Time Warner Cable 2010 Annual Report Download - page 32

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. 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 services.
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 and on mobile devices, 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 or “over-the-top” service.
Any inability to compete effectively or an increase in competition 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,” “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 consumers replace TWC’s traditional
high-speed data or voice services with wireless data or voice services or if TWC 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
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