Products and Services Revenues

6 Months Ended

Jun. 30, 2013

Products and Services Revenues

Products and Services Revenues

(6)   Products and Services Revenues

        We are an integrated communications company engaged primarily in providing an array of communications services, including local and long-distance, network access, private line (including special access), broadband, Ethernet, data, managed hosting, colocation, wireless and video services. We strive to maintain our customer relationships by, among other things, bundling our service offerings to provide our customers with a complete offering of integrated communications services. We categorize our products and services revenues into the following four categories:

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  Strategic services, which include primarily private line (including special access), broadband, Multiprotocol Label Switching ("MPLS") (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), Ethernet, hosting, colocation, video (including resold satellite video services), Voice over Internet Protocol ("VoIP") and Verizon Wireless services;

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  Legacy services, which include primarily local, long-distance, Integrated Services Digital Network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), switched access and traditional wide area network ("WAN") services (which allows a local communications network to link to networks in remote locations);

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  Data integration, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our government and business customers; and

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  Affiliates and other services, which consist primarily of Universal Service Fund ("USF") revenues and surcharges and services we provide to our non-consolidated affiliates. We provide to our affiliates telecommunication services that we also provide to external customers. In addition, we provide to our affiliates computer system development and support services as well as network support and technical services.

        Our operating revenues for our products and services consisted of the following categories:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(Dollars in millions)
Strategic services	$	1,295		1,235		2,573		2,457
Legacy services		1,132		1,227		2,282		2,484
Data integration		137		140		247		256
Affiliates and other services		276		234		534		478
Total operating revenues	$	2,840		2,836		5,636		5,675

        We do not have any single external customer that provides more than 10% of our total revenue. Substantially all of our revenue comes from customers located in the United States.

        Affiliates and other services revenues include revenues from universal service funds which allow us to recover a portion of our costs under federal and state cost recovery mechanisms and certain surcharges to our customers, including billings for our required contributions to several USF programs.

        The table below presents the aggregate USF surcharges recognized on a gross basis:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(Dollars in millions)
USF and surcharges included in operating revenues and expenses	$	92		103		188		203

        Our operations are integrated into and reported as part of the segments of CenturyLink. CenturyLink's chief operating decision maker ("CODM") is our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the Securities and Exchange Commission. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we have one reportable segment.