Windstream 2008 Annual Report Download - page 96

(c) Effective on July 1, 2008, Windstream converted the majority of its remaining interstate rate-of-return regulated
operations to price-cap regulation. In conjunction with the approval, the Company changed its presentation of
certain wireline segment revenues and expenses to be consistent with the effects of price-cap regulation. Prior year
revenues and expenses were changed to reflect the current presentation and these changes had no impact on
segment income.
(d) Wholesale units include unbundled network elements and pay stations.
(e) Average revenue per customer per month is calculated by dividing total wireline revenues and sales by average
access lines in service for the period.
Access Lines
Customer access lines decreased by 5.2 percent during the twelve months ended December 31, 2008, which reflects
declines in residential, business and wholesale lines. During this period, the Company’s legacy operations lost
approximately 158,000 access lines, as compared to approximately 147,000 access lines lost in 2007. During the
twelve months ended December 31, 2008, the Company’s CTC operations lost approximately 7,000 access lines.
During the four month period ended December 31, 2007, the Company’s CTC operations lost approximately 1,000
access lines. These declines in access lines primarily reflect the effects of fixed line competition and wireless
substitution. As of December 31, 2008, approximately 60 percent of the Company’s total access lines had voice
competition, which increased approximately 5 percent from December 31, 2007. In 2009, the Company expects voice
competition to continue to increase at a modest pace similar to 2008.
To slow the decline of revenue from access line loss in 2009, the Company will continue to emphasize sales of
additional services and bundling of its various product offerings, including voice, high-speed Internet, and digital
satellite television into one convenient solution for its customers. Windstream’s Greenstreak product was launched
across all markets in the first quarter of 2007 to mitigate the impact of wireless competition in our markets by offering
high-speed Internet service along with measured local phone service that allows unlimited incoming calls, 911 access
and outgoing local calls for 10 cents a minute. Additionally, the Company announced in the first quarter of 2007 an
extension of an agreement with EchoStar Communications Corporation through mid-year 2010 to offer DISH Network
digital satellite television service to residential customers as part of a bundled product offering. Digital television
service bundled with Windstream voice and high-speed Internet service offers value and convenience for customers,
and is consistent with the Company’s strategy to bundle services as a communications and entertainment company. In
an effort to further develop enhanced services and bundled product offerings, the Company will continue to invest in its
network to offer faster speeds in its high-speed Internet offerings. As of December 31, 2008, the Company could
deliver speeds of 3Mb to 97 percent of its addressable lines. Additionally, speeds of 6Mb and 12Mb are available to 61
percent and 32 percent of its high-speed Internet addressable lines, respectively.
High-speed Internet
During the twelve months ended December 31, 2008 and 2007, the Company added approximately 107,000 and
215,000 high-speed Internet customers, respectively, including approximately 31,000 acquired from CTC in 2007. This
increased the Company’s high-speed Internet customer base to over 978,000 customers at December 31, 2008, which
represents a penetration rate of 32 percent of total access lines in service, and 44 percent of residential access lines in
service. As of December 31, 2008, approximately 75 percent of total access lines had broadband competition primarily
from cable service providers, relatively unchanged from December 31, 2007. In 2009, we expect the pace of high-
speed Internet customer growth to slow as the number of households without high-speed Internet service continues to
shrink. Competitive expansions primarily from cable facilities into our service areas are expected to slow in 2009, but
we could experience some increased competition from high-speed Internet offerings of wireless competitors.
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