Time Warner Cable 2010 Annual Report Download - page 17

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Acquisition of NaviSite. On February 1, 2011, TWC entered into an agreement to acquire NaviSite, which provides
enterprise-class hosting, managed application, messaging and cloud services. The transaction, which is subject to
NaviSite stockholder approval, certain regulatory approvals and customer closing conditions, is expected to close in the
second quarter of 2011.
Voice Services
TWC offers its commercial Digital Phone service, Business Class Phone, to a broad range of businesses. Business
Class Phone is a multi-line voice service developed for small businesses, which provides various calling plans, along with
other key business features, such as call restrictions, non-verified account codes and three-way call transfer. TWC also
offers Business Class PRI, which is designed for medium-sized businesses and supports up to twenty-three simultaneous
voice calls on each two-way trunk line.
Business Class Phone is provided to subscribers at contractually established fees based on the services received. As
of December 31, 2010, TWC had 111,000 commercial Digital Phone subscribers.
Advertising
TWC earns revenues by selling advertising to national, regional and local customers. As part of the agreements under
which it acquires video programming, TWC typically receives an allocation of scheduled advertising time in such
programming, generally two or three minutes per hour, into which its systems can insert commercials, subject, in some
instances, to certain subject matter limitations. In addition, TWC sells advertising in its owned and operated news
channels and its Roadrunner.com portal to local and regional advertisers.
In many locations, TWC has formed advertising “interconnects” or entered into representation agreements with
contiguous cable system operators under which TWC sells advertising on behalf of those operators in exchange for a
percentage of the advertising revenue. This enables TWC to deliver commercials across wider geographic areas,
replicating the reach of the local broadcast stations as much as possible. During 2010, TWC also entered into agreements
with Verizon Communications Inc. (“Verizon”) under which TWC sells advertising on behalf of Verizon FiOS TV in New
York, New York, Dallas, Texas and Los Angeles, California in exchange for a percentage of the advertising revenue. In
addition, TWC, together with Comcast Corporation (“Comcast”) and Cox Communications, Inc., owns National Cable
Communications LLC (“National Cable Communications”), the largest cable television advertising firm in the
United States, which represents a number of cable operators in selling advertising time to national and regional
advertisers. Through its partial ownership of National Cable Communications, TWC is a party to an agreement to sell
DirecTV Group Inc. (“DirecTV”) inventory of advertising time on regional sports networks (“RSNs”). TWC also sells the
video advertising inventory of certain RSNs in New York City and Ohio.
Advanced Advertising
TWC is exploring various means to deliver advanced advertising offerings and measurement data to advertisers.
During 2010, TWC deployed EBIF technology to approximately 5 million set-top boxes in its service areas.
EBIF capabilities enable video subscribers to use their remote control to request from a VOD channel that coupons,
samples and/or brochures be sent to their home, which allows TWC to provide advertisers with feedback about the impact
of their advertising and the value of interactive features. TWC also currently provides anonymized VOD and enhanced
TV viewing data to its programming partners for a fee.
In 2008, TWC and certain other cable operators formed Canoe Ventures LLC (“Canoe”), a joint venture focused on
developing a common technology platform among cable operators for the delivery of advanced advertising products and
services to programmers and advertisers. One component of Canoe’s strategy is to enable TWC and the cable industry as a
whole to support national programmers and advertisers with a one-stop advanced advertising bureau. During 2010, Canoe
successfully launched its first interactive television advertisement product across multiple cable operators’ service areas
in partnership with three cable networks. Canoe and its cable operator owners, including the Company, also made
significant progress during 2010 developing and advancing standards for audience measurement.
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