National Cable & Telecommunications Association 2008 Industry Overview

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N OVER A LL CA B L E I N DUST R Y STATI S TICS As of December 2007 except as noted

Total Homes Passed by Cable Video Service 1 Cable Provides 4 123,400,000 Basic Cable Customers 2 Cable Entertains 7 64,900,000 Cable Innovates 8 Basic Cable Penetration of Homes Passed 3 52.5% Cable Competes 10 Digital Video Customers 2 37,100,000 Cable Leads 13 Cable High-Speed Internet Customers 2 Cable Contributes 14 35,600,000 Cable Voice Customers 2 Cable Educates 16 15,100,000 Cable Cares 18 Total Number of Cable Operating Companies 4 1,212 National Cable Networks 5 565 2008 Annual Cable Revenue (estimate) 2 $79.1 billion Annual Franchise Fees Paid by Cable Industry (estimate) 6 $3 billion Total U.S. Housing Units 7 128,600,000

1 SNL Kagan, excludes estimate of overlap coming from cable over builders

2 SNL Kagan

3 Basic Cable Customers divided by Total Homes Passed by Cable Video Service

4 NIELSEN MEDIA RESEARCH FOCUS

5 Federal Communications Commission Video Competition Report (data as of 2006 contained in November 27, 2007 news release)

6 NCTA estimate

7 U.S. Census Bureau T HE S T ORY OF T HE CABLE The benefits of cable’s broadband

INDUS T RY is a remarkable story of infrastructure extend well beyond economics, entrepreneurs, risk-taking and an explosion of providing consumers more competition, choice new services and programming for consumers. and value. In the blink of an eye, cable phone Cable’s future is full of promise as America service has gained 15 million subscribers who enters into a new era – you could call it are saving billions annually. And networks Internet 3.0 – providing consumers even more. increasingly use the Internet and the broadband platform to ensure our customers experience Our industry’s core business of providing a what they want, wherever they want it. superior video experience that offers quality programming and increasing value continues to In 2008 we celebrate the first 60 years of be unsurpassed and to garner ever-increasing cable in America. Our industry got started ratings and awards. Our entire industry has in Arkansas, Oregon and Pennsylvania to embraced the high-definition revolution to an enhance reception of broadcast TV in hilly extent barely imaginable just a few years ago. regions. I’m quite certain no one ever imagined how cable would transform the entertainment, Cable’s development of the nation’s most information and communications experience for widely available broadband infrastructure millions of consumers. ensures that the industry’s economic impact is felt in every state and nearly every community. It’s a history that everyone in our industry Billions of dollars in private capital have led should be proud of and a legacy which we will to the creation of hundreds of thousands of continue to build upon. jobs. Over the past five years, cable industry employment directly or indirectly accounted for Kyle McSlarrow 3 PRESIDENT & CEO, NCTA nearly five percent of all net new jobs created in the U.S.

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N CABLE PROVIDES

With a $130 billion private capital investment over the past 12 years, cable has created the nation’s most extensive and robust broadband network in America. This technology platform provides American consumers with an unprecedented array of integrated entertainment, information and communications services.

The expanding variety of cable offerings includes more High-Definition (HD) television programming, an ever-wider assortment of HD and standard-definition movies and programs delivered “on demand,” increasingly higher-speed Internet connections, and state- of-the-art digital telephone service. Combined with advances in digital video recording and interactive programming guides, cable gives Americans unparalleled control over when, where and how they consume entertainment, communicate with each other, and seek information, while saving consumers and small businesses billions of dollars.

At the end of 2007: » there were nearly 65 million cable video households nationwide » more than 37 million customers enjoyed digital cable » more than 35 million customers relied on cable Internet connections » more than 15 million customers experienced the savings and convenience of cable’s digital telephone service

With peak download speeds as high as 50 Mbps – and the demonstrated ability to boost that performance by up to three times with a new technology called “wideband” – cable’s national broadband service is the fastest, most secure and feature-rich on the market, and it’s available to 92 percent of U.S. households.

Competition resulting from cable’s entrance into the residential and small business voice marketplace has already saved consumers more than $23 billion, including $13 billion in 2007

Homes Passed by Cable HDTV Service 2003 THR O UGH 2 0 0 7 Source: NCTA estimates based on company data

0 25 50 75 100 MILLIONS 4 2003 January 37 June 55 September 60 December 70 2004 March 84 September 90 2005 January 92 September 96 2007 March 100+

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N alone, according to a recent study by Microeconomic Consulting and Research Associates (MiCRA). The study also projects that households and small businesses could save a total of $111 billion over the next five years.

The cable industry has led the nation’s digital revolution, having last year reached the tipping point at which digital video customers surpassed those who subscribe to analog. Cable is now adding about one million digital customers each quarter and continues to introduce new digital features and services. Four years ago, there were only nine national cable program network channels available in HD. Today, there are over 75, with plans underway to launch dozens more HD channels in the coming months.

Nearly 14 million cable homes had HD-enabled set-top boxes at the end of 2007. HD service is available to more than 100 million homes passed by cable, which carries the HD signals of local broadcasters in 209 of the 210 U.S. television markets. By comparison, Direct Broadcast Satellite (DBS) provider, DirecTV, which aggressively touts its HD capacity, offers local HD channels in 65 television market areas and competitive DBS provider Dish Network in 43.

Cable’s ever-expanding menu of video on demand (VOD) offerings – with up to 10,000 titles available (most at no charge) – now includes Hollywood films available on demand the same day they are released on DVD and popular television series premiering on VOD before airing on linear television channels. VOD programming is now available to most of the 37 million digital cable customers, who ordered more than 3.3 billion on demand programs in 2007. Combined with the growing popularity of digital video recorders (DVRs), now in use by 11 million cable subscribers, and new interactive guides for finding and recording programs, these digital features are putting viewers in control of when and how they view cable programming.

Cable Industry Infrastructure Expenditures 1998 THR O UGH 2007 Source: SNL Kagan

0 3 6 9 12 15 18 BILLIONS 5 1998 $5.61 1999 $10.62 2000 $14.61 2001 $16.07 2002 $14.53 2003 $10.59 2004 $10.08 2005 $10.64 2006 $12.40 2007 $13.70

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N Broadcast Shares Shift to Cable 1998 THR O UGH 2007 Source: CAB 2008 TV Facts

= AD-SUPPORTED CABLE = ABC/CBS/NBC AFFILIATES = ALL OTHER TV SOURCES

0 20 40 60 TOTAL DAY SHARE

1998 37.4 27.6 35.0 1999 34.0 29.3 36.7 2000 33.0 28.9 38.1 2001 30.7 28.2 41.1 2002 28.4 27.3 44.3 2003 26.8 27.7 45.4 2004 26.2 27.3 46.5 2005 24.4 27.3 48.3 2006 23.5 27.0 49.5 2007 22.9 25.7 51.4

Price per Viewing Hour E X PAN D E D BAS IC CA B L E T E L E V I S ION S ERV ICE 1998 THR O UGH 2006 (not adjusted for inflation) Average basic cable rates (per Kagan Research) divided by average basic cable network viewing time (CAB) Source: SNL Kagan

20¢ 21¢ 22¢ 23¢ 24¢ 25¢ 26¢

1998 24.52¢ 1999 24.85¢ 2000 24.90¢ 6 2001 25.37¢ 2002 25.16¢ 2003 24.78¢ 2004 24.64¢ 2005 24.20¢ 2006 24.52¢

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N CABLE E NTERTAINS

Despite the broadening scope of cable’s digital communication services and technologies, the industry has maintained laser-like focus on its core offerings of television programming. The cable industry continues to invest billions of dollars to improve and expand programming choices, and cable viewership continues to grow. For the sixth consecutive year, ad-supported cable gained a larger share of the primetime viewership, earning a 56 percent share in the February sweeps, up from 51.5 percent in February 2007. At the same time, the seven broadcast networks saw their share decline to 41.8 percent from 48 percent the previous year. Cable viewership now regularly exceeds the collective audience levels of broadcast TV across virtually all segments of the viewing day and all demographics, according to analysis of Nielsen data, plus same-day ratings estimates.

By the end of the 2006-2007 television season, viewing of ad-supported basic cable programming – as a proportion of all TV households – grew by more than two and a half times, compared with the 1994-1995 season. Last season the aggregate total day viewing of ad-supported cable networks reached 51 percent, exceeding the combined viewership of all other television sources. Cable’s share in primetime averages an even higher 57 percent.

And the critics continue to validate viewers’ choices. In 2007, cable networks earned another 13 George Foster Peabody Awards, the outstanding achievement awards given annually by the University of Georgia’s Grady College of Journalism. Cable also claimed 42 Primetime Emmy Awards in 2007 and dominated the 65th Annual Golden Globes, winning 10 of the 11 television categories.

By the end of 2006, the number of national basic and digital cable programming networks had grown to 565 from 308 just four years earlier, or three times the number operating in 1997 and five times the number in operation in 1994. As a measure of the industry’s commitment to programming quality, the annual spending on programming by basic networks has doubled in the last five years, hitting $18.8 billion in 2007, up from $1.4 billion in 1990. The top 20 cable networks spent an average of $566 million per network last year, compared with $321 million in 2002 and $160 million in 1997.

Of course, higher quality cable programming yields greater consumer value. And, an analysis of the best measure of value for video service – price per viewing hour – shows an inflation- adjusted decline of 15.4 percent between 2001 and 2006. The expansion of cable networks 7 and programming also means that the real price per channel for cable service declined 5.3 percent over the past decade.

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N CABLE I NNOVATES

Technology investment and innovation is the hallmark of the cable industry. Cable operators invested more than $13 billion to upgrade infrastructure in 2007, bringing industry-wide capital expenditures to more than $130 billion since Congress passed the 1996 Telecommunications Act. Technology is the foundation of all the benefits that have customers flocking to cable: HD television, lightning-fast broadband, video on demand, advanced digital telephone service, plus the ability of consumers to use devices available at retail – with a myriad of new features and functions – to access cable’s video, broadband and phone service.

Key to cable’s ability to deliver more HD programming and VOD, even-faster Internet connections and more advanced digital telephone services are a pair of innovations known as wideband and switched digital video. Using a new generation of Data Over Cable Service Interface Specifications – known as DOCSIS 3.0 – cable operators are able to bond several channels together to extend broadband into wideband and increase cable Internet access speeds exponentially.

At the 2007 Cable Show, Comcast CEO Brian Roberts demonstrated a wideband connection by downloading all 32 volumes of the Encyclopedia Britannica in less than four minutes, at speeds greater than 150 Mbps. That demonstration used only four channels bonded together, though that same wideband technology is capable of bonding together many more. In April 2008, Comcast announced that it had introduced an initial deployment of wideband technology in the Minneapolis – St. Paul area, with plans to expand the product to other market areas before the end of the year.

Just as dial-up Internet connections have given way to broadband, wideband technology promises to drive a “Third Internet Revolution” comprised of new web-based applications limited only by the imaginations of application developers and consumers. Cable’s hybrid fiber-coax network is already capable of deploying wideband in a much more cost-effective manner than that available to competitors and cable is the most extensive network available nationwide, covering 92 percent of all American households.

Equally important will be the expanded use of switched digital video, a technology that enables cable operators to transmit channels to customers on an as-needed basis, rather 8 than dedicating bandwidth to channels that aren’t being viewed at a particular point in time. This switched technology will help conserve channel capacity by allowing cable operators to reclaim much of the bandwidth used currently by analog video channels. The recovered capacity can be used for deployment of wideband, more HD channels and on demand content, as well as innovative new services and interactive features that promise to dramatically improve customers’ enjoyment of, and satisfaction with, cable services.

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N Cable Broadband Availability PERC E NTA G E OF U . S . HO USEHOLDS PA S S E D B Y C A B L E H S I S ERV ICE 2000 THR O UGH 2 0 0 8 ( E S TIMATE) S ource: SNL Kagan and U.S. Census Bureau

0 25 50 75 100 PERCENTAGE

2000 46 2001 65 2002 71 2003 81 2004 87 2005 90 2006 91 2007 92 2008 93 (ESTIMATE)

The combination of more HD programming, VOD, faster wideband Internet connections and advanced digital telephone service delivers even more value to customers when coupled with innovative consumer electronic devices that will soon be available at retail stores and provides access to these cable services. And thanks to cable’s tru2wayTM technology, the interactivity that consumers love so much on the Internet will soon become an everyday reality on their TV sets as well.

Tru2way (formerly called OpenCableTM ) is a software platform built into televisions, set-top boxes and other devices that enables them to access cable services without the need for a cable operator-supplied set-top box. This technology enables cable companies and other interactive television service and application developers to “write” interactive applications once and see them run successfully on any device that supports the specification.

Existing applications include interactive guides, “start over” applications and games; while future applications will include interactive advertisements, chat, web browsing and interactive home shopping. Devices built with tru2way technology and purchased at retail locations will be able to access and receive interactive applications in nearly every U.S. market. Major cable operators have committed to support the tru2way platform on systems covering more than 90 million U.S. homes by the end of 2008.

More than a dozen of the world’s leading consumer electronics manufacturers – including 9 Panasonic, Samsung and LG – have signed the tru2way license to make two-way retail devices. And four of the world’s leading consumer electronics companies, representing more than 28 percent of global television sales, demonstrated tru2way-based products at the Consumer Electronics Show in January 2008. In another significant milestone, in 2007 Time Warner Cable began installing (in New York City) tru2way set-top boxes that were manufactured by Samsung.

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N C A B L E C O M P ETES

Competition is the lifeblood of a successful and thriving marketplace, and the cable industry faces stiff competition across all the markets it serves. The consumer is the beneficiary, enjoying more choice, greater convenience and better value than ever before.

Video — Competition in the residential television marketplace continues to intensify. The two major Direct Broadcast Satellite (DBS) providers – DirecTV and Dish Network – now serve more than 30 million subscribers, more than 31 percent of the multichannel video marketplace, while the nation’s two largest telephone companies, Verizon and AT&T, are gaining market share with their video offerings. Verizon now has more than one million subscribers to its FiOS TV service, having added 226,000 in the fourth quarter of 2007 alone. AT&T had only 231,000 subscribers to its U-verse digital television service at year-end, though its fourth-quarter growth was 83 percent, and the telephone giant expects to reach one million subscribers by the end of 2008.

In November 2007, the Federal Communications Commission (FCC) again reported, “competition in the delivery of video programming services has provided consumers with increased choice, better picture quality and greater technological innovation.” The FCC said that almost all consumers are able to obtain programming through over-the-air broadcast television, a local cable system and at least two DBS providers. In addition to noting the growth of telephone company video services, the FCC also highlighted the growth in web-based video provided over the Internet, which “continues to increase significantly each year,” the report said.

High-Speed Internet — Many of those downloaded web-based videos were carried over cable broadband connections, yet competition to provide broadband Internet access to homes and small businesses remains fierce. Incumbent telephone giants – most notably AT&T and Verizon, but also others – have shifted their focus from Digital Subscriber Line (DSL)

Cable High-Speed Internet Customers 2001 THR O UGH 2007 Source: SNL Kagan

0 10 20 30 40 10 MILLIONS

2001 7.3 2002 11.6 2003 16.3 2004 21.4 2005 26.1 2006 31.1 2007 35.6

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N Cable Voice Customers 2001 THR O UGH 2 0 0 7 Source: SNL Kagan

0 2 4 6 8 10 12 14 16 MILLIONS

2001 1.5 2002 2.5 2003 3.0 2004 3.8 2005 5.9 2006 9.5 2007 15.1

services to fiber optic network deployment to better compete with cable’s hybrid fiber-coax network. At the end of 2007, there were approximately 62 million residential broadband customers – 55 percent subscribed to cable’s broadband service, 42 percent received broadband service from a telephone provider, and the remainder received broadband from a satellite or fixed wireless provider.

In addition to heightened competition from incumbent telecom companies, emerging Internet access technologies such as third and fourth generation cellular wireless networks, satellite-delivered broadband and high-powered WiMAX services will increasingly provide competition going forward.

Digital Telephone — Just as the telephone giants are aggressively seeking a share of the residential television marketplace, cable continues to expand its footprint in residential and business telephone services by delivering both sophisticated new features and lower costs for consumers. In 2007 alone, more than 5.5 million customers switched to cable telephone service, bringing the nationwide total to 15.1 million, an annual growth rate of nearly 59 percent for the year.

Cable’s competition with the incumbent phone companies (which still controlled more than 83 percent of the market for voice services according to the FCC’s December 2007 report on local phone competition) has already saved consumers more than $23 billion and could save households and small businesses a total of $111 billion over the next five years, according to a 11 recent study by Microeconomic Consulting and Research Associates (MiCRA).

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N Digital Cable Customers 2001 THR O UGH 2007 Source: SNL Kagan

0 10 20 30 40 MILLIONS

2001 15.2 2002 19.2 2003 22.2 2004 25.0 2005 28.5 2006 32.6 2007 37.1

Digital Video Penetration DIG ITA L CA B L E C U S TOM ERS/ T OTA L BAS IC CUSTOM ERS Source: SNL Kagan

0 10 20 30 40 50 60 PERCENT

March 2002 23.3 March 2003 30.0 March 2004 35.2 March 2005 39.8 March 2006 45.1 March 2007 51.8 March 2008 58.8 ( ESTIM ATE )

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N CABLE L EADS

Leadership in the nation’s digital revolution requires more than just providing the enabling technology and services. The cable industry leads through a range of consumer education initiatives, none more critical and timely than its key role in the nation’s transition from analog to digital television (DTV), scheduled to be completed after February 17, 2009.

In September 2007 – 18 months in advance of the date the nation’s local television stations will cease broadcasting traditional analog signals and transmit only in digital – the U.S. cable industry launched a $200 million consumer education campaign (including English and Spanish language TV advertising) designed to reach millions of cable and non-cable viewers with useful information about the DTV transition. (The ads can be viewed at www.ncta.com/ DTVSpots.)

The advertising campaign, which will run continuously through February 2009, is accompanied by English and Spanish language information available online, along with other cable company efforts to communicate with consumers in their local areas about the digital transition. These new initiatives are part of cable’s ongoing participation in the DTV Transition Coalition (www.DTVtransition.org).

All this, despite the fact that the 65 million households that subscribe to cable’s video service will continue to receive broadcast signals after the DTV transition (as will the nearly 32 million subscribers to satellite or telephone company digital TV services). Viewers most adversely affected will be the 15 million households that still rely solely on over-the-air television signals, as well as millions more households that are wired for multichannel video but currently receive some over-the-air signals on one or more TV sets that are not connected to a video service.

Another key leadership initiative includes the PointSmart. ClickSafe. campaign, developed by Cable in the Classroom and the NCTA to promote online safety and media literacy. Launched in June 2007, the program is designed to ensure that children enjoy a safe and fulfilling Internet experience. PointSmart. ClickSafe. is a “one-stop shop” intended to unify the industry’s efforts to offer consumers basic educational materials, simple training tips and easy-to-use controls so that families and children can make safe and appropriate choices while using the Internet. 13 Key elements of the initiative include: the instructional website PointSmartClickSafe.org, free parental control software, a national online safety summit in June 2008, partnerships with community organizations and an industry Online Code of Conduct. Under this code, cable operators serving more than 90 percent of cable households and more than 200 cable networks have pledged to provide their customers and viewers with a variety of tools and resources to ensure a safe online experience.

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N CABLE CONTRIBUTES

Cable’s impact on consumers and communities can also be found by looking beyond delivery of the services it offers. Cable is a local business that produces jobs in nearly every community, and the industry’s massive investment of capital has produced a substantial positive impact on the U.S. economy.

In 2007, cable operators with 7,000 local cable systems directly employed 229,000 people across all 50 states who earned over $14 billion in compensation. Cable industry suppliers provide another 136,000 jobs, representing personal income of $9.4 billion. All told, the cable industry directly and indirectly employed 1.5 million community-based workers in 2007, generating nearly $62 billion in personal income. Gross economic output attributable to cable totals nearly $227 billion.

Cable Networks’ Programming Expenditures 1998 THR O UGH 2007 Source: SNL Kagan

0 5 10 15 20 25 BILLIONS

1998 $7.12 1999 $8.24 2000 $9.13 2001 $10.08 2002 $11.40 2003 $12.92 2004 $14.65 2005 $15.88 2006 $18.34 2007 $20.32

National Video Programming Services 2001 THR O UGH 2006 Source: FCC, “Annual Report on the Status of Video Competition”

0 200 400 600 14 2001 287 2002 308 2003 339 2004 390 2005 531 2006 565 2007 Not yet released.

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N Since 2002, employment by cable operators alone has grown by about 53,000 jobs. Both direct and indirect employment attributable to the cable industry has increased by almost 367,000 jobs or nearly five percent of all net new jobs created by the U.S. economy over the five-year period.

Cable’s economic impact is spread throughout all major sectors of the U.S. economy. The largest impact being realized in the information, services and manufacturing sectors, each of which are critical to both the growth and the overall health of the economy. In addition to the purely economic impacts described above, the cable industry has led the development of the country’s broadband infrastructure, contributing to the creation of a truly competitive telecommunications marketplace. As competition has spurred advances in performance of the broadband infrastructure, this critical enabler of the information economy continues to deliver improvements in productivity and innovation across the entire U.S. economy.

The cable industry annually contributes substantially to charities, non-profit organizations and state/municipal governments on a nationwide basis. In 2007, cable operators paid an estimated $3 billion in franchise fees directly to local municipalities for use in a wide variety of civic improvement and community affairs activities around the country. In addition, sales and use taxes associated with cable subscriptions amounted to more than $1.7 billion in revenues to state and local government entities. Cable operators and programming networks also contributed public service announcements as well as cash and “in-kind” donations to local and national non-profit organizations in 2007 estimated to have exceeded $1.5 billion.

Cable Operators’ Programming Expenditures 1998 THR O UGH 2007 Source: NCTA estimates based on data from SNL Kagan and the U.S. Copyright Ofﬁce

0 5 10 15 20 25 BILLIONS

1998 $7.47 1999 $8.00 2000 $8.88 2001 $9.26 2002 $10.99 2003 $11.58 2004 $12.68 15 2005 $15.80 2006 $20.59 2007 $24.77

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N CABLE E DUC ATES

After nearly two decades, the industry-wide education foundation, Cable in the Classroom (CIC), continues to serve more than 80,000 schools and libraries with more than 500 hours each month of commercial-free educational programming and complimentary cable and broadband services, which is valued at $125 million annually. In addition to enhancements to its broadband learning games and new VOD and podcast content delivery, CIC continues to play a national leadership role with its awards program, parent opinion polls, media literacy and Internet safety initiatives. Highlights for 2008 include: » Cable’s Leaders in Learning Awards: Now in its fourth year, Cable’s Leaders in Learning Awards will be celebrated in June 2008 at the Library of Congress in Washington, DC. The awards recognize outstanding educators, administrators and other community leaders at the forefront of innovation in education and honor individuals who implement creative learning programs in their communities. » Media Literacy and Internet Safety: In addition to collaborating with the NCTA on the PointSmart. ClickSafe. initiative, CIC also conducts an annual poll of parents, asking them about their opinions and actions related to their children’s Internet usage, which garnered national media attention in the fall and will be repeated for the third time this year. » VOD Partnership: CIC is partnering with Cox Communications and The History Channel to offer nearly 20 hours of free American history programming to Cox Digital Cable subscribers in Northern Virginia through Cox’s on demand service in a pilot project with potential for application to cable systems in other parts of the country. » eLECTIONS Broadband Game: The new version of eLECTIONS: Your Adventure in Politics game, an online learning game that lets players call the political shots, has been re-launched for 2008. The 3-D broadband adventure uses video clips from cable network programming partners – CNN Student News, History and C-SPAN – and interactive tools allowing kids and adults to experience a self-directed run for the U.S. Presidency, educating players about the political process and the power of one vote. The game demonstrates how broadband technology – with its capacity to deliver video, audio, student interactivity, design and content – can support active, meaningful and memorable learning both inside and outside of the classroom. » CIC Podcast Series: CIC’s podcast channel – dubbed Kids. Cable. Learning. – 16 offers interviews with leaders in education, technology and cable. Educators, cable network personalities and policymakers discuss how new technologies and content are being used to help better prepare young people for the 21st century. With new episodes posted regularly, the podcast channel offers insights from innovative leaders in education and cable available anytime and anywhere, all for free.

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N Multichannel Video Programming Distributor Customers 1998 THR O UGH 2007 Source: SNL Kagan; NCTA estimates

0 20 40 60 80 100 MILLIONS

1998 76.6 1999 80.4 2000 84.6 2001 87.0 2002 87.6 2003 89.4 2004 91.8 2005 94.0 2006 95.6 2007 97.6

= C ABLE CUSTOMERS = NON-CABLE MVPD CUSTOMERS

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N CABLE CARES

Cable companies annually contribute more than $1 billion to a wide range of philanthropic, charitable and public service projects benefiting the thousands of local communities that they serve.

» Among the broader, ongoing efforts is the industry’s Cable Positive initiative, in which the industry has contributed more than $1 billion in commercial airtime to increase public awareness of HIV/AIDS. In addition more than $18 million in cash has been raised to fund 250 AIDS service organizations in 38 states to promote the prevention of HIV/ AIDS.

» Cable in the Classroom (CIC), the industry’s non-profit education foundation and a leading advocate for media literacy, continues in its 19th year to serve tens of thousands of schools and libraries with more than 500 hours each month of commercial- free, copyright-cleared educational programming and complimentary cable and high-speed Internet service.

» Cable’s Walter Kaitz Foundation contributes more than $1 million annually to industry organizations – including the National Association for Multi-Ethnicity in 18 Communications, Women in Cable Telecommunications and the Emma Bowen Foundation – that promote diversity in the workplace and cable’s executive suites.

2008 Cable Industry Overview NATIO N AL CABLE & T ELEC OMMUN I C ATIO N S A SSOC IATIO N » New in 2008 is the industry’s “CableCares” initiative, a community service project to assist ongoing recovery efforts in New Orleans after Hurricane Katrina. CableCares focuses on rebuilding school playgrounds and libraries along with other enhancements to schools in New Orleans. Cable has enjoyed a long partnership with the City of New Orleans as The 2008 Cable Show marked the ninth time that the industry’s annual trade show has been held in the Big Easy.

Projects affiliated with CableCares include: » Collecting thousands of new books and educational videos to replenish the shelves of New Orleans’ school libraries and classrooms. Through a variety of efforts, several thousand books are expected to be donated. » Building two new playgrounds at the Fannie C. Williams and Sarah T. Reed Elementary Schools in East New Orleans. The playgrounds – designed by community leaders, residents and the students themselves – will be built in one day by 200 volunteers from the cable industry and the community. » Providing wiring and equipment necessary to turn Banneker Elementary School into a state-of-the-art broadband school with advanced cable services, including digital and HD cable, high-speed Internet service plus new TVs, DVD players and more. » Giving the grounds of Sarah T. Reed High School in East New Orleans a much-needed facelift, which includes extensive painting, landscaping and other work in the campus’ main entrance, student entrance and the student courtyard areas.

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