Washington Post 2003 Annual Report Download - page 28

exclusivity. Other long-standing FCC rules require cable systems to delete under certain circumstances duplicative network
programs broadcast by distant stations. The FCC also imposes certain technical standards on cable television operators,
exercises the power to license various microwave and other radio facilities frequently used in cable television operations,
and regulates the assignment and transfer of control of such licenses. In addition, pursuant to the Pole Attachment Act, the
FCC exercises authority to disapprove unreasonable rates charged to cable operators by telephone and power utilities for
utilizing space on utility poles or in underground conduits (although states may reclaim exclusive jurisdiction over these
matters by certifying to the FCC that they regulate the rates, terms and conditions of pole attachments, and some states in
which the Company has cable operations have so certified). A number of cable operators (including the Company's
Cable One subsidiary) are using their cable systems to provide not only television programming but also Internet access. In
January 2002, the U.S. Supreme Court ruled that the FCC's authority under the Pole Attachment Act extends to all pole
attachments by cable operators, including those attachments used to provide Internet access. Thus, except where
individual states have assumed regulatory responsibility, the rates charged by utilities for pole or conduit access by cable
companies are subject to FCC rate regulation regardless of whether or not the cable companies are providing Internet
access as well as the delivery of television programming.
The Copyright Act of 1976 gives cable television systems the ability, under certain terms and conditions and assuming that
any applicable retransmission consents have been obtained, to retransmit the signals of television stations pursuant to a
compulsory copyright license. Those terms and conditions permit cable systems to retransmit the signals of local television
stations on a royalty-free basis; however in most cases cable systems retransmitting the signals of distant stations are
required to pay certain license fees set forth in the statute or established by subsequent administrative regulations. The
compulsory license fees have been increased on several occasions since this Act went into effect. In 1994 the availability
of a compulsory copyright license was extended to ""wireless cable'' for both local and distant television signals and to
direct broadcast satellite (""DBS'') operators for distant signals only, although in the latter case the license was limited to
the signals of distant network-affiliated stations delivered to subscribers who could not receive an over-the-air signal of a
station affiliated with the same network. However, in November 1999 Congress enacted the Satellite Home Viewer
Improvement Act, which created a royalty-free compulsory copyright license for DBS operators who wish to distribute the
signals of local television stations to satellite subscribers in the markets served by such stations. This Act continued the
limitation on importing the signals of distant network-affiliated stations contained in the original compulsory license for DBS
operators.
The general prohibition on telephone companies operating cable systems in areas where they provide local telephone
service was eliminated by the Telecommunications Act of 1996. Telephone companies now can provide video services in
their telephone service areas under four different regulatory plans. First, they can provide traditional cable television
service and be subject to the same regulations as the Company's cable television systems (including compliance with local
franchise and any other local or state regulatory requirements). Second, they can provide ""wireless cable'' service,
which is described below, and not be subject to either cable regulations or franchise requirements. Third, they can provide
video services on a common-carrier basis, under which they would not be required to obtain local franchises but would be
subject to common-carrier regulation (including a prohibition against exercising control over programming content).
Finally, they can operate so-called ""open video systems'' without local franchises (although local communities can choose
to require a franchise) and be subject to reduced regulatory burdens. The Act contains detailed requirements governing
the operation of open video systems, including requiring the nondiscriminatory offering of capacity to third parties and
limiting to one-third of total system capacity the number of channels the operator can program when demand exceeds
available capacity. In addition, the rates charged by an open video system operator to a third party for the carriage of
video programming must be just and reasonable as determined in accordance with standards established by the FCC.
(Cable operators and others not affiliated with a telephone company may also become operators of open video
systems.) The Act also generally prohibits telephone companies from acquiring or owning an interest in existing cable
systems operating in their service areas.
The Telecommunications Act of 1996 balances this grant of video authority to telephone companies by removing various
regulatory barriers to the offering of telephone services by cable companies and others. The Act preempts state and local
laws that have barred local telephone competition in some states. In addition, the Act requires local telephone companies
to permit cable companies and other competitors to connect with the telephone network and requires telephone companies
to give competitors access to the essential features and functionalities of the local telephone network (such as switching
capability, signal carriage from the subscriber's residence to the switching center, and directory assistance) on an
unbundled basis. As an alternative method of providing local telephone service, the Act permits cable companies and
others to purchase telephone service on a wholesale basis and then resell it to their subscribers.
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