Time Warner Cable 2014 Annual Report Download - page 47

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TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)
reportable segments. As such, the reportable segment results reflect how management views such segments in assessing
financial performance and allocating resources and are not necessarily indicative of the results of operations that each
segment would have achieved had they operated as stand-alone entities during the periods presented.
Residential Services Segment
Revenue. Residential Services segment revenue consists of revenue from video, high-speed data, voice and other
services offered to residential subscribers. The Company sells video, high-speed data and voice services to residential
subscribers separately and in bundled packages at rates lower than if the subscriber purchases each product on an
individual basis. Revenue received from subscribers to bundled packages is allocated to each product in a pro-rata manner
based on the standalone selling price of each of the respective services.
•Video. Video revenue includes subscriber fees for the Company’s various tiers or packages of video
programming services generally distinguished from one another by the number and type of programming
networks they include. Video revenue also includes related equipment rental charges, installation charges,
broadcast fees and fees collected on behalf of local franchising authorities and the Federal Communications
Commission (the “FCC”). Additionally, video revenue includes revenue from the sale of premium networks,
transactional video-on-demand (e.g., events and movies) and digital video recorder (“DVR”) service.
•High-speed data. High-speed data revenue primarily includes subscriber fees for the Company’s high-speed data
services and related equipment rental and installation charges. The Company offers multiple tiers of high-speed
data services providing various service speeds, data usage levels and other attributes to meet the different needs
of its subscribers. In addition, high-speed data revenue includes fees received from third-party Internet service
providers (e.g., Earthlink) whose online services are provided to some of TWC’s customers.
•Voice. Voice revenue includes subscriber fees for the Company’s voice services, along with related installation
charges, as well as fees collected on behalf of governmental authorities.
•Other. Other revenue includes revenue from security and home management services and other residential
subscriber-related fees.
Operating costs and expenses. Residential Services segment operating costs and expenses include the operating
costs and expenses that management believes are necessary to assess the performance of and allocate resources to the
Residential Services segment. Such costs include programming costs, sales and marketing costs, technical operations
costs, customer care costs, video franchise and other fees and other operating costs (e.g., high-speed data connectivity
costs, voice network costs and bad debt expense). Employee costs directly attributable to the Residential Services segment
are included within each operating cost and expense category as applicable. Operating costs and expenses exclude costs
and expenses related to “corporate” functions and functions supporting more than one reportable segment that are
centrally managed (e.g., facilities, network operations, vehicles and procurement) and are not within the control of
segment management.
Business Services Segment
Revenue. Business Services segment revenue consists of revenue from video, high-speed data, voice, wholesale
transport and other services offered to business customers. The Company sells video, high-speed data and voice services
to business subscribers separately and in bundled packages, and the revenue is allocated to each product in a pro-rata
manner based on the standalone selling price of each of the respective services.
•Video. Video revenue includes the same fee categories received from business video subscribers as described
above under Residential Services video revenue.
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