that are remitted to the FCC. Subsidy revenue, including surcharges billed to customers, for 2009 of $113.3
million decreased $6.5 million, or 5%, as compared with 2008, primarily due to lower receipts under the
45
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES