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Cable Academy, 2010

Cable Academy, 2010. Agenda. Macro Trends & Performance, 2007 – 2009 Recent Initiatives Q & A. Overall Growth, 2007 - 2009. Average Rate of Growth, 2007 - 2009. Revenue Growth By Product Line. Average Growth Rate By Product, 2007 - 2009. % of Total Revenue Growth, 2007 - 2009. 2006.

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Cable Academy, 2010

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  1. Cable Academy, 2010

  2. Agenda • Macro Trends & Performance, 2007 – 2009 • Recent Initiatives • Q & A

  3. Overall Growth, 2007 - 2009 Average Rate of Growth, 2007 - 2009

  4. Revenue Growth By Product Line Average Growth Rate By Product, 2007 - 2009 % of Total Revenue Growth, 2007 - 2009

  5. 2006 • 2009 Gross Margin Trends, 2006 - 2009 • Overall Gross Margin flat at 65% despite Video Margin erosion Data Margin Phone Margin Video Margin 91.2% 89.9% 67.4% 61.0% 60.7% 57.4%

  6. Monthly Operating Costs Per RGU Focus on cost effectiveness has enabled operational scale as we grow Avg. Reduction: (1.1%) (20%) (13%) (16%) RGUs include EBU, Digital, HSD and Phone units.

  7. Our Formula • Improve our value through new product launches and enhancements • Focus on proven and practical value-adds • Targeted acquisition and retention strategies • Getting and keeping the ‘right’ customers • Continual focus on operational performance improvements • Customer centered approaches deliver ‘win win’ cost effectiveness

  8. Recent Initiatives • New Product Launches: • New Bundle Suite & Offers • Targeted acquisition and retention: • Credit Scoring • Operational performance improvement • Reducing Advanced Services Talk Time

  9. New Bundles: What We’ve Been Up To • Created new Digital Value service • Response to a key product gap vs. Satellite • Key building block for new bundles • Launched 3 Double Plays and 3 Triple Plays • Good, Better, Best approach • Created Loyalty Pricing for bundles • Allows existing customers to upgrade into bundles

  10. Why We Made Changes • Competitive Response • Lacked sub $70 digital product • Pressure from Telco hybrid bundles • Consumer Requests • Desire to be “bundled” • Strong demand for Video & Net bundles • Financial Benefits • Bundled customers = lower churn • New bundles and promotions offer improved margins

  11. Phone +$25 Phone +$25 Phone +$25 Triples Select $99.99 Ideal $119.99 Ultimate $134.99 New Bundle Suite Summary “Good” “Better” “Best” Digital Value Service Preferred Internet Digital Plus Service Max Internet Digital Plus Service Max Internet +$20 +$15 Showtime DVR Select $74.99 Ideal $94.99 Ultimate $109.99 Doubles

  12. Loyalty Pricing Overview • Same bundle contents and names, different promotional discounts: • Triple Play are $15 more • Double Plays are $5 more • Loyalty prices represent a $20-$25/mo savings off of retail • Simple eligibility rules for standard vs. loyalty prices: • Adding 1 RGU = loyalty prices; Adding 2 RGUs = standard prices Select Double Play $79.99 Ideal Double Play $99.99 Ultimate Double Play $114.99 Select Triple Play $114.99 Ideal Triple Play $134.99 Ultimate Triple Play $149.99

  13. Early Results Are Encouraging • Nearly 2,000 bundle sales within first month • Double Play and Triple Play sales evenly split • Strong sell-in of higher-end bundles • Approx $10 Triple Play ARPU lift on new connects • More than 15% increase in call center RGU upgrades • Beginning to see improvements in close rates Standard Triple Plays Loyalty Triple Plays

  14. Credit Scoring: What We’ve Been Up To • Implemented Credit Scoring in July 2009 • Use Equifax credit risk model integrated directly into CSG workflows • Chose wireless credit model, not same as FICO • All new connects and restarts across all sales channels are scored • Current customers wishing to upgrade, transfers and seasonal restarts do not get scored • Customers must score 600 or higher to pass • Failing customers must pay $100 deposit if they wish to connect

  15. Why We Made Changes: • 40% of our new connects will disconnect before their 1 year anniversary • Half of those disconnects - 20% of the sample - were non-pays • Half of non-pays – or 10% of all new connects - disconnect within 1st 120 days • 60% of Direct Sales new connects are gone within 12 months • Each non pay disconnect costs us over $500 in capital and operating investment losses! • Bad debt, equipment losses, cost to acquire, install & disconnect costs, etc.

  16. Results: Disconnect Profile By Score Level % Disconnected after 90 – 120 days in service % of Population 59% 15% 11%

  17. Results: Key Metrics • Reduced monthly connect volume by 20 – 25% • Non Pay Churn down 30% Year over Year • Some systems have seen 50% reductions • Bad debt declined from 1.2% of revenue in Q4 08 to .8% of revenue in Q4 09 • Billing call volume dropped by over 40%

  18. Reducing Advanced Services Talk Time • Reduced Average Handle Time by approx. 40 sec / call

  19. Q & A

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