Washington Post 2006 Annual Report Download - page 33

announced its intention to use the WiMAX standard in deploying a next-generation, mobile wireless broadband network,
which it estimates will reach 100 million people by the end of 2008. Also in 2006, a number of cellular telephone
providers, including Verizon Wireless and Sprint, introduced or expanded subscription services that deliver full-length
television programs or video clips directly to cellular telephones, although at present these services are capable of
supporting only a limited number of available video streams.
In 1999 the FCC amended its cable ownership rule, which governs the number of subscribers an owner of cable systems
may reach on a national basis. Before revision, this rule provided that a single company could not serve more than 30% of
potential cable subscribers (or ""homes passed'' by cable) nationwide. The revised rule allowed a cable operator to
provide service to 30% of all actual subscribers to cable, satellite and other competing services nationwide, rather than to
30% of homes passed by cable. This revision had the effect of increasing the number of communities that could be served
by a single cable operator and may have resulted in more consolidation in the cable industry. In 2001 the U.S. Court of
Appeals for the D.C. Circuit voided the FCC's revised rule on constitutional and procedural grounds and remanded the
matter to the FCC for further proceedings. The FCC has since opened a proceeding to determine what the ownership limit
should be, if any. If the FCC eliminates the limit or adopts a new rule with a higher percentage of nationwide subscribers a
single cable operator is permitted to serve, that action could lead to even greater consolidation in the industry.
In 1996 Congress repealed the statutory provision that generally prohibited a party from owning an interest in both a
television broadcast station and a cable television system within that station's Grade B contour. However Congress left the
FCC's parallel rule in place, subject to a congressionally mandated periodic review by the agency. The FCC, in its
subsequent review, decided to retain the prohibition for various competitive and diversity reasons. However in 2002 the
U.S. Court of Appeals for the District of Columbia Circuit struck down the rule, holding that the FCC's decision to retain the
rule was arbitrary and capricious. Thus there currently is no restriction on the ownership of both a television broadcast
station and a cable television system in the same market.
In 2005 the U.S. Supreme Court upheld the FCC's 2002 classification of cable modem service as an ""information
service.'' As a result, cable modem service is not subject to the full panoply of regulations applied to ""telecommunications
services'' or to ""cable services'' under the Communications Act, nor is it subject to state or local government regulation. In
the wake of the Supreme Court's decision, the FCC ruled in August 2005 that a telephone company's offering of digital
subscriber line (""DSL'') Internet access service is also an ""information service.'' At that time, the FCC adopted a general
policy statement that the providers of cable modem and DSL services should not interfere with the use of the Internet by their
customers, but it declined to adopt any specific rules in that regard. However, the FCC also initiated a rulemaking on what
consumer protection requirements should apply in the context of cable modem and DSL services. That rulemaking is
currently pending and its outcome is uncertain. The Company's Cable One subsidiary currently offers Internet access on
virtually all of its cable systems and is the sole Internet service provider on those systems. The Court's decision affirming the
FCC's classification of cable modem service removes some uncertainty surrounding the Company's ability to deliver
Internet access without facing substantially increased regulatory burdens, although legislation or regulations could still be
enacted or adopted that might restrict the Company's future ability to modify the way it provides cable modem service. In
particular, Congress has been considering whether to impose various ""net neutrality'' requirements that would limit the
ability of Internet access providers to prioritize the delivery of particular types of content, applications or services over their
networks.
Cable companies (including the Company's Cable One subsidiary) and others have begun to offer telephone service
using a technology known as voice over Internet protocol (VoIP) which permits users to make telephone calls over
broadband communications networks including the Internet. Depending on their equipment and service provider, some VoIP
subscribers can use a regular telephone (connected to an adaptor) to make and receive calls to or from anyone on the
public network. The Telecommunications Act of 1996 preempts state and local regulatory barriers to the offering of
telephone service by cable companies and others, and the FCC has used that federal provision to preempt specific state
laws that seek to regulate VoIP. Other provisions of the 1996 Act enable a competitor such as a cable company to
exchange voice and data traffic with the incumbent telephone company and to purchase certain features at reduced costs,
and these provisions have enabled some cable companies to offer a competing telephone service. In 2005 the FCC ruled
that a VoIP provider that enables its customers to make calls to and from persons who use the public switched telephone
network must provide its customers with the same ""enhanced 911'' or ""E911'' features that traditional telephone and
wireless companies are obligated to provide, and that rule was upheld by the U.S. Court of Appeals for the District of
Columbia Circuit in December 2006. The FCC took another step in extending certain requirements to cable modem
providers by ruling that Internet access providers and VoIP providers are subject to the requirements of the Communications
Assistance for Law Enforcement Act (CALEA), which requires covered carriers and their equipment suppliers to deploy
equipment that law enforcement can readily access for lawful wiretap purposes. Those requirements go into effect on
2006 FORM 10-K 17