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2014-2013 Commentary
Total operating revenues
Residential revenues were relatively unchanged from the prior year. Legacy voice connections declined by 5%,
decreasing revenues by $7.1 million, while IPTV connections grew 73% increasing revenues $6.6 million. A 1% increase
in average revenue per residential connection driven by price increases for broadband services, growth in customers
opting for faster broadband speeds and growth in customers selecting higher-tier IPTV packages increased revenues
$1.8 million.
Commercial revenues were relatively unchanged from the prior year. Decreases in revenue from declining legacy voice
and data connections exceeded increases in revenues from a 19% growth in average managedIP connections by
$3.1 million. A 1% increase in average revenue per connection driven by price increases on legacy voice and data
services and managedIP customers moving to higher speed data services increased commercial revenues $2.8 million.
Wholesale revenues decreased 4% in 2014. Revenues received through inter-state and intra-state regulatory support
mechanisms decreased $6.9 million. Wholesale revenues declined $2.7 million due to a 10% reduction in intra-state
minutes-of-use.
Cost of services
Costs of providing long-distance services, provisioning circuits and purchasing unbundled network elements decreased
by $9.8 million and employee expenses decreased by $5.0 million due primarily to reductions in employees. Charges
related to the growth in IPTV increased cost of services $4.5 million.
Selling, general and administrative expenses
The decrease of selling, general and administrative expenses in 2014 was due to cost control efforts. Employee
expenses decreased $18.1 million due primarily to reductions in employees, and consulting and IT maintenance charges
decreased $2.5 million and $2.1 million, respectively. Federal USF charges decreased $3.0 million.
26
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS