Time Warner Cable 2007 Annual Report Download - page 9

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Services
TWC offers video, high-speed data and voice services over its broadband cable systems.
Residential Services
Video Services
Programming tiers. TWC offers three main levels or “tiers” of video programming—Basic Service Tier
(“BST”), Expanded Basic Service Tier (“CPST”) and Digital Basic Service Tier (“DBT”). BST generally includes
broadcast television signals, satellite-delivered broadcast networks and superstations, local origination channels,
and public access, educational and government channels. CPST enables BST subscribers to add national, regional
and local cable news, entertainment and other specialty networks, such as CNN, A&E, ESPN, CNBC and MTV. In
certain areas, BST and CPST also include proprietary local programming devoted to the communities TWC serves,
including 24-hour local news channels in a number of cities. Together, BST and CPST provide customers with
approximately 70 channels. DBT offers subscribers up to 50 additional cable networks, including spin-off and
successor networks to national cable services, news networks and niche programming services, such as Discovery
Home and MTV2. Generally, subscribers to CPST and DBT can purchase thematically-linked programming tiers,
including movies, sports and Spanish language tiers, and subscribers to any tier of video programming can purchase
premium services, such as HBO and Showtime, for an additional fee.
TWC’s video subscribers pay a fixed monthly fee based on the video programming tier they receive.
Subscribers to specialized tiers and premium services are charged an additional monthly fee, with discounts
generally available for the purchase of packages of more than one such service. The rates TWC can charge for its
BST service and certain video equipment, including set-top boxes, are subject to regulation under federal law. See
“—Regulatory Matters” below.
Transmission technology. TWC’s customers may receive video service through analog transmissions, a
combination of digital and analog transmissions or, in systems where TWC has fully deployed digital simulcast,
digital transmissions only. Customers who receive any level of video service via digital transmissions are referred to
as “digital video subscribers.” As of December 31, 2007, approximately 61% of TWC’s basic video subscribers
were digital video subscribers.
Digital video subscribers using a TWC-provided set-top box generally have access to an interactive program
guide, Video on Demand (“VOD”), which is discussed below, music channels and seasonal sports packages. Digital
video subscribers who receive premium services generally also receive “multiplex” versions of these services.
The following table presents selected statistical data regarding TWC’s video subscribers:
2007 2006 2005
December 31,
(in thousands, except percentages)
Homes passed
(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,526 26,062 16,338
Basic video subscribers
(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,251 13,402 9,384
Basic video penetration
(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.0% 51.4% 57.4%
Digital video subscribers
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,022 7,270 4,595
Digital video penetration
(5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.5% 54.2% 49.0%
(1)
Homes passed represent the estimated number of service-ready single residence homes, apartment and condominium units and
commercial establishments passed by TWC’s cable systems without further extending the transmission lines.
(2)
Basic video subscriber numbers reflect billable subscribers who receive at least basic video service.
(3)
Basic video penetration represents basic video subscribers as a percentage of homes passed.
(4)
Digital video subscriber numbers reflect billable subscribers who receive any level of video service via digital transmissions.
(5)
Digital video penetration represents digital video subscribers as a percentage of basic video subscribers.
On-Demand services. On-Demand services are available to digital video subscribers using a TWC-provided
set-top box. Available On-Demand services include a wide selection of featured movies and special events, for
which separate per-use fees are generally charged, and free access to selected movies, programs and program
excerpts from cable networks, music videos, local programming and other content. In addition, premium service
4