Frontier Communications 2011 Annual Report Download - page 9

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
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interexchange carriers for origination and termination of long distance voice and data traffic; (4) sales of third party and
owned video services; and (5) sales of customer premise equipment.
Local and long distance voice services. We provide basic telephone wireline services to residential and business customers
in our service areas. Our service areas are largely residential and generally less densely populated than the primary service
areas of the largest ILECs. 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. Long distance network service to and from points outside our operating territories are
provided by interconnection with the facilities of interexchange carriers. Our long distance services are billed either as
unlimited/fixed number of minutes in advance or on a per minute-of-use basis.
We also offer packages of communications services. These packages permit customers to bundle their basic telephone line
service with their choice of enhanced, long distance, video and Internet services for a monthly fee or usage fee depending
on the plan.
We are continuing our efforts to increase the penetration of our enhanced services which may produce revenue with higher
operating margins due to the relatively low marginal operating costs necessary to offer such services. Integrating these
services with other services may provide the opportunity to capture an increased percentage of our customers’
communications expenditures.
Data and Internet services. We offer a wide range of wireline data services to our residential, commercial and carrier
customers. Residential services include HSI, dial up Internet, portal and e-mail products, and Frontier Secure services, such
as hard drive back-up and computer technical support. Commercial services include Ethernet, Dedicated Internet,
Multiprotocol Label Switching (MPLS), and TDM data transport services. These services are all supported by a 24x7 help
desk and an advanced Network Operations Center. Such services are generally offered on a contract basis and the service is
billed on a fixed monthly recurring charge basis. Data and Internet services are typically billed monthly in advance.
We also offer wireless data services (using unlicensed WiFi spectrum) in select markets utilizing networks that we own or
operate. Long-term contracts are billed in advance on an annual or semi-annual basis. End-user subscribers are billed in
advance on a monthly recurring basis and colleges, universities and businesses are billed on a monthly recurring basis for a
fixed number of users. Hourly, daily and weekly casual end-users are billed by credit card at the time of use.
Access services. Our switched access services allow other carriers to use our facilities to originate and terminate their local
and long distance voice traffic. These services are generally offered on a month-to-month basis and the service billed
primarily on a minutes-of-use basis. Switched access charges have been based on access rates filed with the FCC for
interstate services and with the respective state regulatory agency for intrastate services. On November 18, 2011, the FCC
released an Order that, beginning in July 2012, will transition terminating switched access over time to near zero by July
2017. While the FCC has asserted jurisdiction over these terminating access rates, during the transition the charges will
continue to be based on tariffs filed with both the FCC and state regulatory agencies. In addition, subsidies that are
received from state and federal authorities based on the higher cost of providing telephone service to certain rural areas are
a part of our access services revenue. Beginning in July 2012, the Company will also be eligible to receive federal subsidies
for the deployment of broadband in unserved and high cost areas. Monthly recurring access service fees are billed in
advance.
Video services. We offer video services under an agency relationship with DISH in our legacy markets and with DirecTV
in the acquired Territories (other than West Virginia and the four states of the Acquired Business that we converted to
legacy systems in October 2011, where we sell the DISH product and continue to support existing customers who have the
DirecTV product). We receive from the applicable satellite provider and recognize as revenue activation fees, other residual
fees and nominal management, billing and collection fees. Additionally, we offer fiber optic video services on a limited
basis in the states of Indiana, Oregon and Washington pursuant to franchises, permits and similar authorizations issued by
local franchising authorities utilizing fiber optic delivery transport to the home.
Customer Premise Equipment. We offer our small, medium and enterprise business customers a wide range of third-party
telecommunications equipment tailored to their specific business needs. Equipment sales are most often sold in
conjunction with a variety of voice, data and Internet services; however, equipment may also be sold on a stand-alone
basis. We recognize revenue for these equipment sales as specified in the contracts, typically at time of installation and
acceptance by our customers.