Comcast 2007 Annual Report Download - page 32

Capital Expenditures
Our most significant recurring investing activity has been capital
expenditures in our Cable segment and we expect that this will
continue in the future. A significant portion of our capital expendi-
tures is based on the level of growth and the technology being
deployed. The following table summarizes the capital expenditures
we incurred in our Cable segment from 2005 through 2007:
Year ended December 31 (in millions) 2007 2006 2005
Customer premise
equipment(a) $ 3,164 $ 2,321 $ 1,769
Scalable infrastructure(b) 1,014 906 824
Line extensions(c) 352 275 287
Support capital(d) 792 435 279
Upgrades(e) 520 307 250
Commercial(f) 151 ——
Total $ 5,993 $ 4,244 $ 3,409
(a) Customer premise equipment includes costs incurred to connect our services at
the subscriber’s home. The equipment deployed typically includes standard digital
converters, HD converters, digital video recorders, remote controls, high-speed
Internet modems and digital phone modems. Customer premise equipment also
includes the cost of installing such equipment for new subscribers as well as the
material and labor cost incurred to install the cable that connects a subscriber’s
dwelling to the network.
(b) Scalable infrastructure includes costs incurred to secure growth in subscribers,
revenue units or to provide service enhancements, other than those related to
customer premise equipment. Such equipment includes equipment that controls
signal reception, processing and transmission throughout our distribution network
as well as equipment that controls and communicates with the customer premise
equipment residing within a subscriber’s home. Also included in scalable infra-
structure is certain equipment necessary for content aggregation and distribution
(video on demand equipment) and equipment necessary to provide certain video,
high-speed Internet and digital phone service features (voice mail, e-mail, etc.).
(c) Line extensions include the costs of extending our distribution network into new
service areas. These costs typically include network design, purchase and installa-
tion of fiber-optic and coaxial cable, and certain electronic equipment.
(d) Support capital includes costs associated with the replacement or enhancement of
non-network assets due to technical or physical obsolescence and wear-out.
These costs typically include vehicles, computer and office equipment, furniture
and fixtures, tools and test equipment.
(e) Upgrades include costs to enhance or replace existing fiber/coaxial cable net-
works, including recurring betterments.
(f) Commercial includes costs incurred related to the rollout of our services to small
and medium-sized businesses. Such equipment typically includes high-speed
Internet modems and phone modems and the costs of installing such equip-
ment for new customers as well as materials and labor incurred to install the
cable that connects a customer’s business to the closest point of the main dis-
tribution network.
Cable capital expenditures increased 41.2% from 2006 to 2007
and 24.5% from 2005 to 2006 primarily as a result of the rollout of
our digital phone service and an increase in demand for advanced
set-top boxes (including DVR and HDTV) and high-speed Internet
modems. These increases were accelerated by the introduction of
our triple play bundle in late 2005 and as a result of regulatory
changes in 2007. We also incurred additional capital expenditures
in our newly acquired cable systems. In anticipation of this growth,
we have continued to improve the capacity and reliability of our
network in order to handle the additional volume and advanced
services.Wehavealsoexpandedourserviceareathroughline
extensions and now pass more than 48 million homes.
The amounts of capital expenditures in our Programming segment
and our other business activities have not been significant. Con-
solidated 2007 capital expenditures include approximately $110
million related to the consolidation of offices in Pennsylvania and
relocation of our corporate headquarters. The amounts of our
capital expenditures for 2008 and for subsequent years will
depend on numerous factors, including acquisitions, competition,
changes in technology, regulatory changes and the timing and rate
of deployment of new services.
Acquisitions
In 2007, acquisitions were primarily related to our acquisitions
of Patriot Media, Sports Channel New England, Bay Area Sports-
Net and Fandango. In 2006, acquisitions were primarily related to
the Adelphia and Time Warner transactions, the acquisition of the
cable systems of Susquehanna Communications and the acquis-
ition of our additional interest in E! Entertainment Television.
Proceeds from Sale of Investments
In 2007 and 2006, proceeds from the sales and restructurings of
investments were primarily related to the disposition of our owner-
ship interests in Time Warner Inc.
Purchases of Investments
In 2007, purchases of investments consisted primarily of our addi-
tional investment in Insight Midwest, L.P. and our purchase of
available for sale securities. In 2006, purchases of investments
were primarily related to the purchase of our interest in Spec-
trumCo and to our additional investment in Texas and Kansas City
Cable Partners.
Comcast 2007 Annual Report on Form 10-K 30