Full Description

Time Warner Cable Inc. (TWC), incorporated on March 21, 2003, operates as a cable operator in the United States. The Company operates in five geographic areas: New York state (including New York City), the Carolinas, Ohio, southern California (including Los Angeles) and Texas. TWC offers residential and commercial video, high-speed data and voice services over its broadband cable systems. As of December 31, 2008, TWC served approximately 14.6 million customers who subscribed to one or more of its video, high-speed data and voice services, representing approximately 34.2 million revenue generating units (RGUs), which reflects the total of all TWC basic video, digital video, high-speed data and voice service subscribers.

As of December 31, 2008, the Company served approximately 13.1 million basic video subscribers. Of those, approximately 8.6 million received some portion of their video services via digital transmissions (digital video subscribers). Also, as of December 31, 2008, TWC served approximately 8.4 million residential high-speed data subscribers (or 32% of estimated high-speed data service-ready homes) and approximately 3.7 million residential Digital Phone subscribers (or 14% of estimated voice service-ready homes). TWC markets its services separately and as bundled packages of multiple services and features. As of December 31, 2008, TWC served 283,000 commercial high-speed data subscribers and 30,000 commercial Digital Phone subscribers. In addition, TWC sells advertising to a variety of national, regional and local customers.

Residential Services

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, a few specialty networks, such as C-SPAN and QVC, 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 Discovery. In certain areas, BST and CPST also include 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 enables digital video subscribers to add to their CPST service up to approximately 50 additional cable networks, including spin-off and successor networks to national cable services, news networks and niche programming services, such as History International and Biography. Generally, subscribers to CPST and DBT can purchase 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.

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. TWC’s video subscribers may receive 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, 2008, approximately 66% of TWC’s basic video subscribers were digital video subscribers.

On-Demand services are available to digital video subscribers using a TWC-provided set-top box or, when available, a tru2way-enabled television. Available On-Demand services include a 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 subscribers receiving services via a TWC-provided digital set-top box generally have access to the premium service’s On-Demand content without additional fees.

TWC offered up to 95 channels of high-definition (HD) television (HDTV), as of December 31, 2008. Set-top boxes equipped with digital video recorders (DVRs), among other things, enable customers to pause and/or rewind live television programs and record programs on the hard drive built into the set-top box. TWC also offers HD DVRs, which enable customers to record HD programming. Subscribers pay an additional monthly fee for TWC’s DVR service. As of December 31, 2008, 47%, or approximately four million, of TWC’s digital video subscribers also subscribed to its DVR service.

TWC offers residential high-speed data services to nearly all of its homes passed as of December 31, 2008. TWC’s high-speed data services provide customers with a fast, always-on connection to the Internet. High-speed data subscribers connect to TWC’s cable systems using a cable modem, which TWC provides at no charge, or which subscribers can purchase on their own. Subscribers pay a flat monthly fee based on the level of service received.

TWC offers four tiers of its Road Runner high-speed data service in virtually all of its systems: Turbotm, Standard, Basic and Lite. The tiers offer different speeds at different monthly fees. Turbo offers subscribers speeds of up to 20 megabits per second downstream and 2 megabits per second upstream. TWC’s Road Runner service provides communication tools and personalized services, including e-mail, personal computer security, parental controls, news groups and online radio, without any additional charge. The Road Runner portal provides access to content and media from local, national and international providers and topic-specific channels, including entertainment, games, news, sports, travel, music, movie listings and shopping sites. In addition, in 2008, TWC launched the Road Runner Video Store, which permits subscribers to rent or purchase television, shows and movies for online viewing. In addition to Road Runner, most of TWC’s cable systems provide their high-speed data subscribers with access to the services of certain other on-line providers, including Earthlink.

TWC offered its Digital Phone service to nearly all of its homes passed as of December 31, 2008. Most Digital Phone customers receive unlimited local, in-state and United States, Canada and Puerto Rico calling and a number of calling features, including call waiting, caller identification (ID) and Enhanced 911 (E911) services, for a fixed monthly fee. TWC also offers additional calling plans with a variety of options that are designed to meet customers’ particular needs, including a local-only calling plan, an unlimited in-state calling plan and an international calling plan.

Commercial Services

TWC offers commercial customers a range of video programming tiers marketed under the Time Warner Cable Business Class brand. Packages are designed to meet the demands of a business environment by offering a variety of video services that enable businesses to entertain customers and stay abreast of news, weather and financial information. Similar to residential customers, commercial customers receive video services through analog transmissions, a combination of digital and analog transmissions or, in systems where TWC has fully deployed digital technology, digital transmissions only.

TWC offers commercial customers a variety of high-speed data services, including Internet access, Website hosting and managed security. These services are offered to a range of businesses and are marketed under the Road Runner Business Class brand. Commercial subscribers pay a flat monthly fee based on the level of service received. As of December 31, 2008, TWC had 283,000 commercial high-speed data subscribers. In addition, TWC provides its high-speed data services to other cable operators for a fee, who in turn provide high-speed data services to their customers.

Business Class Phone service includes unlimited local, intrastate and long distance in the United States, Canada, Puerto Rico, United States Virgin Islands, Guam and Saipan, as well as a toll-free service for a flat monthly rate. As of December 31, 2008, TWC had 30,000 Business Class Phone subscribers. TWC provides transmission capacity on its network to customers that desire high-bandwidth connections among locations. TWC also offers point-to-point circuits to wireless telephone providers and to other carrier and wholesale customers. TWC’s virtual private network (VPN) services enable customers to use Internet protocol (IP)-based business applications for secure communications among geographically dispersed locations, while also providing customers high-speed access to the Internet, and provide secure access to the Internet for remote users, such as traveling employees and employees working from home or a remote location. TWC also offers a variety of Ethernet services that are designed to provide high-speed, high-capacity connections among customers’ local area networks (LANs), within and between metropolitan areas.

The Company competes with DISH Network Corporation, DirecTV Group Inc., AT&T, Verizon Communications Inc, Cincinnati Bell, Inc., Frontier Communications Corporation, Sprint, T-Mobile USA, Inc., Vonage, Skype, magicJack, Level 3 Communications, Inc. and tw telecom inc.