Cablevision 2012 Annual Report Download - page 19

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authorities. Federal law prohibits our franchising authorities from granting an exclusive cable franchise
to us, and they cannot unreasonably refuse to award an additional franchise to compete with us. The
states in which we operate, New York, New Jersey and Connecticut, have enacted comprehensive cable
regulation statutes that are applicable to cable operators and other providers of video service, such as
Verizon and AT&T. Although the terms of franchise agreements differ from jurisdiction to jurisdiction,
they typically require payment of franchise fees and contain regulatory provisions addressing, among
other things, service quality, cable service to schools and other public institutions, insurance, and
indemnity. State and local franchising authority, however, must be exercised consistently with the
Federal Cable Act, which sets limits on franchising authorities' powers. It restricts franchising authorities
from imposing franchise fees greater than 5% of gross revenues from the provision of cable television
service, prohibits franchising authorities from requiring us to carry specific programming services, and
protects us in seeking franchise renewals by limiting the factors a franchising authority may consider and
requiring a due process hearing before denial of renewal.
Pricing and Packaging. The Federal Cable Act and the FCC's rules regulate the rates that cable operators
may charge for basic video service, equipment and installation. None of these rules applies to cable
systems that the FCC determines are subject to effective competition, or where franchising authorities
have chosen not to regulate rates. In both our New York metropolitan service area and Optimum West
service area cable television systems, the FCC has made "effective competition" findings in the majority
of our communities covering substantially all of our customer base.
In areas not subject to effective competition, the Federal Cable Act and the FCC's rules also require us to
establish a "basic service" package consisting, at a minimum, of all local broadcast signals that we carry,
as well as, if the locality requests, all public, educational and governmental access programming carried
by our systems. All subscribers are required to purchase this tier as a condition of gaining access to any
other programming that we provide. From time to time, Congress or the FCC may consider imposing
new pricing or packaging regulations, including proposals requiring cable operators to offer programming
services on an unbundled basis rather than as part of a tier or to provide a greater array of tiers to give
subscribers the option of purchasing a more limited number of programming services.
Must-Carry/Retransmission Consent. Cable operators are required by the "must carry" provisions of
federal law to carry, without compensation, the programming transmitted by most local broadcast
stations, and, in cable systems that are not fully digital, to offer analog-only customers low-cost set-top
boxes to make those signals "viewable".
Alternatively, local television stations may elect retransmission consent. Stations making such an
election give up their must-carry right and negotiate with cable systems the terms on which the cable
systems carry the stations. Cable systems generally may not carry a broadcast station that has elected
retransmission consent without the station's consent. The terms of retransmission consent agreements
frequently include the payment of compensation to the station. A substantial number of local broadcast
stations currently carried by our cable television systems have elected to negotiate for retransmission
consent. While we currently have retransmission consent agreements with all such broadcast stations, the
potential remains for carriage of such stations to be discontinued if any of such agreements is not renewed
following its expiration.
In the wake of publicized disputes between several cable operators and broadcasters, several members of
Congress have expressed concern that current retransmission consent requirements and practices have had
a negative effect on consumers, and stated that it is time for Congress to reexamine those requirements.
Other members of Congress have suggested that binding arbitration may be an appropriate means of
resolving such disputes. The FCC has initiated a proceeding to consider changes to its rules governing
retransmission consent negotiations.
Ownership Limitations. Congress has required the FCC to set a national limit on the number of
subscribers a cable company can serve, and a limit on the number of channels on a cable television