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Revenue Recognition
 12 Months Ended
Dec. 31, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Product and Service Categories

We categorize our products and services revenue among the following categories for the Business segment:

•Grow, which includes products and services that we anticipate will grow, including our dark fiber, Edge Cloud services, IP, managed security, software-defined wide area networks ("SD WAN"), secure access service edge ("SASE"), Unified Communications and Collaboration ("UC&C") and wavelengths services;

•Nurture, which includes our more mature offerings, including ethernet and VPN data networks services;

•Harvest, which includes our legacy services managed for cash flow, including Time Division Multiplexing ("TDM") voice, private line and other legacy services; and

•Other, which includes equipment sales, IT solutions and other services.

We categorize our products and services revenue among the following categories for the Mass Markets segment:

•Fiber Broadband, under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure;

•Other Broadband, under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure; and

•Voice and Other, under which we derive revenues from (i) providing local and long-distance voice services, professional services, and other ancillary services, and (ii) federal broadband and state support programs.

Reconciliation of Total Revenue to Revenue from Contracts with Customers

The following tables provide total revenue by segment, sales channel and product category. They also provide the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards. The amounts in the tables below include revenue for the Latin American, ILEC and EMEA businesses prior to their sales on August 1, 2022, October 3, 2022 and November 1, 2023, respectively:
Year Ended December 31, 2023
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
 (Dollars in millions)
Business Segment by Sales Channel and Product Category
Large Enterprise
Grow$2,167 (294)1,873 
Nurture1,450 — 1,450 
Harvest760 — 760 
Other239 (5)234 
Total Large Enterprise Revenue4,616 (299)4,317 
Mid-Market Enterprise
Grow803 (28)775 
Nurture797 — 797 
Harvest378 (4)374 
Other33 (4)29 
Total Mid-Market Enterprise Revenue2,011 (36)1,975 
Public Sector
Grow469 (81)388 
Nurture398 — 398 
Harvest383 (1)382 
Other533 — 533 
Total Public Sector Revenue1,783 (82)1,701 
Wholesale
Grow1,030 (251)779 
Nurture820 (25)795 
Harvest1,264 (165)1,099 
Other11 — 11 
Total Wholesale Revenue3,125 (441)2,684 
Business Segment by Product Category
Grow4,469 (654)3,815 
Nurture3,465 (25)3,440 
Harvest2,785 (170)2,615 
Other816 (9)807 
Total Business Segment Revenue11,535 (858)10,677 
Mass Markets Segment by Product Category
Fiber Broadband636 (16)620 
Other Broadband1,394 (126)1,268 
Voice and Other992 (36)956 
Total Mass Markets Revenue3,022 (178)2,844 
Total Revenue$14,557 (1,036)13,521 
Timing of revenue
Goods and services transferred at a point in time$178 
Services performed over time13,343 
Total revenue from contracts with customers$13,521 
Year Ended December 31, 2022
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
 (Dollars in millions)
Business Segment by Sales Channel and Product Category
Large Enterprise
Grow$2,415 (352)2,063 
Nurture1,685 — 1,685 
Harvest1,022 — 1,022 
Other255 (8)247 
Total Large Enterprise Revenue5,377 (360)5,017 
Mid-Market Enterprise
Grow757 (32)725 
Nurture915 — 915 
Harvest510 (7)503 
Other30 (1)29 
Total Mid-Market Enterprise Revenue2,212 (40)2,172 
Public Sector
Grow444 (103)341 
Nurture490 — 490 
Harvest468 (4)464 
Other459 (2)457 
Total Public Sector Revenue1,861 (109)1,752 
Wholesale
Grow979 (271)708 
Nurture1,004 (23)981 
Harvest1,557 (215)1,342 
Other51 — 51 
Total Wholesale Revenue3,591 (509)3,082 
Business Segment by Product Category
Grow4,595 (758)3,837 
Nurture4,094 (23)4,071 
Harvest3,557 (226)3,331 
Other795 (11)784 
Total Business Segment Revenue13,041 (1,018)12,023 
Mass Markets Segment by Product Category
Fiber Broadband604 (18)586 
Other Broadband2,164 (200)1,964 
Voice and Other1,669 (134)1,535 
Total Mass Markets Revenue4,437 (352)4,085 
Total Revenue$17,478 (1,370)16,108 
Timing of revenue
Goods and services transferred at a point in time$154 
Services performed over time15,954 
Total revenue from contracts with customers$16,108 
Year Ended December 31, 2021
Total Revenue
Adjustments for Non-ASC 606 Revenue (1)
Total Revenue from Contracts with Customers
 (Dollars in millions)
Business Segment by Sales Channel and Product Category
Large Enterprise
Grow$2,552 (427)2,125 
Nurture1,906 — 1,906 
Harvest1,205 (2)1,203 
Other255 (5)250 
Total Large Enterprise Revenue5,918 (434)5,484 
Mid-Market Enterprise
Grow724 (29)695 
Nurture1,026 — 1,026 
Harvest613 (7)606 
Other35 (4)31 
Total Mid-Market Enterprise Revenue2,398 (40)2,358 
Public Sector
Grow481 (84)397 
Nurture528 — 528 
Harvest569 (3)566 
Other533 (2)531 
Total Public Sector Revenue2,111 (89)2,022 
Wholesale
Grow930 (279)651 
Nurture1,080 (25)1,055 
Harvest1,682 (228)1,454 
Other— — — 
Total Wholesale Revenue3,692 (532)3,160 
Business Segment by Product Category
Grow4,687 (819)3,868 
Nurture4,540 (25)4,515 
Harvest4,069 (240)3,829 
Other823 (11)812 
Total Business Segment Revenue14,119 (1,095)13,024 
Mass Markets Segment by Product Category
Fiber Broadband524 — 524 
Other Broadband2,507 (227)2,280 
Voice and Other2,537 (570)1,967 
Total Mass Markets Revenue5,568 (797)4,771 
Total Revenue$19,687 (1,892)17,795 
Timing of revenue
Goods and services transferred at a point in time$138 
Services performed over time17,657 
Total revenue from contracts with customers$17,795 
______________________________________________________________________
(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.
Customer Receivables and Contract Balances

The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts classified as held for sale, as of December 31, 2023 and 2022:
December 31, 2023December 31, 2022
 (Dollars in millions)
Customer receivables(1)
$1,256 1,424 
Contract assets(2)
29 34 
Contract liabilities(3)
698 656 
______________________________________________________________________
(1)Reflects gross customer receivables of $1.3 billion and $1.5 billion, net of allowance for credit losses of $60 million and $73 million, at December 31, 2023 and December 31, 2022, respectively. At December 31, 2022 amounts exclude customer receivables, net, classified as held for sale of $76 million, related to the EMEA business which was sold November 1, 2023.
(2)At December 31, 2022 these amounts exclude contract assets classified as held for sale of $16 million, related to the EMEA business which was sold November 1, 2023.
(3)At December 31, 2022 these amounts exclude contract liabilities classified as held for sale of $59 million, related to the EMEA business which was sold November 1, 2023.

Contract liabilities are 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 1 to 5 years depending on the service. Contract liabilities are included within deferred revenue in our consolidated balance sheets. During the years ended December 31, 2023 and December 31, 2022, we recognized $434 million and $539 million, respectively, of revenue that was included in contract liabilities of $715 million and $841 million as of January 1, 2023 and 2022, respectively, including contract liabilities that were classified as held for sale.

Performance Obligations

As of December 31, 2023, we expect to recognize approximately $6.8 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of December 31, 2023, the transaction price related to unsatisfied performance obligation that are expected to be recognized in 2024, 2025 and thereafter was $2.8 billion, $1.7 billion and $2.3 billion, respectively.

These amounts exclude (i) 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 (ii) contracts that are classified as leasing arrangements or government assistance that are not subject to ASC 606.
Contract Costs

The following tables provide changes in our contract acquisition costs and fulfillment costs:
Year Ended December 31, 2023
Acquisition CostsFulfillment Costs
 (Dollars in millions)
Beginning of period balance$202 192 
Costs incurred136 157 
Amortization(152)(140)
Change in contract costs held for sale
(4)(25)
End of period balance$182 184 

Year Ended December 31, 2022
Acquisition CostsFulfillment Costs
 (Dollars in millions)
Beginning of period balance$222 186 
Costs incurred172 158 
Amortization(192)(149)
Classified as held for sale(1)
— (3)
End of period balance$202 192 
_____________________________________________________________________
(1)Represents changes in amounts classified as held for sale related to the divestitures of our Latin American and ILEC businesses on August 1, 2022 and October 3, 2022, respectively, as well as changes of $6 million acquisition costs and no fulfillment costs classified as held for sale as of December 31, 2022 related to the divestiture of the EMEA business, held for sale as of December 31, 2022 and completed November 1, 2023. See Note 2—Divestitures of the Latin American, ILEC and EMEA Businesses.

Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third party and internal costs associated with the provision, installation and activation of services to customers, including labor and materials consumed for these activities.
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 36 months for mass markets customers and 33 months for business customers. We include amortized fulfillment costs in cost of services and products and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statements of operations. We include the amount of these deferred costs that are anticipated to be amortized in the next 12 months in other current assets on our consolidated balance sheets. We include the amount of deferred costs expected to be amortized beyond the next twelve months in other non-current assets on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.

Governmental Funding

Lumen participates in various U.S. federal and state programs under which government support payments are received to offset costs associated with providing services in targeted locations such as unserved or underserved high-cost or rural areas, or for certain types of customers, including non-profit organizations, educational institutions and local governmental bodies. In certain instances, support payments are conditioned on specified infrastructure buildouts by milestone deadlines or provision of services at specified locations and speed requirements. Commitments may be made annually, on a multi-year basis ranging from one to ten years or be on-going subject to periodic change or termination. Consistent with customary practice and as referenced in ASC 832 Government Assistance, Lumen applies a grant model of accounting by which it accounts for these transactions as non-ASC 606 revenue over the periods in which the costs for which the funding is intended to compensate are incurred. This non-ASC 606 revenue is included in operating revenue in our consolidated statements of operations. Corresponding receivables are recorded when services have been provided to the customers and costs incurred, but the cash has not been received. These amounts are included in our accounts receivable, less allowance in our consolidated balance sheets. Certain programs are subject to audits of compliance with program commitments and, subject to the outcomes of those assessments, Lumen may be required to reimburse the government entity for cash previously received, or, in some cases, pay a penalty. Lumen evaluates each program and establishes a liability under the principles of ASC 450 if it is probable support payments will be recaptured or a penalty will be imposed.

For the years ended December 31, 2023 and 2022, Lumen recorded non-customer revenue of $85 million and $190 million, respectively, under government assistance programs, of which 17% and 31%, respectively, was associated with state universal service fund support programs.

Between 2015 and 2021, we received approximately $500 million annually through the Federal Communications Commission (the "FCC")'s Connect America Fund II ("CAF II"), a federal multi-year recurring subsidy program for more extensive broadband deployment in price-cap ILEC territories. For this program, which ended on December 31, 2021, we were required to meet certain specified infrastructure buildout requirements in 33 states by the end of 2021, which required substantial capital expenditures. In the first quarter of 2022, we recognized $59 million of previously deferred revenue related to the conclusion of the CAF II program based upon our final buildout and filing submissions. The government has the right to audit our compliance with the CAF II program and the ultimate outcome of any remaining examinations is unknown, but could result in a liability to us in excess of our reserve accruals established for these matters.

In early 2020, the FCC created the Rural Digital Opportunity Fund (the “RDOF”) program, a federal support program designed to fund broadband deployment in rural America. For the first phase of this program, RDOF Phase I, the FCC ultimately awarded $6.4 billion support payments to be paid in equal monthly installments over 10 years. We were awarded RDOF funding in several of the states in which we operate and began receiving monthly support payments during the second quarter of 2022. We received approximately $17 million in annual RDOF Phase I support payments for the years ended December 31, 2023 and 2022 and expect to receive this same amount each year thereafter during the program period.

Lumen participates in multiple state sponsored programs for broadband deployment in unserved and underserved areas for which the states have state universal service funds sourced from fees levied on telecommunications providers and passed on to consumers. During the years ending December 31, 2023 and 2022, Lumen participated in these types of programs primarily in the states of Nebraska, North Carolina, New Mexico, Minnesota, Virginia and Wisconsin.