Charter 2006 Annual Report Download - page 8

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6
CHARTER COMMUNICATIONS, INC. LETTER TO STOCKHOLDERS
customers, a 15% increase over 2005. With high-speed Internet service
provided to 22% of our high-speed-capable homes, penetration continues
to climb.
Value-Added Video Services
Charter serves 5.4 million analog video customers, and about 52% of our
video base subscribes to the expanded capabilities of Charter Digital Cable.
®
In order to provide additional value and choice to our customers, while better
aligning our pricing structure with programming costs, we’re adjusting
our video channel packages. This new video packaging strategy, along
with initiatives to improve bandwidth utilization, provides network capacity
to further expand our high-definition television (HDTV) programming
offerings. As consumer demand for HDTV programming grows, we will
further expand our HDTV offerings. During 2006, the number of Charter
customers with advanced digital set tops with HDTV or digital video
recording (DVR) capabilities increased by 45% year over year.
We are also pleased with the success of our video-on-demand service.
Charter OnDemand™ is now available to 75% of our digital video
customers, and we’re working to make it available to even more of our
customers. By adding new content and increasing customer awareness,
we drove a 55% increase in unique buyers in 2006 and a 56% increase in
total Charter OnDemand revenues. Charter OnDemand is changing the
way our customers watch TV, and we’re providing them with the choices
and control they desire.
Commercial and Advertising Revenues Climb
The commercial business market provides excellent opportunity for
growth. Charter’s heightened focus on providing video, Internet, and
telephone service to small and medium-sized businesses resulted in
commercial revenue growth of 16% in 2006. Charter’s advertising
sales business also continued to flourish, with revenue growth of 13%
in 2006. We are focused on the continued growth of our commercial
services and advertising sales business in 2007.
Streamlining and Simplifying Operations
During 2006, we completed the sales of geographically non-strategic cable
systems serving approximately 400,000 customers. Through these asset
sales, we improved the density of our service areas and reduced the number
of headends we operate by 45%. We also consolidated our operating
Serving our Customers
More Effectively
Asset sales and operational alignment
have improved the clustering of our
systems, enabling us to serve our
customers more effectively. During
2006, we reduced the number of
headends we operate by 45%, and
increased the number of customers
we serve per headend by 68%.
We expect these improvements
to provide additional operating
and capital efficiencies.
Headends Operated
2005 2006
720
393
100