Windstream 2015 Annual Report Download - page 218

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-88
14. Commitments and Contingencies, Continued:
We are party to various legal proceedings, including certain lawsuits claiming infringement of patents relating to various aspects
of our business. In certain of the patent matters, other industry participants are also parties, and we may have claims of
indemnification against vendors/suppliers. The ultimate resolution of these legal proceedings cannot be determined at this
time. However, based on current circumstances, management does not believe such proceedings, individually or in the aggregate,
will have a material adverse effect on the future consolidated results of our income, cash flows or financial condition.
Finally, management is currently not aware of any environmental matters, individually or in the aggregate, that would have a
material adverse effect on our consolidated financial condition or results of our operations.
15. Segment Information:
Effective November 1, 2015, we implemented a new business unit organizational structure focused on our core customer
relationships to strengthen our ability to achieve our operational, strategic and financial goals. Prior to this reorganization, we
operated as one reportable segment. Following this reorganization, we now operate and report the following four customer-based
segments:
• Consumer and Small Business - ILEC - We manage as one business our residential and small business customers who
reside in markets in which we are the incumbent local exchange carrier (“ILEC”) due to the similarities with respect to
service offerings, marketing strategies and customer service delivery. Products and services offered to these customers
include traditional local and long-distance voice services and high-speed Internet services, which are delivered primarily
over network facilities operated by us. We offer consumer video services primarily through a relationship with Dish
Network LLC and we also own and operate cable television franchises in some of our service areas. During 2015, we
launched Kinetic, a complete video entertainment offering in our Lincoln, Nebraska and Lexington, Kentucky markets,
with plans to launch in Sugar Land, Texas in the second quarter of 2016. We expect to roll out this new service to additional
markets during the next few years.
Residential customers can bundle voice, high-speed Internet and video services, to provide one convenient billing solution
and receive bundle discounts. Small Business - ILEC services offer a wide range of advanced Internet, voice, and web
conferencing products. These services are equipped to deliver high-speed Internet with competitive speeds, value added
services to enhance business productivity and options to bundle services for a global business solution to meet our small
business customer needs.
• Carrier - Our carrier operations consist of providing products and services to other communications services providers,
including special access services, which provide network access and transport services to end users, and fiber-to-tower
connections to support backhaul services to wireless carriers. We also offer on a wholesale basis voice and data transport
services to other communications providers, including the resale of our services and the sale of unbundled network
elements, which allow wholesale customers to provide voice and data services to their customers through the use of our
network or in combination with their own networks.
• Enterprise - Our enterprise operations consist of our business customer relationships that generate $1,500 or more in
revenue per month. Products and services offered to these customers include integrated voice and data services, which
deliver voice and broadband services over a single Internet connection, multi-site networking services which provide a
fast and private connection between business locations, as well as a variety of other data services, including cloud
computing and collocation and managed services as an alternative to traditional information technology infrastructure.
• Small Business - CLEC - These operations consist of our business customer relationships that generate less than $1,500
in revenue per month and are located in services areas in which we are a competitive local exchange carrier (“CLEC”)
and provide services over network facilities primarily leased from other carriers. Products and services provided to these
customers include integrated voice and data services, advanced data and traditional voice and long-distance services, as
well as value added services including online backup, managed web design and web hosting, and various e-mail services.
The accounting policies used in measuring segment operating results are the same as those described in Note 2. We evaluate
performance of the segments based on segment income, which is computed as segment revenues and sales less segment operating
expenses. As further discussed below, certain operating revenues and expenses are not assigned to our segments.