We have adopted the hybrid fiber optic/coaxial ("HFC") architecture as the
standard for our ongoing systems upgrades. In most systems, we deploy fiber
optic cable to individual nodes, serving an average of 800 homes or commercial
buildings, and coaxial cable from each node to individual homes or buildings. We
believe that this network design provides high capacity and superior signal
quality and will enable us to provide the newest forms of telecommunications
services to our customers. The primary advantages of HFC architecture over
traditional coaxial cable networks include:
- increased channel capacity of cable systems;
- reduced number of amplifiers in cascade from the headend to the home,
resulting in improved signal quality and reliability;
- reduced number of homes per node, improving the capacity of the network
to provide high-speed Internet service and reducing the number of
households affected by disruptions in the network; and
- sufficient dedicated bandwidth for two-way services, thereby avoiding
reverse signal interference problems.
The HFC architecture will enable us to offer new and enhanced services,
including additional channels and tiers, expanded pay-per-view options,
high-speed Internet access, wide area network and point-to-point data services
and digital advertising insertion. The upgrades will facilitate our new services
in two primary ways:
- Greater bandwidth allows us to send more information through our systems.
This provides us with the "space" to provide new services in addition to
our current services. As a result, we will be able to roll out digital
cable programming in addition to existing analog channels offered to
customers who do not wish to subscribe to a package of digital services.
- Enhanced design configured for two-way communication with the customer
allows us to provide cable Internet services without telephone support
and other interactive services such as an interactive program guide,
impulse pay-per-view, video-on-demand and Wink that cannot be offered
without upgrading the bandwidth capacity of our systems.
This architecture will also position us to offer cable telephony services
in the future, using either IP technology or switch-based technology.
PRODUCTS AND SERVICES
We offer our customers a full array of traditional cable television
services and programming and have begun to offer new and advanced high bandwidth
services such as high-speed Internet access. We plan to continually enhance and
upgrade these services, including adding new programming and other
telecommunications services, and will continue to position cable television as
an essential service.
TRADITIONAL CABLE TELEVISION SERVICES. Approximately 86% of our customers
subscribe to both "basic" and "expanded basic" service and generally, receive a
line-up of between 33 to 85 channels of television programming, depending on the
bandwidth capacity of the system. Customers who pay a premium to the basic rate
are provided additional channels, either individually or in packages of several
channels, as add-ons to the basic channels. About 28% of our customers subscribe
for premium channels, with additional customers subscribing for other special
add-on packages. We tailor both our basic line-up and our