Washington Post 2007 Annual Report Download - page 32

(which each currently serve more than 80,000 basic video subscribers) are located on the Gulf Coast of Mississippi
and in the Boise, ID, area.
Cable ONE continued its introduction of its voice over Internet protocol (“VoIP”), or digital telephone, service in 2007.
At year-end, Cable ONE provided VoIP service to 58,640 customers, and the service is currently available to 90% of
the homes passed.
In December 2006, Cable ONE purchased in the FCC’s Advanced Wireless Service auction approximately 20 MHz
of spectrum in the 1.7 GHz and 2.1 GHz frequency bands in areas that cover more than 85% of the homes passed by
Cable ONE’s systems. This spectrum can be used to provide a variety of advanced wireless services, including fixed
and mobile high-speed Internet access using WiMAX and other digital transmission systems. Licenses for this spectrum
have an initial 15-year term and 10-year renewal terms. Licensees will be required to show that they have provided
substantial service by the end of the initial license term, but there are no interim construction or service requirements.
Cable ONE is evaluating how best to utilize its spectrum, but has no plans to offer any wireless services in the
immediate future.
Regulation of Cable Television and Related Matters
The Company’s cable, Internet, and voice operations are subject to various requirements imposed by local, state and
federal governmental authorities. The regulation of certain cable television rates pursuant to procedures established by
Congress has negatively impacted the revenues of the Company’s cable systems. Many of the other legislative and
regulatory matters discussed in this section also have the potential to adversely affect the Company’s cable television,
Internet, and voice businesses.
Cable Television
The Cable Television Consumer Protection and Competition Act of 1992 (the “1992 Cable Act”) requires or authorizes
the imposition of a wide range of regulations on cable television operations. Three major areas of regulation are: (i) the
rates charged for certain cable television services; (ii) required carriage (“must-carry”) of some local broadcast
stations; and (iii) retransmission consent rights for commercial broadcast stations.
Franchising. As a condition to their ability to operate, the Company’s cable systems have been required to obtain
franchises granted by state or local governmental authorities. Those franchises typically are nonexclusive and limited in
time, contain various conditions and limitations and provide for the payment of fees to the local authority, determined
generally as a percentage of revenues. Additionally, those franchises often regulate the conditions of service and
technical performance and contain various types of restrictions on transferability. Failure to comply with all of the terms
and conditions of a franchise may give rise to rights of termination by the franchising authority.
Rate Regulation. In 1993, the FCC adopted regulations that permitted local franchising authorities or the FCC to
regulate rates charged for certain levels of cable service, equipment and service calls. Among other things, the
Telecommunications Act of 1996 expanded the definition of “effective competition” (a condition that precludes any
regulation of the rates charged by a cable system), and sunsetted the FCC’s authority to regulate the rates charged for
optional tiers of service. The FCC has confirmed that some of the cable systems owned by the Company fall within the
effective-competition exemption, and the Company believes, based on an analysis of competitive conditions within its
systems, that other of its systems may also qualify for that exemption. Monthly subscription rates charged for the basic
tier of cable service, as well as rates charged for equipment rentals and service calls, for many of our cable systems
remain subject to regulation by local franchise authorities in accordance with FCC rules. However, rates charged by
cable television systems for tiers of service other than the basic tier — for pay-per-view and per-channel premium
program services, for digital video, cable modem services and digital telephone — and for advertising are all
currently exempt from regulation.
“Must-Carry” and Retransmission Consent. As previously discussed in the section titled “Television Broadcasting,”
under the “must-carry” requirements of the 1992 Cable Act, a commercial television broadcast station may, subject to
certain limitations, insist on carriage of its signal on cable systems located within the station’s market area. Similarly, a
non-commercial public station may insist on carriage of its signal on cable systems located either within the station’s
predicted Grade B signal contour or within 50 miles of a reference point in a station’s community designated by the
FCC. As a result of these obligations, certain of the Company’s cable systems have had to carry broadcast stations that
they might not otherwise have elected to carry, and the freedom the Company’s systems would otherwise have to drop
signalspreviouslycarriedhasbeenreduced.
16 THE WASHINGTON POST COMPANY