Frontier Communications 2013 Annual Report Download - page 7

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services. Integrating these services with other services may provide the opportunity to capture an increased
percentage of our customers’ total communications expenditures.
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 is 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 the USF/ICC Report & Order (the Order) that,
beginning in July 2012, requested that we transition to terminating switched access rates over time to near zero
by July 2017. The Order enables companies to recover part of the decline through increases in subscriber line
fees charged to some residential and business wireline voice customers. 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. Monthly recurring access service fees are billed in advance.
We also receive subsidies from state and federal authorities based on the higher cost of providing wireline
service to certain rural areas that are included in our access services revenue. Beginning in July 2012, the
Company began receiving federal subsidies for the deployment of broadband in unserved and high-cost areas.
Video services. We have offered video services under an exclusive agency relationship with DISH since
August 2011. We receive from DISH, and recognize as revenue, activation fees, other residual fees and
nominal management, billing and collection fees. Additionally, we offer fiber optic-based 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.
Customer Premise Equipment. We offer our small, medium and enterprise business customers a wide
range of third-party communications 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 standalone basis. We recognize revenue for these equipment sales in accordance with the contracts,
and separately from any related maintenance agreements, generally at time of installation and acceptance by
our customers.
Customer Metrics
Our Company, like others in the industry, utilizes reporting metrics focused on units. Consistent with our
strategy to focus on the customer, we also utilize residential and business customer metrics that, when
combined with unit counts, provide additional insight into the results of our strategic initiatives described
above.
2013 2012
As of or for the year ended
December 31,
Residential Customer Metrics:
Customers......................................................... 2,803,481 2,887,063
Revenue (in 000’s) ................................................ $2,029,479 $2,128,859
Average monthly residential revenue per customer(1) ................. $ 59.30 $ 58.33
Customer monthly churn . . ......................................... 1.69% 1.62%
Business Customer Metrics:
Customers......................................................... 270,799 286,106
Revenue (in 000’s) ................................................ $2,180,456 $2,276,119
Average monthly business revenue per customer .................... $ 653.26 $ 639.13
Total customers...................................................... 3,074,280 3,173,169
Broadband subscribers................................................ 1,866,670 1,754,422
Video subscribers . . .................................................. 385,353 346,627
(1) Calculation excludes the Mohave Cellular Limited Partnership which was sold as of April 1, 2013.
6
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES