Frontier Communications 2012 Annual Report Download - page 47

Data and Internet services revenue for 2011 increased $607.3 million, or 49%, to $1,842.9 million, as
compared with 2010. Data and Internet services revenue for 2011 increased $574.7 million as a result of the
additional six months of revenue in 2011 attributable to the Acquired Business. Excluding the additional six
months of revenue related to the Acquired Business, data and Internet services revenue increased $32.7 million,
or 3%, as compared with 2010, primarily due to the overall growth in the number of broadband subscribers and
high-capacity Internet and ethernet circuits purchased by customers. Data services revenue for 2011, excluding
the additional six months of revenue related to the Acquired Business, decreased $12.8 million to $608.2
million, as compared with 2010, primarily due to higher promotional discounts and customer credits. As of
December 31, 2011, the number of the Company’s broadband subscribers increased by 45,200, or 3%, since
December 31, 2010. Nonswitched access revenue for 2011, excluding the additional six months of revenue
related to the Acquired Business, increased $45.5 million to $660.0 million, as compared with 2010, primarily
due to growth in the number of those circuits.
Other
Other revenue for 2012 increased $51.9 million, or 16%, to $381.5 million, as compared with 2011. Other
revenue for 2012 increased, as compared to 2011, primarily due to higher service activation fees from new
customers, lower bad debt expenses that are charged against revenue and higher wireless revenue, partially
offset by the reduction in customers for FiOS video service and lower directory services revenue.
Other revenue for 2011 increased $62.7 million, or 24%, to $329.7 million, as compared with 2010. Other
revenue for 2011 increased $87.1 million as a result of the additional six months of revenue in 2011 attributable
to the Acquired Business. Excluding the additional six months of revenue related to the Acquired Business,
other revenue decreased $24.4 million, or 9%, as compared with 2010. Directory services revenue for 2011,
excluding the additional six months of revenue related to the Acquired Business, decreased $16.8 million, or
16%, as compared with 2010, primarily due to a decline in yellow pages advertising. All other revenue for
2011, excluding the additional six months of revenue related to the Acquired Business, decreased $7.6 million,
or 5%, primarily due to the reduction in customers for FiOS video service.
Switched Access and Subsidy
Switched access and subsidy revenue for 2012 decreased $42.7 million, or 7%, to $576.4 million, as
compared with 2011. Switched access revenue for 2012 of $257.8 million, decreased $61.2 million, or 19%, as
compared to 2011, 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 combined with a
reduction due to the second half impact of the lower rates enacted by the first phase of the FCC’s intercarrier
compensation reform. Switched access and subsidy revenue includes subsidy payments we receive from federal
and state agencies, including surcharges billed to customers that are remitted to universal service
administrators. Subsidy revenue, including surcharges billed to customers of $119.7 million for 2012, of
$318.6 million, increased $18.5 million, or 6%, as compared with 2011, primarily due to an increase in the
customer surcharge revenue to support the Federal Universal Service Fund and increased recovery from the
Federal Fund due to the implementation of the Order during the second half of 2012. We expect a further
decline in switched access and subsidy revenue in 2013.
Switched access and subsidy revenue for 2011 increased $121.4 million, or 24%, to $619.1 million, as
compared with 2010. Switched access and subsidy revenue increased $169.3 million as a result of the
additional six months of revenue in 2011 attributable to the Acquired Business. Excluding the additional six
months of revenue related to the Acquired Business, switched access and subsidy revenue decreased $47.9
million, or 10%, as compared with 2010.
Switched access revenue, excluding the additional six months of revenue related to the Acquired Business,
for 2011 of $245.0 million, or 7% of our revenues, decreased $40.5 million, or 14%, as compared with $285.5
million, or 8% of our revenues in 2010. These decreases were 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. Subsidy revenue, excluding the additional six months of revenue related to the
Acquired Business, for 2011 of $204.8 million, decreased $7.4 million, or 3%, as compared with 2010,
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES