Results of Operations
Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018
Our management reviews and analyzes several key financial measures in order to manage our business and assess the quality of and variability of our service revenue, operating results and cash flows. The following summary tables present a comparison of our results of operations with respect to certain key financial measures. The comparisons illustrated in the tables are discussed in greater detail below.
(1) Includes non-cash equity-based compensation expense of $994 and $895 for 2019 and 2018, respectively.
(2) Includes non-cash equity-based compensation expense of $17,466 and $16,813 for 2019 and 2018, respectively.
Service Revenue. Our service revenue increased 5.0% from 2018 to 2019. Exchange rates negatively impacted our increase in service revenue by approximately $5.3 million. All foreign currency comparisons herein reflect results for 2019 translated at the average foreign currency exchange rates for 2018. We increased our total service revenue by increasing the number of sales representatives selling our services, by expanding our network, by adding additional buildings to our network, by increasing our penetration into the buildings connected to our network and by gaining market share by offering our services at lower prices than our competitors.
Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes, Universal Service Fund fees and certain state regulatory fees. We record these taxes billed to our customers on a gross basis (as service revenue and network operations expense) in our consolidated statements of operations. The impact of these taxes including the Universal Service Fund resulted in an increase to our revenues from 2018 to 2019 of approximately $2.4 million.
Our net-centric customers tend to purchase their service on a price per megabit basis. Our corporate customers tend to utilize a small portion of their allocated bandwidth on their connections and tend to purchase their service on a per connection basis. Revenues from our corporate and net-centric customers represented 68.4% and 31.6% of total service revenue, respectively, for 2019 and represented 64.9% and 35.1% of total service revenue, respectively, for 2018. Revenues from corporate customers increased 10.6% to $373.7 million for 2019 from $337.8 million for 2018 primarily due to an increase in our number of our corporate customers. Revenues from our net-centric customers decreased by 5.4% to $172.5 million for 2019 from $182.3 million for 2018 primarily due to an increase in our number of net-centric customers being offset by a decline in our average price per megabit. Our revenue from our net-centric customers has declined as a percentage of our total revenue and grew at a slower rate than our corporate customer revenue because net-centric customers purchase our services based upon a price per megabit basis and our average price per megabit declined by 23.9% from 2018 to 2019. Additionally, the net-centric market experiences a greater level of pricing pressure than the corporate market and net-centric customers who renew their service with us expect their renewed service to be at a lower price than their current price. We expect that our average price per megabit will continue to decline at similar rates which would result in our corporate revenues continuing to represent a greater portion of our total revenues and our net-centric revenues continuing to grow at a lower rate than our corporate revenues. Additionally, the impact of foreign exchange rates has a more significant impact on our net-centric revenues.
Our on-net revenues increased 5.9% from 2018 to 2019. We increased the number of our on-net customer connections by 8.4% at December 31, 2019 from December 31, 2018. On-net customer connections increased at a greater rate than on-net revenues primarily due to the 3.8% decline in our on-net ARPU, primarily from a decline in ARPU for our net-centric customers. ARPU is determined by dividing revenue for the period by the average customer connections for that period. Our average price per megabit for our installed base of customers is determined by dividing the aggregate monthly recurring fixed charges for those customers by the aggregate committed data rate for the same customers. The decline in on-net ARPU is partly attributed to volume and term based pricing discounts. Additionally, on-net customers who cancel their service from our installed base of customers, in general, have an ARPU that is greater than the ARPU for our new customers due to declining prices primarily for our on-net services sold to our net-centric customers. These trends resulted in the reduction to our on-net ARPU and a 23.9% decline in our average price per megabit for our installed base of customers.
Our off-net revenues increased 2.7% from 2018 to 2019. Our off-net revenues increased as we increased the number of our off-net customer connections by 6.3% at December 31, 2019 from December 31, 2018. Our off-net customer connections increased at a greater rate than our off-net revenue primarily due to the 5.0% decrease in our off-net ARPU.
Network Operations Expenses. Network operations expenses include the costs of personnel associated with service delivery, network management, and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, access and facilities fees paid to building owners and excise taxes billed to our customers and recorded on a gross basis. Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee's salary and other compensation. Our network operations expenses, including non-cash equity-based compensation expense, increased 0.1% from 2018 to 2019 as we were connected to 8.0% more customer connections and we were connected to 125 more on-net buildings as of December 31, 2019 compared to December 31, 2018. The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilities expansion activities, the increase in our off-net revenues and the increase in taxes recorded on a gross basis partly offset by price reductions obtained in certain of our circuit costs and fewer fiber operating leases. When we provide off-net services we also assume the cost of the associated tail circuits.
Selling, General, and Administrative Expenses (“SG&A”). Our SG&A expenses, including non-cash equity- based compensation expense, increased 9.8% from 2018 to 2019. Non-cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee's salary and other compensation and was $17.5 million for 2019 and $16.8 million for 2018. SG&A expenses increased primarily from an increase in salaries and related costs required to support our expansion and increases in our sales efforts and an increase in our headcount. Our sales force headcount increased by 10.8% from 619 at December 31, 2018 to 686 at December 31, 2019 and our total headcount increased by 8.3% from 974 at December 31, 2018 to 1,055 at December 31, 2019.
Depreciation and Amortization Expenses. Our depreciation and amortization expenses decreased 1.2% from 2018 to 2019. The decrease is primarily due to the depreciation expense associated with the increase related to newly deployed fixed assets being offset by the decline in depreciation expense from fully depreciated fixed assets.
Gains on Equipment Transactions. We exchanged certain used network equipment and cash consideration for new network equipment resulting in gains of $1.1 million for 2019 and $1.0 million for 2018. The gains are based upon the excess of the estimated fair value of the new network equipment over the carrying amount of the returned used network equipment and the cash paid. The increase in gains from 2018 to 2019 was due to purchasing more equipment under the exchange program in 2019 than we purchased in 2018.
Interest Expense. Interest expense results from interest incurred on our $445.0 million of senior secured notes, interest incurred on our $189.2 million of senior unsecured notes, interest on our installment payment agreement, interest on our finance lease obligations and interest incurred on our €135.0 million of 2024 Notes that we issued on June 25, 2019. Our interest expense increased by 12.5% for 2019 from 2018 primarily due to the issuance of $70.0 million of senior secured notes we issued in August 2018, the issuance of €135.0 million of senior unsecured notes we issued in June 2019 and an increase in our finance lease obligations. The 2024 Notes were issued at par for €135.0 million ($153.7 million) on June 25, 2019. The 2024 Notes were issued in Euros and are reported in our reporting currency — US Dollars. As of December 31, 2019 the 2024 Notes were valued at $151.4 million resulting in an unrealized gain on foreign exchange of $2.3 million in 2019.
Income Tax Expense. Our income tax expense was $15.1 million for 2019 and $12.7 million for 2018. The increase in our income tax expense was primarily related to an increase in our income before income taxes.
Buildings On-net. As of December 31, 2019 and 2018 we had a total of 2,801 and 2,676 on-net buildings connected to our network, respectively.
Table:
 | Year Ended December 31 | Percent Change | 
 | 2019 | 2018 | Change
 | (in thousands) |  | 
Service revenue | $546,159 | $520,193 | 5.0%
On-net revenues | 396,753 | 374,555 | 5.9%
Off-net revenues | 148,931 | 145,004 | 2.7%
Network operations expenses(1) | 219,801 | 219,526 | 0.1%
Selling, general, and administrative expenses(2) | 146,913 | 133,858 | 9.8%
Depreciation and amortization expenses | 80,247 | 81,233 | (1.2)%
Gains on equipment transactions | 1,059 | 982 | 7.8%
Interest expense | 57,453 | 51,056 | 12.5%
Income tax expense | 15,154 | 12,715 | 19.2%


Question: What is the average service revenue in 2018 and 2019?
Answer: 533176
Calculation: ($520,193 + $546,159)/2