Time Warner Cable 2009 Annual Report Download - page 28

Item 1A. Risk Factors.
Risks Related to Competition
TWC faces a wide range of competition, which could negatively affect its business and financial results.
TWC’s industry is, and will continue to be, highly competitive. Some of TWC’s principal competitors, incumbent local telephone
companies, in particular, offer services that provide features and functions comparable to the video, high-speed data and/or voice services
that TWC offers, and they offer them in bundles similar to TWC’s, sometimes with the addition of wireless services. In a significant
number of TWC’s operating areas, AT&T and Verizon have upgraded their networks to carry two-way video, high-speed data with
substantial bandwidth and IP-based telephony services, which they market and sell in bundles, in some cases, along with their wireless
service.
In addition, each of TWC’s services faces competition from other companies that provide services on a stand-alone basis. TWC’s
video service faces competition from DBS providers that try to distinguish their services from TWC’s by offering aggressive promotional
pricing, exclusive programming, and/or assertions of superior service or offerings. Increasingly, TWC’s video service also faces
competition from companies that deliver content to consumers over the Internet, some without charging a fee for access to the content.
This trend could negatively impact customer demand for TWC’s video service, especially premium and On-Demand services, and could
encourage content owners to seek higher license fees from TWC in order to subsidize their free distribution of content. TWC also faces
competition in high-speed data service from wireless data providers, and in voice service from wireline, wireless and “over-the-top”
phone providers, especially as an increasing number of homes in the United States replace their wireline telephone service with wireless
service.
Any inability to compete effectively or an increase in competition with respect to video, high-speed data or voice services could
have an adverse effect on TWC’s financial results and return on capital expenditures due to possible increases in the cost of gaining and
retaining subscribers and lower per subscriber revenue, could slow or cause a decline in TWC’s growth rates, and reduce TWC’s
revenues. As TWC expands and introduces new and enhanced services, TWC may be subject to competition from other providers of
those services. TWC cannot predict the extent to which this competition will affect its future business and financial results or return on
capital expenditures.
Future advances in technology, as well as changes in the marketplace, in the economy and in the regulatory and legislative
environments, may result in changes to the competitive landscape. For additional information, see “—Risks Related to Government
Regulation,” and “Business—Competition” and “—Regulatory Matters.”
TWC faces risks relating to competition for the leisure and entertainment time of audiences, which has intensified in part due to
advances in technology.
In addition to the various competitive factors discussed above, TWC’s business is subject to risks relating to increasing competition
for the leisure and entertainment time of consumers. TWC’s business competes with all other sources of entertainment and information
delivery. Technological advancements, such as VOD, new video formats, and Internet streaming and downloading, many of which have
been beneficial to TWC’s business, have nonetheless increased the number of entertainment and information delivery choices available
to consumers and intensified the challenges posed by audience fragmentation. Increasingly, content owners are delivering their content
directly to consumers over the Internet, often without charging any fee for access to the content. Furthermore, due to consumer
electronics innovations, consumers are more readily able to watch such Internet-delivered content on television sets and mobile devices.
The increasing number of choices available to audiences could negatively impact not only consumer demand for TWC’s products and
services, but also advertisers’ willingness to purchase advertising from TWC. If TWC does not respond appropriately to the increasing
leisure and entertainment choices available to consumers, TWC’s competitive position could deteriorate, and TWC’s financial results
could suffer.
TWC’s competitive position and business and financial results could suffer if it does not develop compelling wireless offerings.
TWC believes that broadband cable networks currently provide the most efficient means to deliver its services, but consumers are
increasingly interested in accessing information, entertainment and communication services outside the home as well. TWC launched
Road Runner Mobile, a wireless mobile broadband service, in several cities during the fourth quarter of 2009, and it expects to continue to
roll out the service in additional cities during 2010. TWC utilizes Clearwire’s mobile broadband network to provide the service pursuant
to a wholesale agreement with Clearwire. Clearwire’s network is currently available in a limited number of cities and there can be no
assurance that Clearwire will successfully finance, construct and deploy a nationwide mobile broadband network.
TWC does not offer wireless voice products although some of its wireline competitors and their affiliates do offer such products.
TWC may determine that it needs to offer a wireless voice product to remain competitive. If TWC incurs significant costs in developing
or marketing wireless mobile voice and/or broadband offerings, and the resulting offerings are not competitive with the offerings of
TWC’s competitors or appealing to TWC’s customers, TWC’s business and financial results could suffer. Furthermore, if TWC’s
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