This excerpt taken from the IWA 10-K filed Mar 10, 2006.
Year ended December 31, 2005 compared to year ended December 31, 2004
Revenues and Sales
The table below sets forth the components of our revenues and sales for 2005 as compared to 2004:
Local Services. Local services revenues decreased $7.2 million, or 8.7%, for 2005, as compared to 2004, primarily due to $7.1 million of revenue collected subject to refund in prior periods and recognized during 2004. Our new rates established under the settlement agreement with the Iowa Utilities Board became effective on April 23, 2004. Also contributing to the decrease was the loss of $3.6 million in revenues resulting from the discontinuance of the expanded local area calling plans during the third quarter of 2004, as more fully described below, and the decrease in total access lines. These reductions were partially offset by the benefit of the April 23, 2004 rate increase for the entire period of 2005, which resulted in additional revenue of $2.3 million. In addition, we experienced an increase in revenue from enhanced local services of $1.1 million for 2005 as compared to 2004, due to the growth of bundled product offerings. From December 31, 2004 to December 31, 2005, total access lines decreased by 8,300 including the loss of 13,900 incumbent local exchange carrier lines and an increase in lines served by our competitive local exchange carriers of 5,600.
Our historical ability to provide expanded local calling plans at favorable margins depended on the existence of an agreement for mutual exchange of traffic with another telecommunications provider. That agreement terminated on July 31, 2004. As a result, we discontinued the expanded local calling plans and encouraged customers who subscribed to our expanded local calling plans to replace those plans with substitute services. The termination of the agreement for mutual exchange of traffic and discontinuance of our expanded local calling plans have affected several of our revenue streams and our costs of services and sales. Local services revenue for 2004 included $3.6 million from the expanded local calling plans that have been discontinued. While that revenue stream has ended, we have increased our long distance and access revenues as subscribers migrate from our expanded local calling plans to toll plans.
Network Access Services. Our network access services revenues increased $6.3 million, or 6.6%, for 2005 as compared to 2004. Revenues from switched access services increased approximately $6.2 million, due primarily to an increase in access minutes per line which is due in part to the elimination of the expanded local calling plans.
Toll Services. Our toll services revenues increased by $646,000, or 2.8%, for 2005 as compared to 2004. This revenue growth was attributable to an increase in the number of long distance customers of approximately 7,000, or 5.2%, partially offset by a decrease in average minutes of use per customer and average revenue per minute.
Other Services and Sales. Other services and sales revenues increased by $3.8 million, or 14.0%, for 2005 as compared to 2004. The revenue increase was primarily due to growth in the number of DSL Internet customers. DSL Internet access service revenues increased $5.5 million, or 97.5%, due primarily to customer growth. This increase was partially offset by a decrease in dial-up Internet-revenues of $1.1 million and a decline in revenue from customer premise equipment sales of $483,000. We believe the decline in dial-up Internet access service customers is generally the result of customer migration to broadband products such as our DSL service.