Cable B contracts with Customer D to provide television services for a fixed
monthly fee for 24 months. The base television services package gives
Customer D the right to purchase additional premium channels. At contract
inception, Customer D adds a premium sports channel for an additional 5 per
month.
The premium channel service is capable of being distinct because the customer
can benefit from the service together with readily available resources (i.e. the
existing base television services). In addition, the premium channel service is
distinct in the context of the contract because the premium channel service does
not significantly affect, or transform, the base television services and therefore
is not highly interrelated with the base television services. Furthermore, the
premium channel can be added or dropped by the customer without affecting the
base television services. Therefore, Cable B concludes that the premium channel
service is a performance obligation. For further considerations, if the premium
channel is not added at contract inception, see 8.1, Example 58.