Time Warner Cable 2008 Annual Report Download - page 27

In 2005, the FCC reaffirmed its earlier decision rejecting multi-casting (i.e., carriage of more than one program
stream per broadcaster) requirements with respect to carriage of broadcast signals pursuant to must-carry rules.
Certain parties filed petitions for reconsideration. To date, no action has been taken on these reconsideration
petitions, and TWC is unable to predict what requirements, if any, the FCC might adopt.
In September 2007, the FCC adopted rules that will require cable operators that offer at least some analog
service (i.e., that are not operating “all-digital” systems) to provide subscribers down-converted analog versions of
must-carry broadcast stations’ digital signals. In addition, must-carry stations broadcasting in HD format must be
carried in HD on cable systems with greater than 552 MHz capacity; standard-definition signals may be carried only
in analog format. These rules will become effective after the broadcast television transition from analog to digital
service for full power television stations, and are currently scheduled to terminate after three years, subject to FCC
review. Congress recently extended the digital transition deadline from February 17, 2009 to June 12, 2009.
The Communications Act also permits franchising authorities to negotiate with cable operators for channels
for public, educational and governmental access programming. It also requires a cable system with 36 or more
activated channels to designate a significant portion of its channel capacity for commercial leased access by third
parties, which limits the amount of capacity TWC has available for other programming. The FCC regulates various
aspects of such third-party commercial use of channel capacity on TWC’s cable systems, including the rates and
some terms and conditions of the commercial use. These rules are the subject of an ongoing FCC proceeding, and
recent revisions to such rules are stayed pursuant to an appeal in the U.S. Court of Appeals for the Sixth Circuit. The
FCC also has an open proceeding to examine its substantive and procedural rules for program carriage. TWC is
unable to predict whether any such proceedings will lead to any material changes in existing regulations.
In connection with certain changes in TWC’s programming line-up, the Communications Act and FCC
regulations also require TWC to give various kinds of advance notice. Under certain circumstances, TWC must give
as much as 30 days’ advance notice to subscribers, programmers and franchising authorities, and notice may have to
be given in the form of bill inserts, on-screen announcements and/or newspaper advertisements. DBS operators and
other non-cable programming distributors are not subject to analogous duties.
As part of the FCC’s collection of information for its Video Competition Report, the FCC released on
January 16, 2009 a notice of inquiry, requiring that cable operators submit to the agency information concerning the
number of homes that their systems pass and information concerning their subscribers in order to determine whether
the FCC’s so-called “70/70” test has been met. If the FCC were to determine that cable systems with 36 or more
activated channels are available to 70% of households within the United States and that 70% of those households
subscribe to such systems, it may have the authority to promulgate certain additional regulations covering cable
operators.
Ownership limitations. There are various rules prohibiting joint ownership of cable systems and other kinds
of communications facilities, including local telephone companies and multichannel multipoint distribution service
facilities. The Communications Act also requires the FCC to adopt “reasonable limits” on the number of subscribers
a cable operator may reach through systems in which it holds an ownership interest. In December 2007, the FCC
adopted an order establishing a 30% limit on the percentage of nationwide multichannel video subscribers that any
single cable provider can serve. This rule is now under appellate review. The Communications Act also requires the
FCC to adopt “reasonable limits” on the number of channels that cable operators may fill with programming
services in which they hold an ownership interest. The matter remains pending before the FCC. It is uncertain when
the FCC will rule on this issue or how any regulation it adopts might affect TWC.
Pole attachment regulation. The Communications Act requires that utilities provide cable systems and
telecommunications carriers with non-discriminatory access to any pole, conduit or right-of-way controlled by
investor-owned utilities. The Communications Act also permits the FCC to regulate the rates, terms and conditions
imposed by these utilities for cable systems’ use of utility poles and conduit space. States are permitted to preempt
FCC jurisdiction over pole attachments through certifying that they regulate the terms of attachments themselves.
Many states in which TWC operates have done so. Most of these certifying states have generally followed the FCC’s
pole attachment rate standards and guidelines. The FCC or a certifying state could increase pole attachment rates
paid by cable operators. In addition, the FCC has adopted a higher pole attachment rate applicable to pole
attachments made by companies providing telecommunications services. The applicability of and method for
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