Frontier Communications 2014 Annual Report Download - page 37

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Voice Services
Voice services revenues for 2014 decreased $168 million, or 8%, as compared with 2013,
primarily due to $150 million, or 9%, in lower local and enhanced services revenue. This decrease is
primarily due to the continued loss of voice customers and, to a lesser extent, decreases in individual
features packages, partially offset by increased local voice charges to residential and business end
users. Long distance services revenue decreased $17 million, or 5%, primarily due to an 8% decrease
in minutes of use driven by fewer customers, partially offset by increased cost recovery surcharge
rates.
Voice services revenues for 2013 decreased $198 million, or 9%, as compared with 2012,
including $138 million, or 8%, in lower local and enhanced services revenue. This decrease was
primarily due to the continued loss of voice customers and, to a lesser extent, decreases in individual
features packages, partially offset by increased local voice charges to residential and business end
users to the extent permitted by the 2011 Order. Long distance services revenue decreased
$60 million, or 14%, primarily due to lower minutes of use driven by fewer customers and the migration
to bundled packages.
Data and Internet Services
Data and Internet services revenues for 2014 decreased $7 million as compared with 2013. Data
and Internet services includes nonswitched access revenue from data transmission services to other
carriers and high-volume business customers with dedicated high-capacity Internet and Ethernet
circuits. These nonswitched access revenues decreased $92 million, or 10%, primarily due to lower
monthly recurring charges attributable to a reduction in wireless backhaul and other carrier service
revenues. These decreases were mostly offset by increases in data services revenues of $85 million,
or 9%, primarily due to a 6% increase in the total number of broadband customers and sales of
Frontier Secure products. We expect wireless data usage to continue to increase, which may drive the
need for additional wireless backhaul capacity. Despite the need for additional capacity, we expect to
continue to experience declines in wireless backhaul revenue in 2015, as our carrier partners migrate
to Ethernet solutions at lower price points and certain customers migrate to our competitors.
Data and Internet services revenues for 2013 increased $61 million, or 3%, as compared with
2012. Data services revenue increased $85 million, or 10%, primarily due to a 6% increase in the
number of broadband customers and sales of Frontier Secure products. These increases were offset
by a $24 million, or 3%, decrease in nonswitched access revenue, primarily due to a reduction in
wireless backhaul.
Other
Other revenues for 2014 increased $11 million, or 4%, primarily due to lower bad debt expenses
that are charged to other revenue and increased customer premise equipment revenues, partially
offset by lower wireless revenue associated with the sale of our interest in the Mohave partnership and
lower directory services revenues.
Other revenues for 2013 decreased $58 million, or 16%, primarily due to lower wireless revenues
associated with the sale of our interest in the Mohave partnership, lower directory services revenues
and the reduction in FiOSvideo service customers, partially offset by lower bad debt expenses.
Switched Access and Subsidy
Switched access and subsidy revenue for 2014 decreased $41 million, or 7%, to $511 million, as
compared to 2013. Switched access revenue decreased $38 million, or 16%, and subsidy revenue
decreased $3 million in 2014. The decrease in switched access revenue was 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 and other communications services combined with a reduction due to the impact of the
lower rates enacted by the FCC’s intercarrier compensation reform in July 2013. The decrease in
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES