v3.26.1
Revenue Recognition
 3 Months Ended
Mar. 31, 2026
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 4—Revenue Recognition

We categorize revenue from our operations within the products and services listed below based on the customers we serve as follows: (i) revenue from Mass Markets customers is primarily reflected in the 'Fiber Broadband', 'Other Broadband', and 'Voice and Other' categories, (ii) revenue from Business customers is primarily reflected in the 'Strategic' and 'Legacy' categories, and (iii) revenue from affiliates is reflected in the 'Affiliate Services' category.

Products and Services Categories
•Other Broadband: Under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure;

•Voice and Other: Under which we derive revenues from (i) providing local and long-distance services, professional services, and other ancillary services, (ii) federal broadband and state support payments, and (iii) equipment, IT solutions and other services;

•Fiber Broadband: Under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure, representing the fiber-based business-to-customer products and services that remain following the Mass Markets Fiber-to-the-Home divestiture;
•Strategic: Includes existing and emerging products and services in which we are significantly investing, including offerings that leverage modernized infrastructure, higher-capacity technologies and scalable or on-demand delivery models, such as dark fiber and higher speed wavelength services;

•Legacy: Includes our services that are generally provided over legacy platform or lower-capacity configurations, such as traditional Ethernet delivered in locations or with technologies not currently suited for scalable or on-demand models, lower speed wavelength services, and voice and private line services;

•Affiliate Services: Includes (i) communications services that we provide to our affiliates and also provide to external customers and (ii) application development and support services that we provide to our affiliates, as described further in Note 7—Affiliate Transactions.

Reconciliation of Total Revenue to Revenue from Contracts with Customers

The following tables provide our total revenue by product and service category as well as the amount of revenue that is not subject to Topic 606, but is instead governed by other accounting standards. The amounts in the tables below include revenue for the Mass Markets Fiber-to-the-Home business prior to its sale on February 2, 2026:

Three Months Ended March 31, 2026
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Other Broadband$166 (13)153 
Voice and Other102 (1)101 
Fiber Broadband27 (1)26 
Strategic7 (5)2 
Legacy307 (31)276 
Affiliate Services442 (14)428 
Total revenue$1,051 (65)986 

Three Months Ended March 31, 2025
Total Revenue
Adjustments for Non-ASC 606 Revenue(1)
Total Revenue from Contracts with Customers
(Dollars in millions)
Other Broadband$205 (18)187 
Voice and Other120 (4)116 
Fiber Broadband86 (3)83 
Strategic2 (2)— 
Legacy327 (31)296 
Affiliate Services482 (12)470 
Total revenue$1,222 (70)1,152 
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(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.

Operating Lease Revenue

We lease various data transmission capacity, office facilities, switching facilities, and other network sites to third parties under operating leases. Lease and sublease revenue are included in Operating revenue in the consolidated statements of operations.
The following table provides details of our gross operating lease revenue:

Three Months Ended March 31,
20262025
(Dollars in millions)
Operating lease revenue
$64 67 
Percentage of Operating revenue
6 %5 %

Customer Receivables and Contract Balances

The following table provides balances of customer receivables and contract liabilities, net of amounts classified as held for sale:

March 31, 2026
December 31, 2025(2)
 (Dollars in millions)
Customer receivables, less allowance of $32 and $30(1)
$182 221 
Contract liabilities
245 225 
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(1)Customer receivables includes affiliate receivables.
(2)     As of December 31, 2025, these amounts excluded $11 million of customer receivables, net and $6 million of contract liabilities associated with the disposal group classified as held for sale.

Contract Liabilities

Contract liabilities are included within Deferred revenue on our consolidated balance sheets and consist of consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which typically ranges from one to five years depending on the service.

During the three months ended March 31, 2026, we recognized $116 million of revenue that was included in contract liabilities of $225 million as of January 1, 2026, including contract liabilities that were classified as held for sale. During the three months ended March 31, 2025, we recognized $122 million of revenue that was included in contract liabilities of $244 million as of January 1, 2025.

Performance Obligations

As of March 31, 2026, we expect to recognize $1.7 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of March 31, 2026, the transaction price related to unsatisfied performance obligations expected to be recognized for the remainder of 2026, 2027, and thereafter was $575 million, $535 million, and $556 million, respectively.

These amounts exclude:

•the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed); and

•contracts that are classified as leasing arrangements that are not subject to ASC 606.
Contract Costs

Acquisition Costs

•Includes commission fees paid to employees as a result of obtaining contracts.

•Amortized acquisition costs are included in Selling, general and administrative expenses in our consolidated statements of operations.

Fulfillment Costs

•Includes third-party and internal costs associated with the provision, installation, and activation of communications services to customers, including labor and materials consumed for these activities.

•Amortized fulfillment costs are included in Cost of services and products in our consolidated statements of operations.

We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average contract life of approximately 50 months for Mass Markets customers and 38 months for Business customers, respectively.

The following tables provide changes in our contract acquisition costs and fulfillment costs:

Three Months Ended March 31, 2026
Acquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance(1)
$35 48 
Cost incurred
3 11 
Amortization(6)(8)
Change in contract costs held for sale(8)— 
End of period balance
$24 51 
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(1)    The beginning balance for the three months ended March 31, 2026 excluded $6 million of acquisition costs and $7 million of fulfillment costs associated with the disposal group classified as held for sale.

Three Months Ended March 31, 2025
Acquisition CostsFulfillment Costs
(Dollars in millions)
Beginning of period balance
$51 46 
Cost incurred5 9 
Amortization(8)(8)
End of period balance
$48 47 

We include deferred acquisition and fulfillment costs in Other current assets, net and Other assets, net on our consolidated balance sheets and assess them for impairment on a quarterly basis.