Windstream 2015 Annual Report Download - page 145

F-15
Consumer and Small Business - ILEC Segment Results of Operations
The following table reflects the Consumer and Small Business - ILEC segment results of operations as of December 31:
2015 to 2014 2014 to 2013
(Millions) 2015 2014 2013
Increase
(Decrease) %
Increase
(Decrease) %
Revenues and sales:
Service revenues:
High-speed Internet bundles (a) $ 1,032.8 $ 1,017.6 $ 1,013.6 $ 15.2 1 $ 4.0 —
Voice only (b) 169.3 199.6 226.7 (30.3)(15)(27.1)(12)
Voice and miscellaneous 49.0 49.9 51.6 (0.9)(2)(1.7)(3)
Total consumer 1,251.1 1,267.1 1,291.9 (16.0)(1)(24.8)(2)
Small business - ILEC (c) 351.5 359.8 358.9 (8.3)(2) 0.9 —
Total service revenues 1,602.6 1,626.9 1,650.8 (24.3)(1)(23.9)(1)
Product sales (d) 2.9 17.5 16.6 (14.6)(83) 0.9 5
Total revenues and sales 1,605.5 1,644.4 1,667.4 (38.9)(2)(23.0)(1)
Cost and expenses (e) 671.0 696.9 725.0 (25.9)(4)(28.1)(4)
Segment income $ 934.5 $ 947.5 $ 942.4 $ (13.0)(1) $ 5.1 1
(a) Increases in high-speed Internet bundle revenues were primarily due to the continued migration of customers to higher
speeds, increased sales of value added services, targeted price increases, and implementation of a modem rental program
during 2015, partially offset by declines in high-speed Internet customers. Demand for faster broadband speeds and
Internet-related services such as virus protection and online data backup services, are expected to favorably impact
consumer high-speed Internet revenues, offsetting some of the decline in consumer voice revenues.
(b) Decreases in voice only revenues were primarily attributable to the decline in households served due to the impacts of
competition, partially offset by the effects of targeted price increases.
(c) Decreases in Small Business - ILEC revenues were primarily attributable to lower usage for voice and long distance
services and the decline in customers due to the impacts of competition. These declines were partially offset by incremental
revenues attributable to the ARC of $2.9 million and $4.3 million in 2015 and 2014, respectively, primarily due to an
increase in the monthly rate effective July 1st of each year as described above.
(d) The decrease in product sales during 2015 was attributable to the decline in sales of high-speed Internet modems as a
result of the modem rental program implemented during the year.
(e) The decreases were primarily attributable to a reduction of interconnection expense, reflecting lower voice only revenues
due to the decline in households served and a reduction in third party ancillary costs such as technical assistance and
online data backup services.
For 2016, we are focused on enhancing our broadband capabilities to generate solid and sustainable cash flows. We expect to grow
revenue by continuing to increase broadband speeds and capacity throughout our territories. Project Excel, which began in late
2015, accelerates our plans to upgrade and modernize our broadband network by year-end 2016. This program upgrades our entire
fiber-fed infrastructure with Very high-bit-rate Digital Subscriber Line Generation 2 (“VDSL2”) electronics to enable faster
broadband speeds and enhances our backhaul capabilities to address future capacity demands and improve network reliability. We
expect increases in real-time streaming video and traditional Internet usage to drive demand for faster broadband speeds and
generate increased revenues as customers upgrade their services.