v3.21.2
Revenue from Contracts with Customers
 6 Months Ended
Jun. 30, 2021
Revenue from Contract with Customer [Abstract]  
Revenue from Contracts with Customers
Note 9 – Revenue from Contracts with Customers

Disaggregation of Revenue

We provide wireless communications services to three primary categories of customers:

•Postpaid customers generally include customers who are qualified to pay after receiving wireless communications services utilizing phones, home internet, wearables, DIGITS (a service that allows our customers to use multiple mobile numbers on any compatible smartphone or device with internet connection), or other connected devices which includes tablets and SyncUP products;
•Prepaid customers generally include customers who pay for wireless communications services in advance; and
•Wholesale customers include Machine-to-Machine and Mobile Virtual Network Operator customers that operate on our network but are managed by wholesale partners.

Postpaid service revenues, including postpaid phone revenues and postpaid other revenues, were as follows:
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2021202020212020
Postpaid service revenues
Postpaid phone revenues$9,667 $9,341 $19,150 $14,918 
Postpaid other revenues825 618 1,645 928 
Total postpaid service revenues$10,492 $9,959 $20,795 $15,846 

We operate as a single operating segment. The balances presented within each revenue line item in our Condensed Consolidated Statements of Comprehensive Income represent categories of revenue from contracts with customers disaggregated by type of product and service. Service revenues also include revenues earned for providing premium services to customers, such as device insurance services. Revenue generated from the lease of mobile communication devices is included within Equipment revenues in our Condensed Consolidated Statements of Comprehensive Income.

We provide wireline communication services to domestic and international customers. Wireline service revenues were $187 million and $384 million for the three and six months ended June 30, 2021, respectively and were $211 million for both the three and six months ended June 30, 2020. Wireline service revenues are presented in Other service revenues in our Condensed Consolidated Statements of Comprehensive Income.

Equipment revenues from the lease of mobile communication devices were as follows:
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2021202020212020
Equipment revenues from the lease of mobile communication devices$914 $1,421 $1,955 $1,586 

Contract Balances

The contract asset and contract liability balances from contracts with customers as of December 31, 2020 and June 30, 2021, were as follows:
(in millions)Contract AssetsContract Liabilities
Balance as of December 31, 2020$278 $824 
Balance as of June 30, 2021267 789 
Change$(11)$(35)

Contract assets primarily represent revenue recognized for equipment sales with promotional bill credits offered to customers that are paid over time and are contingent on the customer maintaining a service contract.
The change in the contract asset balance includes customer activity related to new promotions, offset by billings on existing contracts and impairment which is recognized as bad debt expense. The current portion of our Contract assets of approximately $206 million and $204 million as of June 30, 2021 and December 31, 2020, respectively, was included in Other current assets in our Condensed Consolidated Balance Sheets.

Contract liabilities are recorded when fees are collected, or we have an unconditional right to consideration (a receivable) in advance of delivery of goods or services. Changes in contract liabilities are primarily related to the activity of prepaid customers. Contract liabilities are primarily included in Deferred revenue in our Condensed Consolidated Balance Sheets.

Revenues for the three and six months ended June 30, 2021 and 2020 include the following:
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2021202020212020
Amounts included in the beginning of year contract liability balance$41 $10 $724 $538 

Remaining Performance Obligations

As of June 30, 2021, the aggregate amount of transaction price allocated to remaining service performance obligations for postpaid contracts with subsidized devices and promotional bill credits that result in an extended service contract is $1.2 billion. We expect to recognize revenue as the service is provided on these postpaid contracts over an extended contract term of 24 months.

As of June 30, 2021, the aggregate amount of transaction price allocated to remaining service and lease performance obligations associated with operating leases was $668 million and $403 million, respectively. We expect to recognize this revenue as service is provided over the lease contract term of 18 months.

Information about remaining performance obligations that are part of a contract that has an original expected duration of one year or less have been excluded from the above, which primarily consists of monthly service contracts.

Certain of our wholesale, roaming and service contracts include variable consideration based on usage. This variable consideration has been excluded from the disclosure of remaining performance obligations. As of June 30, 2021, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $805 million, $1.4 billion and $1.0 billion for 2021, 2022, and 2023 and beyond, respectively. These contracts have a remaining duration ranging from less than one year to nine years.

Contract Costs

The total balance of deferred incremental costs to obtain contracts was $1.2 billion and $1.1 billion as of June 30, 2021 and December 31, 2020, respectively, and is included in Other assets in our Condensed Consolidated Balance Sheets. Deferred contract costs incurred to obtain postpaid service contracts are amortized over a period of 24 months. The amortization period is monitored to reflect any significant change in assumptions. Amortization of deferred contract costs is included in Selling, general and administrative expenses in our Condensed Consolidated Statements of Comprehensive Income and was $264 million and $205 million for the three months ended June 30, 2021 and 2020, respectively, and $512 million and $410 million for the six months ended June 30, 2021 and 2020, respectively.

The deferred contract cost asset is assessed for impairment on a periodic basis. There were no impairment losses recognized on deferred contract cost assets for the three and six months ended June 30, 2021 and 2020.