Windstream 2013 Annual Report Download - page 145
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F-9
Other Service Revenues
Other service revenues include USF surcharge revenues, revenues from other miscellaneous services and consumer revenues
generated in markets where we lease the connection to the customer premise. We no longer offer new consumer service in those
areas. As a result, we expect other service revenues to decline as existing customers disconnect.
The following table reflects the primary drivers of year-over-year changes in other service revenues:
Year Ended
December 31, 2013 Year Ended
December 31, 2012
(Millions) Increase
(Decrease) % Increase
(Decrease) %
Due to PAETEC acquisition $ — $ 126.8
Due to decreases in other revenues (1.9)(6.2)
Due to changes in pass through taxes and other surcharges (7.8) 4.5
Due to decreases in consumer CLEC service revenues (17.5)(5.1)
Total changes in other revenues $ (27.2) (11)% $ 120.0 93%
Product Sales
Product sales consist of sales of various types of communications equipment to our customers. Business product sales includes
high-end data and communications equipment which facilitate the delivery of advanced data and voice services to our business
customers. Consumer product sales include high-speed Internet modems, home networking equipment, computers and phones.
We also sell network equipment to contractors on a wholesale basis.
The following table reflects the primary drivers of year-over-year changes in product sales:
Year Ended
December 31, 2013 Year Ended
December 31, 2012
(Millions) Increase
(Decrease) % Increase
(Decrease) %
Due to PAETEC acquisition $ — $ 108.7
Due to changes in consumer product sales 2.5 (11.9)
Due to decreases in business product sales (8.1)(8.7)
Due to changes in contractor sales (13.0) 16.5
Total changes in product sales $ (18.6) (8)% $ 104.6 83%
Cost of Services
Cost of services expense primarily consists of charges incurred for network operations, interconnection, bad debt and business
taxes. Network operations charges include salaries and wages, materials, contractor costs, IT support and costs to lease certain
network facilities. Interconnection consists of charges incurred to access the public switched network and transport traffic to the
Internet, including charges paid to other carriers for access points where we do not own the primary network infrastructure.
Third-party costs for ancillary voice and data services include marketing, business and financial services, and consumer
customer support.