service subscription. We also have a coordinated strategy for retaining
customers that includes televised retention advertising to reinforce the
decision to subscribe and to encourage customers to purchase higher service
NEW PRODUCTS AND TECHNOLOGIES. A variety of emerging technologies and the
rapid growth of Internet usage have presented us with substantial opportunities
to provide new or expanded products and services to our customers and to expand
our sources of revenue. The desire for such new technologies and the use of the
Internet by businesses in particular have triggered a significant increase in
our commercial market penetration. As a result, we are in the process of
introducing a variety of new or expanded services beyond the traditional
offerings of analog television programming for the benefit of both our
residential and commercial customers. These new products include:
- digital television and its related enhancements,
- high-speed Internet access, through television set-top converter boxes,
cable modems installed in personal computers and traditional telephone
- interactive services, such as Wink, and
- Internet protocol telephony and data transmission services.
We believe that we are well positioned to compete with other providers of
these services due to the high bandwidth of cable technology and our ability to
access homes and businesses.
DIGITAL TELEVISION. As part of upgrading our systems, we are installing
headend equipment capable of delivering digitally encoded cable transmissions
with a two-way digital-capable set-top converter box in the customer's home.
This digital connection offers significant advantages. For example, we can
compress the digital signal to allow the transmission of up to twelve digital
channels in the bandwidth normally used by one analog channel. This will allow
us to increase both programming and service offerings, including near
video-on-demand for pay-per-view customers which is expected to increase the
amount of services purchased by our customers.
Digital services customers may receive a mix of additional television
programming, an electronic program guide and up to 40 channels of digital music.
The additional programming falls into four categories which are targeted towards
- Additional basic channels, which are marketed in systems primarily
serving rural communities;
- Additional premium channels, which are marketed in systems serving both
rural and urban communities;
- "Multiplexes" of premium channels to which a customer previously
subscribed, such as multiple channels of HBO or Showtime, which are
marketed in systems serving both rural and urban communities; and
- Additional pay-per-view programming, such as more pay-per-view options
and/or frequent showings of the most popular films to provide near
video-on-demand, which are more heavily marketed in systems primarily
serving both rural and urban communities.
As part of our current pricing strategy for digital services, we have
established a retail rate of $6.95 to $8.95 per month for the digital set-top
converter and the delivery of "multiplexes" of premium services, additional
pay-per-view channels, digital music and an