Verizon Wireless 2012 Annual Report Download - page 34

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Wireline
The Wireline segment provides communications products and services including local exchange and long distance voice service, broadband video
anddata,IPnetworkservices,networkaccessandotherservicestoconsumers,smallbusinessesandcarriersintheUnitedStates,aswellastobusi-
nessesandgovernmentcustomersbothintheUnitedStatesandinover150othercountriesaroundtheworld.
Reclassificationshavebeenmadetoreflectcomparableoperatingresultsforthespin-offoftheoperationsincludedintheFrontiertransaction,which
weownedthroughJune30,2010(see“AcquisitionsandDivestitures”).
Operating Revenues and Selected Operating Statistics (dollars in millions)
Increase/(Decrease)
Years Ended December 31, 2012 2011 2010 2012 vs. 2011 2011 vs. 2010
Consumer retail $ 14,043 $ 13,606 $ 13,419 $ 437 3.2 % $ 187 1.4 %
Small business 2,659 2,731 2,837 (72) (2.6) (106) (3.7)
MassMarkets 16,702 16,337 16,256 365 2.2 81 0.5
Strategic services 8,052 7,575 6,594 477 6.3 981 14.9
Core 7,247 8,047 8,722 (800) (9.9) (675) (7.7)
Global Enterprise 15,299 15,622 15,316 (323) (2.1) 306 2.0
Global Wholesale 7,240 7,973 8,746 (733) (9.2) (773) (8.8)
Other 539 750 909 (211) (28.1) (159) (17.5)
Total Operating Revenues $ 39,780 $ 40,682 $ 41,227 $ (902) (2.2) $ (545) (1.3)
Connections ('000):(1)
Total voice connections 22,503 24,137 26,001 (1,634) (6.8) (1,864) (7.2)
Total Broadband connections 8,795 8,670 8,392 125 1.4 278 3.3
FiOSInternetsubscribers 5,424 4,817 4,082 607 12.6 735 18.0
FiOSVideosubscribers 4,726 4,173 3,472 553 13.3 701 20.2
(1) As of end of period
Wireline’srevenuesdecreasedduring2012comparedto2011primarily
driven by declines in Global Wholesale, Global Enterprise Core and Other
revenues, partially offset by higher revenues in Consumer retail driven by
FiOSservicesandhigherrevenuesfromStrategicservices.
Mass Markets
MassMarketsoperationsprovidelocalexchange(basicserviceandend-
user access) and long distance (including regional toll) voice services, as
wellasbroadbandservices(includinghigh-speedInternet,FiOSInternet
andFiOSVideo)toConsumerretailandSmallbusinesssubscribers.
2012 Compared to 2011
MassMarketsrevenuesincreasedduring2012comparedto2011pri-
marilyduetotheexpansionofFiOSservices(Voice,InternetandVideo)
as well as changes in our pricing strategy adopted in 2012, partially offset
by the continued decline of local exchange revenues.
We have continued to grow our subscriber base and consistently
improvedpenetrationrateswithinourFiOSserviceareasduring2012.
AlsocontributingtotheincreaseinrevenuefromFiOSserviceswere
changes in our pricing strategy adopted in 2012. As of December 31,
2012,weachievedpenetrationratesof37.3%and33.3%forFiOSInternet
andFiOSVideo,respectively,comparedtopenetrationratesof35.5%
and31.5%forFiOSInternetandFiOSVideo,respectively,atDecember
31, 2011.
MassMarketsrevenueswerenegativelyimpactedbythedeclineoflocal
exchange revenues primarily due to a 6.1% decline in Consumer retail
voice connections resulting primarily from competition and technology
substitution with wireless, VoIP, broadband and cable services. Total voice
connections include traditional switched access lines in service as well
asFiOSdigitalvoiceconnections.TherewasalsoadeclineinSmallbusi-
ness retail voice connections, primarily reflecting challenging economic
conditions, competition and a shift to both IP and high-speed circuits.
2011 Compared to 2010
MassMarketsrevenuesincreasedslightlyduring2011comparedto2010
primarilyduetotheexpansionofconsumerandsmallbusinessFiOSser-
vices (Voice, Internet, Video), partially offset by the continued decline of
local exchange revenues.
As we continued to expand the number of premises eligible to order
FiOSservicesandoursalesandmarketingeffortstoattractnewFiOS
subscribers, we continued to grow our subscriber base and consistently
improvedpenetrationrateswithinourFiOSserviceareas.Ourpricing
strategy allows us to provide competitive offerings to our customers and
potential customers. As of December 31, 2011, we achieved penetration
ratesof35.5%and31.5%forFiOSInternetandFiOSVideo,respectively,
comparedtopenetrationratesof31.9%and28.0%forFiOSInternetand
FiOSVideo,respectively,atDecember31,2010.
MassMarketsrevenueswerenegativelyimpactedbythedeclineoflocal
exchange revenues primarily due to a 7.2% decline in total voice con-
nections, which resulted primarily from competition and technology
substitution. Total voice connections include traditional switched access
linesinserviceaswellasFiOSdigitalvoiceconnections.Themajorityof
the decline in total voice connections was sustained in the residential
retail market, which experienced a 7.3% voice connection loss primarily
due to substituting traditional landline services with wireless, VoIP, broad-
band and cable services. There was also a 5.3% decline in small business
retail voice connections, primarily reflecting challenging economic con-
ditions, competition and a shift to both IP and high-speed circuits.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued