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Item 1. Business

2021-02-25 compared with 2020-02-28 · 298 added, 252 removed, 107 unchanged (84% of the section changed)

We are an international facilities-based communications company engaged primarily in providing a broad array of integrated services to our business and residential customers.

Our specific products and services are detailed below under the heading "Operations - Products and Services."

With approximately 450,000 route miles of fiber optic cable globally, we believe we are among the largest providers of communications services to domestic and global enterprise customers.

Changes from Prior Periodic Reports

In this report we have complied with the disclosures required by the Securities and Exchange Commission ("SEC") release No.

33-10825 "Modernization of Regulation S-K Items 101, 103, and 105", and we have early adopted the changes in disclosure standards included in SEC release No.

33-10890 "Management's Discussion and Analysis, Selected Financial Data, Supplementary Financial Information."

Modernization of Regulation S-K Items 101, 103 and 105

Effective as of November 9, 2020, the SEC issued Release No.

33-10825, “Modernization of Regulation S-K Items 101, 103, and 105.” This release was adopted to modernize the description of business, legal proceedings, and risk factor disclosures that registrants are required to make pursuant to Regulation S-K.

Specifically, this release requires registrants to provide disclosures relating to their human capital resources and to restructure their risk factor disclosures.

Additionally, the release increases the threshold for disclosure of environmental proceedings to which the government is a party.

These changes are required for any annual period subsequent to the effective date of November 9, 2020.

As such, we have adopted these changes in this report.

Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information

In November 2020, the SEC issued Release No.

33-10890, “Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information” which will become fully effective on August 9, 2021, with voluntary compliance permitted on or after February 10, 2021.

This release was adopted to modernize, simplify, and enhance certain financial disclosure requirements in Regulation S-K.

Specifically, the SEC eliminated the requirement for selected financial data, only requiring quarterly disclosure when there are retrospective changes affecting comprehensive income, and amending the matters required to be presented under Management’s Discussion and Analysis (“MD&A”) to, among other things, eliminate the requirement of the contractual obligations table.

With our early adoption of this release, we have eliminated from this document the items discussed above that are no longer required.

Information on our contractual obligations is still disclosed in a narrative within the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of this report.

Business Overview and Purpose

We are an international facilities-based technology and communications company focused on providing our business and residential customers with a broad array of integrated services and solutions necessary to fully participate in our rapidly evolving digital world, which we believe is undergoing the “Fourth Industrial Revolution” or simply the “4IR”.

We believe we are the world’s most inter-connected network and our platform empowers our customers to rapidly adjust digital programs to meet immediate demands, create efficiencies, accelerate market access, and reduce costs – allowing customers to rapidly evolve their information, communications and technology ("ICT") programs to address dynamic changes without distraction from their core competencies.

By empowering our customers to rapidly acquire, analyze and act on data, we are furthering human progress through technology and enabling our customers to thrive in the 4IR.

Our specific products and services are detailed below under the heading “Segments and Products & Services.”

As part of the recent Lumen rebranding, we refined our marketing approach to better align with our customer base.

Lumen is the name of our company and our flagship brand for serving the enterprise and wholesale markets.

We also launched our Quantum Fiber brand and reconfirmed the importance of our expansive CenturyLink platform name.

Quantum Fiber is our brand for providing fiber-based services to small business and residential customers.

Our CenturyLink brand covers our mass-marketed legacy copper-based services, managed for optimal cost and efficiency.

With approximately 450,000 route miles of fiber optic cable globally, we are among the largest providers of communications services to domestic and global enterprise customers.

Our terrestrial and subsea fiber optic long-haul network throughout North America, Europe, Latin America and Asia Pacific connects to metropolitan fiber networks that we operate.

We provide services in over 60 countries, with most of our revenue being derived in the United States.

We believe we are the second largest enterprise wireline telecommunications company in the United States.

We were incorporated under the laws of the State of Louisiana in 1968.

Our principal executive offices are located at 100 CenturyLink Drive, Monroe, Louisiana 71203 and our telephone number is (318) 388-9000.

We provide services in over 60 countries, with most of our revenue being derived in the United States ("U.S.").

We believe our secure global platform plays a central role in facilitating communications worldwide.

In the last year, the COVID-19 pandemic forced a seismic shift in how the world communicates with colleagues, family and friends, how children learn and how we conduct business.

From multi-national global enterprises to small businesses, our integrated solutions portfolio enables our customers to accelerate digital transformation, improve operational performance and manage risk.

For a discussion of certain risks applicable to our business, see “Risk Factors” in Item 1A of Part I of this report.

The summary financial information in this Item 1 should be read in conjunction with, and is qualified by reference to, our consolidated financial statements and notes thereto in Item 8 of Part II of this report and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of Part II of this report.

Acquisition of Level 3

On November 1, 2017, CenturyLink acquired Level 3 through successive merger transactions, including a merger of Level 3 with and into a merger subsidiary, which survived such merger as our indirect wholly-owned subsidiary under the name of Level 3 Parent, LLC.

Upon closing, CenturyLink shareholders owned approximately 51% and former Level 3 shareholders owned approximately 49% of the combined company.

For additional information about our acquisition of Level 3, see (i) Note 2—Acquisition of Level 3 to our consolidated financial statements in Item 8 of Part II of this report and (ii) our prior reports filed by us with the Securities and Exchange Commission (the "SEC") including those filed on February 13, 2017, November 1, 2017 and January 16, 2018.

Sale of Data Centers and Colocation Business

On May 1, 2017, we sold a portion of our data centers and colocation business to a consortium led by BC Partners, Inc.

and Medina Capital ("the Purchaser") in exchange for pre-tax cash proceeds of $1.8 billion and a minority stake in the limited partnership that owns the consortium's newly-formed global secure infrastructure company, Cyxtera Technologies ("Cyxtera").

As part of the transaction, the Purchaser acquired 57 of our data centers and assumed $294 million (as of May 1, 2017) of our capital lease obligations related to the divested properties.

See Note 3—Sale of Data Centers and Colocation Business to our consolidated financial statements in Item 8 of Part II of this report for additional information.

Financial Highlights

Our consolidated operating results and financial position include the operating results and financial position of Level 3 beginning as of November 1, 2017.

For additional information, see Note 2—Acquisition of Level 3 to our consolidated financial statements in Item 8 of Part II of this report.

The following table summarizes the results of our consolidated operations:

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Operating expenses 19,750 24,184 22,010

Operating (loss) income

Net (loss) income

Operating income (loss) $ 962 (2,726) 570

Net loss $ (1,232) (5,269) (1,733)

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During 2019, 2018 and 2017, we incurred Level 3 acquisition-related expenses of $234 million , $393 million and $271 million , respectively.

For additional information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Acquisition of Level 3" and Note 2—Acquisition of Level 3 to our consolidated financial statements in Item 8 of Part II of this report.

During 2019 and 2018, we recorded non-cash, non-tax-deductible goodwill impairment charges of $6.5 billion and $2.7 billion .

(1) During 2020, 2019 and 2018, we incurred Level 3 integration and transformation expenses of $375 million, $234 million and $393 million, respectively.

(2) During 2020, 2019 and 2018, we recorded non-cash, non-tax-deductible goodwill impairment charges of $2.6 billion, $6.5 billion and $2.7 billion, respectively.

For additional information, see Note 2—Goodwill, Customer Relationships and Other Intangible Assets to our consolidated financial statements in Item 8 of Part II of this report.

The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in a re-measurement of our deferred tax assets and liabilities at the new federal corporate tax rate of 21%.

The re-measurement resulted in tax expense of $92 million for 2018 and a tax benefit of approximately $1.1 billion for 2017.

We estimate that during 2019 , 2018 and 2017, approximately 8.2% , 7.9% and 2.0% , respectively, of our consolidated revenue was derived from providing telecommunications, colocation and hosting services outside the United States.

(3) The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in a remeasurement of our deferred tax assets and liabilities at the new federal corporate tax rate of 21%.

The remeasurement resulted in tax expense of $92 million for 2018.

We estimate that during 2020, 2019 and 2018, approximately 8.7%, 8.5% and 8.2%, respectively, of our consolidated revenue was derived from providing telecommunications, colocation and hosting services outside the U.S.

The following table summarizes certain selected financial information from our consolidated balance sheets:

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(Dollars in millions)

Total assets $ 59,394 64,742

Total long-term debt (1)

31,837 34,694

Total stockholders' equity 11,162 13,470

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For information on our total obligations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Future Contractual Obligations" in Item 7 of Part II of this report.

Reporting Segments

At December 31, 2019 , we had the following five reportable segments:

International and Global Accounts Management ("IGAM") Segment.

Under our IGAM segment, we provide our products and services to approximately 200 global enterprise customers and three operating regions:

The summary financial information appearing above should be read in conjunction with, and is qualified by reference to, our consolidated financial statements and notes thereto in Item 8 of Part II of this report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of this report.

Our business combination with Level 3 was driven in part by a vision to provide enhanced services to our business and residential customers by transforming our infrastructure into an adaptive fiber network delivering high bandwidth and low latency on a secure platform.

Over the last three years, we have diligently pursued that vision through a deliberative strategy to attain our goals.

• 2018 – Integration – focused on efficiently combining the two companies into one;

• 2019 – Transformation – focused on improving the customer experience by strengthening our suite of products and services;

• 2020 – Operation – centered on the “Lumen” brand launch, highlighting the Company’s vision for future services;

• 2021 – Platform Expansion and Innovation – build and enhance the capabilities of our platform and use those enhancements to drive profitable growth.

Platform Expansion and Innovation

In September 2020, we launched our “Lumen” brand signaling our heightened focus on delivering digital experiences to our customers designed to drive their success.

We believe the 4IR will usher in unprecedented opportunity to leverage digital interactions to enhance business outcomes.

The demands brought on by the COVID-19 pandemic underscored the urgency for digital transformation across our customer base, and further highlighted the need for reliable, secure digital services.

Our new brand communicates our commitment to support our customers' needs and reflects a fiber platform that is secure, reliable and fast.

Although our Lumen, Quantum and CenturyLink brands are focused on specific customers and related services, our collective Lumen strategy remains driven by our fundamental objectives of:

• Portfolio Progression – meeting the dynamic needs of our broad range of customers for enhancing productivity

◦ Serving the business market at light speed to deliver applications globally, where and how they are needed to meet business outcomes

◦ Serving mass market customers with the reliable, secure and high-performance connectivity and the related services they require

◦ Enabling all customers – businesses and consumers – access to secure, fast and reliable connectivity required to thrive in the 4IR

• Stakeholder Success and Value Creation – understanding the value and perspective each stakeholder contributes to our overall success;

• Cost Transformation – diligently pursuing our deleveraging and capital allocation strategies to enhance our return on capital and reward our investors.

We plan to continue to pursue our long-term Lumen vision through disciplined focus on these objectives, which are discussed further below.

Portfolio Progression

Our portfolio progression plans focus on continuing to integrate our global network, cloud, edge, security, voice and collaboration assets and technologies into an advanced, all-in-one delivery architecture.

Capability enhancements such as edge computing and software-defined wide area networks ("SD WAN") are critical to meeting our customers’ needs and drive our growth strategy.

Our capabilities are grounded in our extensive global fiber infrastructure and our innovation efforts are centered around accelerating our platform’s capabilities to anticipate and address those needs.

We believe our Lumen platform provides the flexibility to create compelling, bespoke network services to enhance the efficiency and utility of our core network services.

Our design has the potential to create value for our customers by simplifying application delivery on a high-performance, secure, worldwide digital platform.

The Lumen platform is designed to address each layer of a digital business model through (i) high performance dynamic connections that are interoperable with a range of on-net enterprise locations, multi-tenant data centers and public cloud on-ramps;

(ii) hybrid cloud infrastructure integrated with computing and storage options across public cloud, network edge and customer premises, and compatible with a wide range of data centers using different software;

and (iii) service orchestration and automation which supports software-defined managed services frameworks capable of deploying workloads to a range of infrastructure venues and network connections.

We believe this platform design can help customers, and our Lumen team, control costs by increasing operational efficiencies and driving forward the next generation of our product and services portfolio.

Stakeholder Success and Value Creation

Employees, Customers, Partners and Vendors

We believe realizing the Lumen promise depends on regular, informed communications with our stakeholders, including shareholders, employees, customers, vendors, lenders, partners and our global community.

Understanding stakeholder goals and priorities enables strategic decisions focused on building long-term value.

Employees and Human Capital Resources

Lumen’s highly competitive business requires attracting, developing and retaining a motivated team inspired by leadership, engaged in meaningful work, motivated by growth opportunities and thriving in a culture that embraces diversity, inclusion and belonging.

Understanding and anticipating the priorities of our current and future employees is important to realizing our purpose to “further human progress through technology.” At December 31, 2020, we had approximately 39,000 employees world-wide, including approximately 7,000 outside the U.S.

Attracting, Developing and Retaining Talent

Our recruiting, development and retention objectives focus on attracting skilled, engaged employees who contribute the talent and diverse perspectives critical to our innovative, forward-looking and inclusive workforce.

Our recruiting process actively sources diverse talent and is designed to eliminate bias, supporting our ability to hire candidates with professional qualifications, personal potential and differing perspectives.

Fostering career progression by encouraging regular professional education empowers our employees to pursue their professional goals, which is critical to developing and retaining our employees.

We invest in broad-based development for all of our employees in various ways such as skills-building programs, on-demand learning options, tuition reimbursement, tailored mentoring programs and a suite of leadership development courses.

In an effort to create more development opportunities for all employees, we are currently expanding our intern, mentoring and leadership development programs, with added focus on development for diverse employees.

We gauge progress and efficacy, identify opportunities for change, and pursue solutions through tracking and analyzing data from various sources such as annual talent reviews and our progress toward hiring/promotion goals in our development, diversity and inclusion plans.

Diversity, Inclusion & Belonging

We believe that understanding and respecting another’s perspective, experience, background and beliefs provide an opportunity to expand horizons, challenge complacency and foster empathy.

For Lumen, diversity of perspective, experience, background and beliefs fuel our innovative, collaborative, and engaged workplace.

Realizing greater ethnic, racial and gender diversity across all levels of an organization is, and will continue to be, an ongoing journey.

Our Diversity & Inclusion Steering Committee comprised of a cross-functional team of senior executives and led by our Chief Diversity & Inclusion Officer, regularly evaluates and seeks to define our diversity, inclusion and belonging strategy.

We aim for the highest standards of fairness and equal opportunity, in recruitment, hiring, promotions, job assignments and compensation (including undertaking periodic gender and race/ethnicity pay equity studies of our U.S., non-represented employees and making pay adjustments when warranted).

Inclusive recruiting and outreach programs for diverse candidates, employee resource groups, and management-led listening circles are among some of Lumen’s initiatives to create greater diversity and belonging among our employees.

Positive Corporate Culture

Our employees are critical to Lumen’s success and we believe creating a positive, inclusive culture is essential to attracting and retaining engaged employees.

Lumen’s company culture program incorporates a wide variety of communication and training activities encouraging collaboration among our colleagues around the world.

We measure the program’s efficacy and identify opportunities for improvements through an engagement survey distributed approximately every six months.

Health & Wellness

We believe a healthy, engaged and high performing workforce is part of our competitive advantage.

We want all of our employees to thrive, and we regularly re-evaluate how to best support our employees’ wellness, health and safety through benefits and resources.

Our current benefit and wellness programs drive engagement that positively impacts our culture, job satisfaction, recruiting and retention programs.

In response to the COVID-19 pandemic, we expanded our physical, mental, and family health programs and informational outreach.

Additional information about our COVID-19 response is located under Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of this report.

Labor Relations

Approximately 23 % of our U.S.

workforce is represented by a union, either the Communications Workers of America or the International Brotherhood of Electrical Workers.

Employees in four countries in Europe are represented by works councils or a representative body.

We recognize the critical role that our supervisors and managers play in fostering a productive and respectful work environment, and we encourage employees to work directly with their supervisors, where possible, to efficiently and effectively resolve workplace concerns.

We also respect our employees’ rights to voluntarily establish and join unions and similar associations without unlawful interference.

We strive to work collaboratively with the unions, councils and associations that represent our workers.

Customer Success

Our customers range from individual households to global enterprises.

Whether our network supports remote education or a multi-national work-from-home environment, all customers are impacted by the quality and reliability of our products and services.

Understanding how each customer accesses and uses our products and services informs the type of customer engagement to best meet their expectations.

Our Customer Success organization includes dedicated teams focused on building deeper relationships and providing us the opportunity to continually improve our customers’ Lumen experience, including their interactions with our employees and systems.

We believe a strong experience leads to satisfied customers and engaged employees who are encouraged to recommend creative solutions.

We have a dedicated team responsible for evaluating the best approach to the customer experience from our largest enterprise customers to our residential customers, coupled with frequent, transparent and informative communication processes.

We value both customer and employee suggestions.

We offer our customers several channels for communicating with us, including voice, text, email, chat and social media, among others.

We are driving a digital-first culture that allows our customers to configure, order, and rapidly deploy our services through an all-digital, self-service set of tools.

In 2019, we launched Lumen’s inaugural customer experience (CX) event, during which we invited customers to collaborate directly with us.

While careful listening to customers is the best source of customer experience feedback, we believe overlaying it with employee feedback is the most effective way to continuously improve.

We regularly invite our front-line employees to provide feedback on opportunities to improve our capabilities.

Partners and Vendors

Understanding how our customers access and use our products and services is an important element of evaluating which partners and vendors may best contribute to our customers’ success.

Consequently, understanding the opportunities any future or existing partners or vendors may bring is also an element of customer success.

Lumen leverages our relationships and by co-innovating with a comprehensive group of strategic partners to create solutions focused exclusively on our customers' business and IT requirements.

Through our open and interoperable approach, we seek to implement the best execution venue available for all our solutions – whether ours or a third party’s.

When necessary, Lumen incorporates market-leading technologies to optimize application performance and streamline integration throughout the IT stack to ensure seamless integration and interoperability.

Lumen has collaborated with a host of technology partners, giving us the capability to tailor and fully manage scalable solutions that customers control, so they can maximize applications.

Lumen, by working with our network of technology partners, can integrate different partners and technologies, shifting the IT burden from our customers.

In light of these efforts to better serve our customers, we are materially reliant on a wide range of vendors to support our organization and partners to support our strategy.

We work with, and rely on, other communications companies that lease us transmission capacity or sell us various services necessary for our current operations, as well as a wide range of software, hardware and equipment suppliers.

We believe that co-innovating with other companies provides the flexibility to rapidly evolve our strategy to effectively support our customers.

Cost Transformation

We believe that diligently pursuing our deleveraging strategy, responsible capital allocation and our ongoing commitment to reinvest the savings in growing our Lumen platform contributes to our long-term goal to create value.

Our investments in infrastructure, expanding fiber, and deploying in-building technology are part of our foundation for future growth.

Our network, through which we provide most of our products and services consists of fiber-optic and copper cables, high-speed transport equipment, electronics, voice switches, data switches and routers, and various other equipment.

We operate part of our network with leased assets, and a substantial portion of our equipment with licensed software.

At December 31, 2020, our network (both owned and leased) included:

• Approximately 450,000 route miles of fiber optic plant globally;

• Approximately 916,000 miles of copper plant;

• Approximately 310 colocation facilities and data centers globally;

• Approximately 37,500 route miles of subsea fiber optic cable systems;

• Approximately 180,000 buildings directly connected to our network, which we refer to as "Fiber On-net" buildings;

• Multiple gateway and transmission facilities used in connection with operating our network throughout North America, Europe and Latin America;

• Central office and other equipment that enables us to provide telephone service as an incumbent local telephone company ("ILEC") in 37 states.

As noted elsewhere in this report, we view our network as one of our most critical assets.

We have devoted, and plan to continue to devote, substantial resources to (i) simplify and modernize our network and legacy systems and (ii) expand our network to address demand for enhanced or new products.

Although we own most of our network, we lease a substantial portion of our core fiber network from several other communication companies under arrangements that will periodically need to be renewed or replaced to support our current network operations.

Like other large communications companies, we are a constant target of cyber-attacks of various degrees, and, from time to time in the ordinary course of our business, we experience disruption in our services.

For additional information regarding our systems, network assets, network risks, capital expenditure requirements and reliance upon third parties, see “Risk Factors” in Item 1A of Part I of this report.

Competition and Market Overview

Organizations across the globe are competing to capitalize on opportunities created by emerging technologies.

The need for data-intensive and latency-sensitive emerging technologies continues to grow.

Helping businesses address these needs requires a platform that integrates essential technology services such as hybrid networking, connected security services that monitor, prevent and remediate threats, and edge computing services ranging from compute and storage to hosting and collocation services on the cloud edge.

We compete in a dynamic and highly competitive market, and we expect continued intense competition from a wide variety of sources under these evolving market conditions.

In addition to competition from large international communications providers, we are increasingly facing competition from systems integrators, cloud service providers, software companies, infrastructure companies, cable companies, device providers, resellers and smaller niche providers, among others.

Our ability to compete hinges upon effectively enhancing and better integrating our existing products, introducing new products on a timely and cost-effective basis, meeting changing customer needs, providing high-quality information security to build customer confidence and combat cyber-attacks, extending our core technology into new applications and anticipating emerging standards, business models, software delivery methods and other technological changes.

Depending on the applicable market and requested services, competition can be intense, especially if competitors in the market have network assets better suited to customer needs, faster transmission speeds or lower prices, or, in certain overseas markets, are national or regional incumbent communications providers that have a longer history of providing service in the market.

For our traditional voice services, providers of wireless voice, social networking and electronic messaging services are significant competitors as many customers are increasingly relying on these providers to communicate, resulting in the long-term systemic decline we have seen in our legacy, traditional voice services.

Other potential sources of competition include non-carrier systems that are capable of bypassing our local networks, either partially or completely, through various means.

Developments in software have permitted new competitors to offer affordable networking products that historically required more expensive hardware investment.

We anticipate that all these trends will continue to place downward pressures on the use of our network.

Additionally, the Telecommunications Act of 1996 obligates the ILECs to permit competitors to interconnect their facilities to the ILEC’s network and to take various other steps that are designed to promote competition, including obligations to (i) negotiate interconnection agreements in good faith, (ii) provide nondiscriminatory “unbundled” access to specific portions of the ILEC’s network and (iii) permit competitors to physically or virtually colocate their plant on the ILEC’s property.

As a result of these regulatory, consumer and technological developments, we also face competition from competitive local exchange carriers ("CLECs"), particularly in densely populated areas.

CLECs provide competing services through (i) reselling an ILEC’s local services, (ii) using an ILEC’s unbundled network elements, (iii) operating their own facilities or (iv) a combination thereof.

Competition for higher margin, legacy services remains high.

However, our platform expansion and innovation strategy is focused largely on addressing these competitive pressures.

As both residential and business customers increasingly demand high-speed connections for entertainment, communications and productivity, we expect the demands on our network will continue to increase over the next several years.

To remain competitive and successful, we are continuing to invest in network security, reliability and flexibility and design innovations to deliver competitive services to meet increasing customer bandwidth and speed requirements.

Additional information about competitive pressures is located under the heading “Risk Factors—Business Risks” in Item 1A of Part I of this report.

Market Overview

Understanding and anticipating market trends drives our investment in developing the products and services we believe will be well received by our customers.

We expect edge computing services demand to significantly increase over the next several years, serving multiple verticals, including finance, healthcare, retail, manufacturing and other industries.

As these use cases continue to emerge, we expect secure network services will increase in importance as consumers require holistic solutions with the flexibility necessary to help accelerate the convergence of computing and communications capabilities with digital content.

We believe we have a world-class set of global fiber assets that positions us to deliver a highly-competitive suite of cloud connectivity, low latency edge computing, and integrated network services.

We generally market our business services to members of in-house IT departments or other highly-sophisticated customers with deep technological experience.

These individuals typically satisfy their IT requirements by contracting with us or a rapidly evolving group of competitors, or by deploying in-house solutions.

We expect our market competition to continue to increase as technology evolves and enables our customers to seek solutions from multiple sources.

We compete to provide services to business customers based on a variety of factors, including the comprehensiveness and reliability of our network, our data transmission speeds, price, the latency of our available intercity and metro routes, the scope of our integrated offerings, the reach and peering capacity of our IP network, and customer service.

As noted above, technological and competitive factors have led to new products and services that have reduced the demand for certain of our traditional network services, especially our traditional ILEC services.

Also, market demand for our broadband services could be adversely affected by advanced wireless data transmission technologies and other systems delivering generally faster average broadband transmission speeds than ours.

Sales and Marketing

Our enterprise sales and marketing approach revolves around solving complex customer problems with advanced technology and network solutions - striving to make core networks services compatible with digital tools.

We also rely on our call center personnel and a variety of channel partners to promote sales of services that meet the needs of our customers.

To meet the needs of different customers, our offerings include both stand-alone services and bundled services designed to provide a complete offering of integrated services.

Our sales and marketing approach to our business customers includes a commitment to provide comprehensive communications and IT solutions for business, wholesale and government customers of all sizes, ranging from small business offices to the world’s largest global enterprise customers.

Our marketing plans include marketing our products and services primarily through direct sales representatives, inbound call centers, telemarketing and third parties, including telecommunications agents, system integrators, value-added resellers and other telecommunications firms.

We support our distribution through digital advertising, events, television advertising, website promotions and public relations.

We maintain local offices in most major and secondary markets within the U.S.

and many of the primary markets of the more than 60 countries in which we provide services.

Similarly, our sales and marketing approach to our mass market customers emphasizes customer-oriented sales, marketing and service with a local presence.

Our approach includes marketing our products and services primarily through direct sales representatives, inbound call centers, telemarketing and third parties, including retailers, satellite television providers, door to door sales agents and digital marketing firms.

Segments and Products & Services

On February 10, 2021, we announced plans to adjust our reporting segments and customer-facing sales channels in 2021 to better align with operational changes designed to better support our customers.

We believe the changes will provide greater transparency into how we are performing against our strategy, including focusing on growth opportunities and managing declining legacy services.

For fiscal year 2020, our products and services were reported by segments as described below.

In 2020, we reported our financial performance using five segments, as described below:

• International and Global Accounts Management ("IGAM") Segment - provided products and services to approximately 200 global enterprise customers and three operating regions:

Europe Middle East and Africa, Latin America and Asia Pacific;

Enterprise Segment.

Under our enterprise segment, we provide our products and services to large and regional domestic and global enterprises, as well as the public sector, which includes the U.S.

• Enterprise Segment - provided products and services to large and regional domestic and global enterprises, as well as the public sector, which includes the U.S.

federal government, state and local governments and research and education institutions;

Small and Medium Business ("SMB") Segment.

Under our SMB segment, we provide our products and services to small and medium businesses directly and through our indirect channel partners;

Wholesale Segment.

Under our wholesale segment, we provide our products and services to a wide range of other communication providers across the wireline, wireless, cable, voice and data center sectors.

• Small and Medium Business ("SMB") Segment - provided products and services to small and medium businesses directly and indirectly through our channel partners;

• Wholesale Segment - provided products and services to a wide range of other communication providers across the wireline, wireless, cable, voice and data center sectors.

Our wholesale customers range from large global telecom providers to small regional providers;

Consumer Segment.

Under our consumer segment, we provide our products and services to residential customers.

Additionally, Universal Service Fund ("USF") federal and state support payments, Connect America Fund ("CAF") federal support revenue, and other revenue from leasing and subleasing including prior year rental income associated with the 2017 failed-sale-leaseback are reported in our consumer segment as regulatory revenue.

The following table shows the composition of our operating revenue by segment under our current segment categorization for the years ended December 31, 2019 , 2018 and 2017 :

Years Ended December 31,

Percent Change

• Consumer Segment - provided products and services to residential customers.

Additionally, certain state support payments, Connect America Fund (“CAF”) federal support revenue, and other revenue from leasing and subleasing, including 2018 rental income associated with the 2017 failed-sale-leaseback, are reported in our consumer segment as regulatory revenue.

The following table shows the composition of our operating revenue by segment for the years ended December 31, 2020, 2019 and 2018:

Years Ended December 31, Percent Change

2020 2019 2018 2020 vs 2019 2019 vs 2018

Percentage of revenue:

International and Global Accounts 16 % 16 % 16 % — % — %

Enterprise 29 % 26 % 25 % 3 % 1 %

Small and Medium Business 12 % 13 % 13 % (1) % — %

Operations and Other *

Wholesale 18 % 19 % 19 % (1) % — %

Consumer 25 % 26 % 27 % (1) % (1) %

Total operating revenue 100 % 100 % 100 %

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* Consists of all revenue not attributable to our segment revenue.

For additional information on our segment data, including information on certain centrally-managed assets and expenses not reflected in our segment results, see Note 16—Segment Information to our consolidated financial statements in Item 8 of Part II of this report and "Management's Discussion and Analysis of Financial Condition and Results of Operations — Reporting Segments" in Item 7 of Part II of this report.

Products and Services

Our Business Segments

We categorize our products and services revenue among four categories for our International and Global Accounts Management, Enterprise, Small and Medium Business and Wholesale segments.

While most of our customized customer interactions involve multiple integrated technologies and services, we organize our products and services according to the core technologies that drive them.

We report our related revenue under the following categories:

IP and data services, transport and infrastructure services, voice and collaboration services, and IT and managed services, each of which is described in further detail below.

Products & Services

At December 31, 2020, we reported our products and services revenue among four categories for our International and Global Accounts Management, Enterprise, Small and Medium Business and Wholesale segments.

IP and Data Services

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• Internet Protocol ("IP").

Our Internet Protocol services provide global internet access over a high performance, diverse network with connectivity in more than 60 countries with approximately 129 Tbps of global throughput.

Our network features approximately 82 Tbps of global peering capacity, and spans approximately 450,000 route miles globally with extensive off-net access solutions across North America, Europe, Latin America and Asia Pacific;

Our IP services provide global internet access over a high performance, diverse network with connectivity in more than 60 countries.

Our network spans approximately 450,000 route miles globally with extensive off-net access solutions across North America, Europe, Latin America and Asia Pacific;

• Content Delivery .

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Transport and Infrastructure

• Wavelength.

We deliver high bandwidth optical networks to firms requiring an end-to-end transport solution with Ethernet technology by contracting for a scalable amount of bandwidth connecting sites or providing high-speed access to cloud computing resources;

We possess an extensive array of unlit optical fiber, known as “dark fiber.” Many large enterprises are interested in building their networks with this high-bandwidth, highly secure optical technology and dark fiber gives them access to the technology.

CenturyLink provides professional services to engineer these networks, and in some cases, manage them for customers;

• Dark Fiber.

Lumen Technologies provides professional services to engineer these networks, and in some cases, manage them for customers;

• Private Line.

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Voice and Collaboration

We offer our customers a complete portfolio of traditional Time Division Multiplexing voice services including Primary Rate Interface service, local inbound service, switched one-plus, toll free, long distance and international services;

Voice Over IP (VoIP).

We deliver a broad range of local and enterprise voice and data services built on VoIP (Voice over Internet Protocol) technology.

Our local and enterprise voice services include VoIP enhanced local service, national and multinational SIP Trunking, Hosted VoIP, support of Primary Rate Interface service, long distance service, and toll-free service.

We offer our customers a complete portfolio of traditional Time Division Multiplexing ("TDM") voice services including Primary Rate Interface service, local inbound service, switched one-plus, toll free, long distance and international services;

• Voice Over Internet Protocol ("VoIP").

We deliver a broad range of local and enterprise voice and data services built on VoIP (Voice over Internet Protocol) technology, including VoIP enhanced local service, national and multinational SIP Trunking, Hosted VoIP, support of Primary Rate Interface service, long distance service and toll-free service.

IT and Managed Services

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These services frequently enhance equipment or networks owned, acquired or controlled by the customer and often include our consulting or software development.

Our Consumer Segment

We categorize our products and services revenue among the following four categories for our Consumer segment:

Broadband , which includes high speed, fiber-based and lower speed Digital Subscriber Line ("DSL") broadband services;

Voice , which includes local and long-distance revenue;

Regulatory Revenue, which consists of (i) CAF, USF, and other support payments designed to reimburse us for various costs related to certain telecommunications services and (ii) other operating revenue from the leasing and subleasing of space;

Other, which includes retail video (including our facilities-based linear TV service), professional services and other ancillary services.

From time to time, we may continue to change the categorization of our products and services.

Additional Information

From time to time, we may make investments in other communications or technology companies.

For further information on regulatory, technological and competitive factors that could impact our revenue, see "Regulation" and "Competition" under this Item 1 below and "Risk Factors" under Item 1A below.

For more information on the financial contributions of our various services, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of Part II of this report.

Most of our products and services are provided using our telecommunications network, which consists of fiber-optic and copper cables, high-speed transport equipment, electronics, voice switches, data switches and routers, and various other equipment.

Our local exchange carrier networks also include central offices and remote site assets, and form a portion of the public switched telephone network.

We operate part of our network with leased assets, and a substantial portion of our equipment with licensed software.

At December 31, 2019 , our network (both owned and leased) included:

Approximately 450,000 route miles of fiber optic plant globally;

Approximately 916,000 miles of copper plant;

Approximately 340 colocation facilities and data centers globally;

Approximately 37,500 route miles of subsea fiber optic cable systems;

Approximately 170,000 buildings directly connected to our network, which we refer to as "Fiber On-net" buildings;

Multiple gateway and transmission facilities used in connection with operating our network throughout North America, Europe and Latin America;

Central office and other equipment that enables us to provide telephone service as an incumbent local telephone company (“ILEC”) in 37 states.

We continue to enhance and expand our network by deploying various technologies to provide additional capacity to our customers.

Rapid and significant changes in technology are expected to continue in the telecommunications industry.

Our future success will depend, in part, on our ability to anticipate and adapt to changes in technology and customer demands, including demands for enhanced digitization, automation and customer self-service capabilities.

In addition, we anticipate that continued increases in internet usage by our customers will require us to make significant capital expenditures to increase network capacity or to implement network management practices to alleviate network capacity shortages.

The FCC's stringent definition of broadband service and consumers' demand for faster transmission speeds could create additional requirements for higher capital spending.

Any such additional expenditures could adversely impact our results of operations and financial condition.

Similarly, we continue to take steps to simplify and modernize our network.

We assembled much of our network by acquiring companies that previously operated their independent networks.

We continue to take steps to eliminate differences between previously separate and older systems.

To attain these objectives, we plan to continue to pursue several complex projects that we expect will be costly and may take several years to complete.

The costs of these projects could materially increase if we conclude that we need to replace any or all of our legacy systems.

Like other large communications companies, we are a constant target of cyber-attacks of varying degrees, which has caused us to spend increasingly more time and money to deal with increasingly sophisticated attacks.

Some of the attacks result in security breaches, and we periodically notify our customers, our employees, our regulators or the public of these breaches when necessary or appropriate.

None of these resulting security breaches to date has materially adversely affected our business, results of operations or financial condition.

Similarly, like other large communication companies operating complex networks, from time to time in the ordinary course of our business we experience disruptions in our service.

Although none of these outages have thus far materially adversely affected us, certain of these outages have resulted in regulatory fines, negative publicity, service credits and other adverse consequences.

We rely on several other communications companies to provide our offerings.

We lease a portion of our core fiber network from our competitors and other third parties.

Many of these leases will lapse in future years.

A portion of our services are provided by other carriers under agency agreements or through reselling arrangements with other carriers.

Our future ability to provide services on the terms of our current offerings will depend in part upon our ability to renew or replace these leases, agreements and arrangements on terms substantially similar to those currently in effect.

For additional information regarding our systems, network assets, network risks, capital expenditure requirements and reliance upon third parties, see "Risk Factors," generally, in Item 1A of Part I of this report, and, in particular, "Risk Factors—Risks Affecting Our Business" and "Risk Factors—Risks Affecting Our Liquidity and Capital Resources." For more information on our properties, see Item 2 of Part I of this report.

Patents, Trade Names, Trademarks and Copyrights

Either directly or through our subsidiaries, we have rights in various patents, trade names, trademarks, copyrights and other intellectual property necessary to conduct our business.

Our services often use the intellectual property of others, including licensed software.

We also occasionally license our intellectual property to others as we deem appropriate.

Through acquisitions or our own research and development, as of December 31, 2019 , we had approximately 2,600 patents and patent applications in the United States and other countries.

Our patents cover a range of technologies, including those relating to data and voice services, content distribution and transmission and networking equipment.

We have also received licenses to use patents held by others, including through certain extensive cross-license arrangements.

Patents give us the right to prevent others, particularly competitors, from using our proprietary technologies.

At December 31, 2020, we reported our products and services revenue among the following four categories for the Consumer segment:

• Broadband , which includes high speed, fiber-based and lower speed DSL broadband services;

• Voice , which include local and long-distance services;

• Regulatory Revenue, which consist of (i) CAF and other support payments designed to reimburse us for various costs related to certain telecommunications services and (ii) other operating revenue from the leasing and subleasing of space;

• Other, which include retail video services (including our linear TV services), professional services and other ancillary services.

Research, Development & Intellectual Property

Due to the dynamic nature of our industry, we prioritize investing in developing new products, improving existing products and licensing third party intellectual property rights to anticipate and meet our customers’ evolving needs.

As of December 31, 2020, we had approximately 2,700 patents and patent applications in the U.S.

and other countries.

We have also received licenses to use patents held by others.

Patent licenses give us the freedom to operate our business without the risk of interruption from the holder of the patented technology.

We plan to continue to file new patent applications as we enhance and develop products and services, and we plan to continue to seek opportunities to expand our patent portfolio through strategic acquisitions and licensing.

We periodically receive offers from third parties to purchase or obtain licenses for patents and other intellectual property rights in exchange for royalties or other payments.

We also periodically receive notices, or are named in lawsuits, alleging that our products or services infringe on patents or other intellectual property rights of third parties, or receive requests to indemnify customers who allege that their use of our products or services caused them to be named in an infringement proceeding.

In certain instances, these matters can potentially adversely impact our operations, operating results or financial position.

For additional information, see “Risk Factors—Risks Affecting Our Business” in Item 1A of Part I of this report, and Note 19—Commitments, Contingencies and Other Items to our consolidated financial statements in Item 8 of Part II of this report.

Sales and Marketing

We maintain local offices in (i) most major and secondary markets within the U.S., (ii) most of the larger population centers within our local service area and (iii) many of the primary markets of the more than 60 countries in which we provide services.

These offices provide sales and customer support services to the communities in our local markets.

We also rely on our call center personnel and a variety of channel partners to promote sales of services that meet the needs of our customers.

Our sales and marketing strategy is to enhance our sales by offering solutions tailored to the needs of our various customers and promoting our brands.

To meet the needs of different customers, our offerings include both stand-alone services and bundled services designed to provide a complete offering of integrated services.

We conduct most of our operations under the brand name "CenturyLink." Our satellite television service is offered on a co-branded basis under the "DIRECTV" name.

We strive to offer our business customers stable, reliable, secure and trusted solutions.

We support our distribution through digital advertising, events, television advertising, website promotions and public relations.

Similarly, our sales and marketing approach to our residential customers emphasizes customer-oriented sales, marketing and service with a local presence.

Our marketing plans include marketing our products and services primarily through direct sales representatives, inbound call centers, telemarketing and third parties, including retailers, satellite television providers, door to door sales agents and digital marketing firms.

We support our distribution with digital marketing, direct mail, bill inserts, newspaper and television advertising, website promotions, public relations activities and sponsorship of community events and sports venues.

Our domestic operations are regulated by the Federal Communications Commission (the “FCC”), various state utility commissions and occasionally by local agencies.

In addition to our patent rights, we have rights in various trade names, trademarks, copyrights and other intellectual property that we use to conduct our business.

Our services often use the intellectual property of others, including licensed software.

We also occasionally license our intellectual property to others as we deem appropriate.

For information on various litigation risks associated with owning and using intellectual property rights, see “Risk Factors—Business Risks” in Item 1A of Part I of this report, and Note 17—Commitments, Contingencies and Other Items to our consolidated financial statements in Item 8 of Part II of this report.

Our domestic operations are regulated by the Federal Communications Commission (the “FCC”), by various state utility commissions and occasionally by local agencies.

Our non-domestic operations are regulated by supranational groups (such as the European Union, or EU), national agencies and frequently state, provincial or local bodies.

Generally, we must obtain and maintain operating licenses from these bodies in most areas where we offer regulated services.

The following description discusses some of the major industry regulations that affect our operations, but numerous other regulations not discussed below also have a substantial impact on us.

For information on the risks associated with the regulations discussed below, see “Risk Factors—Risks Relating to Legal and Regulatory Matters” in Item 1A of Part I of this report.

Changes in the composition and leadership of the FCC, state commissions and other agencies that regulate our business could have significant impacts on our revenue, expenses, competitive position and prospects.

Changes in the composition and leadership of these agencies are often difficult to predict, which makes future planning more difficult.

The following description discusses some of the major regulations affecting our operations, but others could have a substantial impact on us as well.

For additional information, see “Risk Factors” in Item 1A of Part I of this report.

Federal Regulation of Domestic Operations

The FCC regulates the interstate services we provide, including the business data service charges we bill for wholesale network transmission and intercarrier compensation, including the interstate access charges that we bill to long-distance companies and other communications companies in connection with the origination and termination of interstate phone calls.

The FCC regulates the interstate services we provide, including the business data service charges we bill for wholesale network transmission and intercarrier compensation, including the interstate access charges that we bill other communications companies in connection with the origination and termination of interstate phone calls.

Additionally, the FCC regulates several aspects of our business related to international communications services, privacy, public safety and network infrastructure, including our access to and use of local telephone numbers and our provision of emergency 911 services.

Many of the FCC’s regulations adopted in recent years remain subject to judicial review and additional rulemakings, thus increasing the difficulty of determining the ultimate impact of these changes on us and our competitors.

Universal Service

In 2015, we accepted Connect America Fund or "CAF" funding from the FCC of approximately $500 million per year for six years to fund the deployment of voice and broadband capable infrastructure for approximately 1.2 million rural households and businesses in 33 of the 37 states in which we are an ILEC under the CAF Phase II high-cost support program.

The funding from the CAF Phase II support program in these 33 states has substantially replaced the funding from the interstate USF high-cost program that we previously utilized to support voice services in high-cost rural markets in these 33 states.

As a result of accepting CAF Phase II support payments for 33 states, as well as existing merger-related commitments, we are obligated to make substantial capital expenditures to build infrastructure by certain specified milestone deadlines.

For information on the risks associated with participating in this program, see "Risk Factors—Risks Relating to Legal and Regulatory Matters" in Item 1A of Part I of this report.

On January 30, 2020 the FCC approved an order creating the Rural Digital Opportunity Fund (the "RDOF"), which is a new federal support program designed to follow the CAF Phase II program.

Through the RDOF, the FCC plans to award up to $20.4 billion in support payments, beginning January 1, 2022, to bring broadband to unserved areas through multi-round reverse auctions.

The FCC plans to conduct the first auction late in 2020.

In its order, the FCC also addressed the transition of carriers from CAF Phase II to RDOF and clarified that price cap carriers, like CenturyLink, will receive an additional year of CAF Phase II funding in 2021.

We are in the early stages of analyzing this opportunity.

In accordance with the FCC’s January 2020 order, we elected to receive an additional year of CAF Phase II funding in 2021.

In early 2020, the FCC created the Rural Digital Opportunity Fund (the “RDOF”), which is a new federal support program designed to replace the CAF Phase II program.

On December 7, 2020, the FCC allocated in its RDOF Phase I auction $9.2 billion in support payments over 10 years to deploy high speed broadband to over 5.2 million unserved locations.

We won bids for RDOF Phase I support payments of $26 million annually.

These RDOF Phase I support payments are expected to begin January 1, 2022.

For additional information about the potential financial impact of the CAF Phase II program, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of Part II of this report.

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In February 2015, the FCC adopted an order classifying Broadband Internet Access Services (“BIAS”) under Title II of the Communications Act of 1934 and applying new regulations.

In December 2017, the FCC voted to repeal most of those regulations and the classification of BIAS as a Title II service and to preempt states from imposing substantial regulations on broadband.

Opponents of this change appealed this action in federal court and have advocated in favor of re-instituting regulation of Internet services under Title II of the Communications Act.

In December 2017, the FCC voted to repeal most of those regulations and the classification of BIAS as a Title II service to preempt states from imposing substantial regulations on broadband.

Opponents of this change appealed this action in federal court.

Several states have also opposed the change and have initiated state executive orders or introduced legislation focused on state-specific Internet service regulation.

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The court also requested the FCC to make further findings relating to its classification decision.

Numerous parties have sought further appellate review of this decision.

The result of these appeals is pending and the potential impact to CenturyLink is currently unknown.

Numerous parties have appealed this decision, which remain pending.

In addition, members of the Biden Administration and various consumer interest groups have advocated in favor of reclassifying BIAS under Title II.

The ultimate impact of these pending judicial appeals and calls for additional regulation are currently unknown to us, although the imposition of heightened regulation of our Internet operations could potentially hamper our ability to operate our data networks efficiently, restrict our ability to implement network management practices necessary to ensure quality service, increase the cost of operating, maintaining and upgrading our network and otherwise negatively impact our current operations.

State Regulation of Domestic Operations

In recent years, most states have reduced their regulation of ILECs, including our ILEC operations.

In recent years, most states have reduced their regulation of ILECs, including ours.

Nonetheless, state regulatory commissions generally continue to (i) set the rates that telecommunication companies charge each other for exchanging traffic, (ii) administer support programs designed to subsidize the provision of services to high-cost rural areas, (iii) regulate the purchase and sale of ILECs, (iv) require ILECs to provide service under publicly-filed tariffs setting forth the terms, conditions and prices of regulated services, (v) limit ILECs’ ability to borrow and pledge their assets, (vi) regulate transactions between ILECs and their affiliates and (vii) impose various other service standards.

In most states, switched and business data services and interconnection services are subject to price regulation, although the extent of regulation varies by type of service and geographic region.

We operate in states where traditional cost recovery mechanisms, including state USF, are under evaluation or have been modified.

The 2017 changes to the federal tax code prompted several states to review the potential impact to regulated rates.

As laws and regulations change, there can be no assurance that these mechanisms will continue to provide us with the same level of cost recovery.

Data Privacy Regulations

Various foreign, federal and state laws govern our storage, maintenance and use of customer data, including a wide range of consumer protection, data protection, privacy, intellectual property and similar laws.

Data privacy regulations are complex and vary across jurisdictions.

As a global company, we must comply with various jurisdictional data privacy regulations, including the General Data Protection Regulation (“GDPR”) in the EU and

similar laws adopted by various other jurisdictions in certain of our domestic and overseas markets.

The application, interpretation and enforcement of these laws are often uncertain, and may be interpreted and applied inconsistently from jurisdiction to jurisdiction.

These regulations require careful handling of personal and customer data.

We have data handling policies and practices to comply with global data privacy requirements, including GDPR and similar regulations, and have resources dedicated to complying with changing data privacy regulations.

Anti-Bribery and Corruption Regulations

As a global company we must comply with complex foreign and U.S.

laws and regulations governing business ethics and practices, such as the U.S.

Foreign Corrupt Practices Act, the U.K.

Bribery Act and other local laws prohibiting corrupt payments to governmental officials and anti-competition regulations.

We have compliance policies, programs and training to prevent non-compliance with such anti-corruption regulations in the U.S.

and other jurisdictions.

We monitor pending and proposed legislation and regulatory changes that may impact our business and develop strategies to address the changes and incorporate them into existing compliance programs.

International Regulations

Our subsidiaries operating outside of the United States are subject to various regulations in the markets where service is provided.

Our subsidiaries operating outside of the U.S.

are subject to various regulations in the markets where service is provided.

The scope of regulation varies from country to country.

The telecommunications

regulatory regimes in certain of our non-domestic markets are in the process of development.

issues, including the pricing of services, have not been addressed fully, or even at all.

We cannot accurately predict

whether and how these issues will be resolved, or their effect on our operations.

Further, some of the legal

requirements governing our foreign operations are more restrictive than or conflict with those governing our

domestic operations, which raises our compliance costs and regulatory risks.

On January 31, 2020, the United Kingdom (the "UK") terminated its membership in the EU (“Brexit”), subject to an 11-month transition period during which the UK will continue to be subject to all EU rules, but will no longer have any voting rights.

The British government is currently negotiating the terms of Brexit.

Several factors which are currently unknown will influence Brexit’s impact on our business, including the form Brexit will take.

The communications regulatory regimes in certain of our non-domestic markets are in the process of development.

Many issues, including the pricing of services, have not been addressed fully, or even at all.

The United Kingdom (“UK”) recently terminated its membership in the EU (“Brexit”), subject to the negotiation of additional separation agreements with the EU regarding data sharing, financial services and other matters.

Several factors which are currently unknown will influence Brexit’s ultimate impact on our business.

We operate a staging facility in the UK, where certain core network elements and customer premises equipment is configured before being shipped to both UK and EU locations.

The UK is currently also a central repository of our spare parts for use in our European operations.

However, we have also recently established a third party sparing facility in Amsterdam which will help mitigate potential disruptions resulting from any restriction on the free movement of goods between the EU and the UK after the end of the transition period.

However, we have also established a third party sparing facility in Amsterdam which we believe will help mitigate potential disruptions resulting from any impediments to the free movement of goods between the EU and the UK.

Given the small percentage of our global personnel that are UK or EU nationals, we do not anticipate any adverse impact from Brexit on our workforce.

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Nonetheless, based on current information, we do not anticipate Brexit will have a substantial impact on our business.

Our overseas operations are subject to various U.S.

export and sanctions laws and regulations.

Our deconsolidated Venezuelan affiliate conducts operations in Venezuela, which is currently subject to certain U.S.

Other Regulations

Our networks are subject to numerous local regulations, including codes that regulate our trenching and construction operations or that require us to obtain permits, licenses or franchises to operate.

Such regulations are enacted by municipalities, counties or other regional governmental bodies, and can vary widely from jurisdiction to jurisdiction as a result.

Our networks and properties are subject to numerous federal, state and local regulations, including environmental compliance and remediation expenses.

We are also subject to codes that regulate our trenching and construction operations or that require us to obtain permits, licenses or franchises to operate.

Such regulations are enacted by municipalities, counties, state, federal or other regional governmental bodies, and can vary widely from jurisdiction to jurisdiction as a result.

Such regulations may also require us to pay substantial fees.

The application, interpretation and enforcement of these laws are often uncertain, and may be interpreted and applied inconsistently from jurisdiction to jurisdiction.

Various foreign, federal and state legislative or regulatory bodies have recently adopted increasingly restrictive laws or regulations governing the protection or retention of data, and others are contemplating similar actions.

In particular, regulatory bodies in Europe have aggressively enforced the

stringent terms of the EU’s General Data Protection Regulation.

For additional information about these matters, see “Risk Factors—Risks Affecting Our Business” and “Risk Factors—Risks Relating to Legal and Regulatory Matters” in item 1A of Part I of this report.

We compete in a rapidly evolving and highly competitive market, and we expect intense competition from a wide variety of sources under evolving market conditions to continue.

In addition to competition from larger telecommunication service providers, we are facing increasing competition from cable and satellite companies, wireless providers, technology companies, cloud companies, broadband providers, device providers, resellers, sales agents, facilities-based providers, and smaller more narrowly focused niche providers.

Further technological advances and regulatory and legislative changes have increased opportunities for a wide range of alternative communications service providers, which in turn have increased competitive pressures on our business.

These alternate providers often face fewer regulations and have lower cost structures than we do.

In addition, the communications industry has, in recent years, experienced substantial consolidation, and some of our competitors in one or more lines of our business are generally larger, have stronger brand names, have more financial and business resources and have broader service offerings than we currently do.

In certain overseas markets, we compete against national incumbent telecommunications providers and other regional or international companies that may have a longer history of providing service in the market.

The Telecommunications Act of 1996, which obligates ILECs to permit competitors to interconnect their facilities to the ILEC's network and to take various other steps that are designed to promote competition, imposes several duties on an ILEC if it receives a specific request from another entity which seeks to connect with or provide services using the ILEC's network.

In particular, each ILEC is obligated to (i) negotiate interconnection agreements in good faith, (ii) provide nondiscriminatory "unbundled" access to specific portions of the ILEC's network and (iii) permit competitors, on terms and conditions (including rates) that are just, reasonable and nondiscriminatory, to colocate their physical plant on the ILEC's property, or provide virtual colocation if physical colocation is not practicable.

Current FCC rules require ILECs to lease a network element only in those situations where competing carriers genuinely would be impaired without access to such network elements, and where the unbundling would not interfere with the development of facilities-based competition.

Wireless voice services are a significant source of competition with our traditional ILEC services.

It is increasingly common for customers to completely forego use of traditional wireline phone service and instead rely solely on wireless service for voice services.

We anticipate this trend will continue, particularly with younger customers who are less accustomed to using traditional wireline voice services.

Technological and regulatory developments in wireless services, Wi-Fi, and other wired and wireless technologies have contributed to the development of alternatives to traditional landline voice services.

Moreover, the growing prevalence of electronic mail, text messaging, social networking and similar digital non-voice communications services continues to reduce the demand for traditional landline voice services.

These factors have led to a long-term systemic decline in the number of our wireline voice service customers.

In addition to facing direct competition from those providers described above, ILECs increasingly face competition from alternate communication systems constructed by long distance carriers, large customers, municipalities or alternative access vendors.

These systems are capable of originating or terminating calls without use of an ILEC's networks or switching services.

Other potential sources of competition include non-carrier systems that are capable of bypassing ILECs' local networks, either partially or completely, through various means, including the provision of business data services or independent switching services and the concentration of telecommunications traffic on a few of an ILEC's access lines.

We anticipate that all these trends will continue and lead to decreased billable use of our networks.

Demand for our broadband services could be adversely affected by advanced wireless data transmission technologies being deployed by wireless providers and by certain technologies permitting cable companies and other competitors to deliver generally faster average broadband transmission speeds than ours.

As a result of these regulatory, consumer and technological developments, ILECs also face competition from competitive local exchange carriers, or CLECs, particularly in densely populated areas.

CLECs provide competing services through (i) reselling an ILEC's local services, (ii) using an ILEC's unbundled network elements, (iii) operating their own facilities or (iv) a combination thereof.

Depending on the applicable market and requested services, competition can be intense, especially if one or more competitors in the market have network assets better suited to the customer’s needs or are offering faster transmission speeds or lower prices.

To succeed, we must continue to invest in our networks to ensure that they can deliver competitive services that meet these increasing bandwidth and speed requirements.

In addition, network reliability and security are increasingly important competitive factors in our business.

Additional information about competitive pressures is located (i) under the heading "Risk Factors—Risks Affecting Our Business" in Item 1A of Part I of this report and (ii) in the discussion immediately below, which contains more specific information on how these trends in competition have impacted our segments.

International and Global Accounts Management, Enterprise, Small and Medium Business and Wholesale Segments

In connection with providing services to our business customers, which includes our International and Global Accounts Management, Enterprise, Small and Medium Business and Wholesale customers, we compete against other telecommunication providers, as well as other regional, national and international carriers, other data transport providers, cable companies, CLECs and other enterprises, some of whom are substantially larger than us.

Competition is based on price, bandwidth, quality and speed of service, promotions and bundled offerings.

In providing broadband services, we compete primarily with cable companies, wireless providers, technology companies and other broadband service providers.

We face competition in Ethernet based services in the wholesale market from cable companies and fiber-based providers.

Our competitors for providing integrated data, broadband, voice services and other IT services to our business customers range from mid-sized businesses to large enterprises.

Due to the size and capacity of some of these companies, our competitors may be able to offer more inexpensive solutions to our customers.

To compete, we focus on providing sophisticated, secure and performance-driven services to our business customers through our global infrastructure.

The number of companies providing business services has grown and increased competition for these services, particularly with respect to smaller business customers.

Many of our competitors for business services are not subject to the same regulatory requirements as we are and therefore, they are able to avoid significant regulatory costs and obligations.

Our competitors for cloud, hosting, colocation and other IT services include telecommunications companies, technology companies, cloud companies, colocation companies, hardware manufacturers and system integrators that support the in-house IT operations for a business or offer outsourcing solutions.

Due to the size, capacity and strategically low pricing tactics of some of these companies, our competitors may be able to offer more inexpensive solutions to our customers.

The increase in recent years in the number of companies providing these services has placed substantial downward pressure on pricing for a wide range of cloud, hosting, colocation and other IT services.

To address these competitive pressures, we have focused on offering end-to-end integrated customer solutions which we believe could help differentiate our products and services from those offered by competitors with a narrower range of products and services.

For our wholesale customers, we will continue to be adversely affected by product substitution, technological migration, industry consolidation and mandated rate reductions.

Competition for private line services is based on price, network reach and reliability, service, promotions and bundled offerings.

We face significant competition for access services from CLECs, cable companies, resellers and wireless service providers as well as some of our own wholesale markets customers, many of which are deploying their own networks to provide customers with local services.

By doing so, these competitors reduce revenue producing traffic on our network.

In providing equipment sales and professional services to our business customers, we compete primarily with large integrators, equipment providers and national telecommunication providers.

Competition is based on package offerings, and as such our strategy is to provide these customers individualized and customizable packages that include other services.

As such, in providing data integration we often face many of the same competitive pressures as we face in providing other services, as discussed above.

We expect equipment sales and professional services revenue to continue to fluctuate from quarter to quarter as these offerings tend to be more sensitive than others to changes in the economy and in spending trends of our governmental customers.

We further expect the profit margins on our equipment sales and professional services offerings to continue to be lower than those of our other services.

Consumer Segment

With respect to providing our services to residential customers, technology advancements have increased both the quantity and type of competitors that we compete with for our services.

More specifically, voice services face significant product and technology substitution.

Additionally, cable companies have increased broadband speeds and continue to compete with our broadband services, and wireless carriers' latest generation technologies are allowing them to more directly compete with our Broadband services.

The fragmentation of the video market with the proliferation of Over the Top providers has made it difficult for us to offer a cost-effective video product.

Lastly, the regulatory environment in which we operate, while it provides us certain advantages, can make us less nimble than cable, wireless, and other technology companies.

As a result, our strategy for competing in the consumer space is to continue to invest in our network with fiber solutions to increase connection speeds and service quality, partner with video providers such as DIRECTV to provide video and content options to customers, and encourage customers to bundle voice services by providing a high quality voice connection with discounts for bundling.

In addition, we believe initiatives to improve the customer experience and digital experience should increase customer loyalty over time.

The domestic consumer market for broadband services is mature, with a significant portion of households already receiving those services.

We compete for customers on the basis of pricing, packaging of services and features and quality of service.

In order to remain competitive, we believe continually increasing connection speeds is important.

As a result, we continue to invest in our network, which allows for the delivery of higher speed broadband services.

Although our status as an ILEC in our local service areas continues to provide us advantages in providing local services in those territories, as noted above, we increasingly face significant competition as an increasing number of consumers are willing to substitute cable, wireless and electronic communications for traditional voice telecommunications services.

This has led to an increase in the number and type of competitors within our industry, price compression and a decrease in our market share.

As a result of this product substitution, we face greater competition in providing local and long-distance voice services from wireless providers, resellers and sales agents (including ourselves), social media hosts and broadband service providers, including cable companies.

We also continue to compete with traditional telecommunications providers, such as national carriers, smaller regional providers, CLECs and independent telephone companies.

Acquisitions and Dispositions

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in late 2017.

These acquisitions have substantially changed our customer base, geographic footprint and mix of products and services.

These acquisitions have substantially changed our customer base, geographic footprint, business strategies and mix of products and services.

We regularly evaluate the possibility of acquiring additional assets or disposing of assets in exchange for cash, securities or other properties, and at any given time may be engaged in discussions or negotiations regarding additional acquisitions or dispositions.

We generally do not announce our acquisitions or dispositions until we have entered into a preliminary or definitive agreement.

See above under "Acquisition of Level 3", for additional information about our November 1, 2017 acquisition of Level 3, and "Sale of Data Centers and Colocation Business" for additional information about our May 1, 2017 disposition.

See Note 4—Goodwill, Customer Relationships and Other Intangible Assets for additional information on these acquisitions.

Environmental Matters

From time to time we may incur environmental compliance and remediation expenses, mainly resulting from owning or operating prior industrial sites or operating vehicle fleets or power supplies for our communications equipment.

Although we cannot assess with certainty the impact of any future compliance and remediation obligations or provide you with any assurances regarding the ultimate impact thereof, we do not currently believe that future environmental compliance and remediation expenditures will have a material adverse effect on our financial condition or results of operations.

For additional information, see (i) "Risk Factors—Risks Relating to Legal and Regulatory Matters—Risks posed by other regulation" and "Risk Factors—Other Risks—We face risks from natural disasters and extreme weather, which can disrupt our operations and cause us to incur additional capital and operating costs" in Item 1A of Part I of this report and (ii) Note 19—Commitments, Contingencies and Other Items included in Item 8 of Part II of this report.

See Note 2—Goodwill, Customer Relationships and Other Intangible Assets to our consolidated financial statements in Item 8 of Part II of this report for additional information on these acquisitions.

Overall, our business is not materially impacted by seasonality.

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The amount and timing of these costs are subject to the weather patterns of any given year, but have generally been highest during the third quarter and have been related to damage from severe storms, including hurricanes, tropical storms and tornadoes in our markets along the Atlantic and Gulf of Mexico coastlines.

At December 31, 2019 , we had approximately 42,500 employees, of which approximately 10,700 are members of either the Communications Workers of America ("CWA") or the International Brotherhood of Electrical Workers ("IBEW").

See "Risk Factors—Risks Affecting Our Business" in Item 1A of Part I of this report for a discussion of risks relating to our labor relations and see Note 21—Labor Union Contracts to our consolidated financial statements in Item 8 of Part II of this report for additional information on the timing of certain contract expirations.

Additional Information

From time to time, we may make investments in other communications or technology companies.

For further information on regulatory, technological and competitive factors that could impact our revenue, see "Regulation" under this Item 1, above, and "Competition" under this Item 1, above, and "Risk Factors" under Item 1A, below.

Website Access and Important Investor Information

Our website is www.centurylink.com .

We routinely post important investor information in the "Investor Relations" section of our website at ir.centurylink.com .

We were incorporated in Louisiana in 1968.

Our website is www.lumen.com .

We routinely post important investor information in the “Investor Relations” section of our website at ir.lumen.com .

The information contained on, or that may be accessed through, our website is not part of this report or any other periodic reports that we file with the SEC.

You may obtain free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports in the "Investor Relations" section of our website ( ir.centurylink.com ) under the heading "FINANCIALS" and subheading "SEC Filings." These reports are available on our website and on the SEC's website at www.sec.gov .

You may obtain free electronic copies of annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K of us and two of our principal subsidiaries, and amendments to those reports, in the “Investor Relations” section of our website ( ir.lumen.com ) under the heading “FINANCIALS” and subheading “SEC Filings.” These reports are also available on the SEC’s website at www.sec.gov .

From time to time, we also use our website to webcast our earnings calls and certain of our meetings with investors or other members of the investment community.

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In the event that we make any changes (other than by a technical, administrative or non-substantive amendment) to, or provide any waivers from, the provisions of our code of conduct applicable to our directors or executive officers, we intend to disclose these events on our website or in a report on Form 8-K filed with the SEC.

The code of conduct, as well as copies of our guidelines on significant governance issues and the charters of our key board committees, are also available in the "Governance" section of our website at www.centurylink.com/aboutus/governance or in print to any shareholder who requests them by sending a written request to our Corporate Secretary at CenturyLink, Inc., 100 CenturyLink Drive, Monroe, Louisiana, 71203.

The code of conduct, as well as copies of our guidelines on significant governance issues and the charters of our key board committees, are also available in the “Governance” section of our website at www.lumen.com/en-us/about/governance or in print to any shareholder who requests them by sending a written request to our Corporate Secretary at Lumen Technologies, Inc., 100 CenturyLink Drive, Monroe, Louisiana, 71203.

In connection with filing this report, our chief executive officer and chief financial officer made the certifications regarding our financial disclosures required under the Sarbanes-Oxley Act of 2002, and its related regulations.

In addition, during 2020, our chief executive officer certified to the New York Stock Exchange that he was unaware of any violations by us of the New York Stock Exchange’s corporate governance listing standards.

As a large complex organization, we are from time to time subject to litigation, disputes, governmental or internal investigations, service outages, security breaches or other adverse events.

We typically publicly disclose these events only when we determine these disclosures to be material to investors or otherwise required by applicable law.

As a large complex organization, we are from time to time subject to litigation, disputes, governmental or internal investigations, consent decrees, service outages, security breaches or other adverse events.

We typically publicly disclose these occurrences (and their ultimate outcomes) only when we determine these disclosures to be material to investors or otherwise required by applicable law.

We typically disclose material non-public information by disseminating press releases, making public filings with the SEC, or disclosing information during publicly accessible meetings or conference calls.

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To the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

Unless otherwise indicated, information contained in this report and other documents filed by us under the federal securities laws concerning our views and expectations regarding the communications industry are based on estimates made by us using data from industry sources, and on assumptions made by us based on our management’s knowledge and experience in the markets in which we operate and the communications industry generally.

Unless otherwise indicated, information contained in this report and other documents filed by us under the federal securities laws concerning our views and expectations regarding the technology or communications industries are based on estimates made by us using data from industry sources, and on assumptions made by us based on our management’s knowledge and experience in the markets in which we operate and our industry generally.

You should be aware that we have not independently verified data from industry or other third-party sources and cannot guarantee its accuracy or completeness.

Our principal executive offices and telephone number are listed on the cover page of this report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business