Charter 2015 Annual Report Download - page 27

Download and view the complete annual report

Please find page 27 of the 2015 Charter annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

12
including our ability to comply with our debt covenants. See “— Regulation and Legislation — Video Services — Franchise
Matters.”
Markets
We operate in geographically diverse areas which are organized in regional clusters. These markets are managed centrally on a
consolidated level. Our eleven markets and the customer relationships within each market as of December 31, 2015 are as follows
(in thousands):
Markets
Total Customer
Relationships
California 705
Carolinas/Virginia 1,010
Central States 696
Michigan 696
Minnesota/Nebraska 375
Mountain States 409
New England 384
Northwest 583
Tennessee/Louisiana 956
Texas 228
Wisconsin 632
Competition
We face competition for both residential and commercial customers in the areas of price, service offerings, and service reliability.
In our residential business, we compete with other providers of video, high-speed Internet access, voice services, and other sources
of home entertainment. In our commercial business, we compete with other providers of video, high-speed Internet access and
related value-added services, fiber solutions, business telephony, and Ethernet services. We operate in a competitive business
environment, which can adversely affect the results of our business and operations. We cannot predict the impact on us of broadband
services offered by our competitors.
In terms of competition for customers, we view ourselves as a member of the broadband communications industry, which
encompasses multi-channel video for television and related broadband services, such as high-speed Internet, voice, and other
interactive video services. In the broadband communications industry, our principal competitors for video services are direct
broadcast satellite (“DBS”) and telephone companies that offer video services. Our principal competitors for high-speed Internet
services are the broadband services provided by telephone companies, including both traditional DSL, fiber-to-the-node, and fiber-
to-the-home offerings, as well as wireless data providers. Our principal competitors for voice services are established telephone
companies, other telephone service providers, and other carriers, including VoIP providers. At this time, we do not consider other
traditional cable operators to be significant competitors in our overall market, as overbuilds are infrequent and geographically
spotty (although in any particular market, a cable operator overbuilder would likely be a significant competitor at the local level).
We could, however, face additional competition from other cable operators if they began distributing video over the Internet to
customers residing outside their current territories.
Our key competitors include:
DBS
Direct broadcast satellite is a significant competitor to cable systems. The two largest DBS providers now serve more than 33
million subscribers nationwide. DBS service allows the subscriber to receive video services directly via satellite using a dish
antenna.
Video compression technology and high powered satellites allow DBS providers to offer more than 315 digital channels. In 2015,
major DBS competitors were especially competitive with promotional pricing for more basic services. While we continue to
believe that the initial investment by a DBS customer exceeds that of a cable customer, the initial equipment cost for DBS has