Washington Post 2006 Annual Report Download - page 32

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. Direct broadcast satellite
(""DBS'') operators have had a compulsory copyright license since 1988, although that license was limited to distant
television signals and only permitted the delivery of the signals of distant network-affiliated stations to subscribers who
could not receive an over-the-air signal of a station affiliated with the same network. However, in 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. In September 2006 the U.S. Copyright Office requested comments concerning the
appropriate treatment of imported digital television broadcast signals, including comments addressing the question of
whether the same compulsory license fees that apply to imported analog signals should apply to imported digital signals
that incorporate multiple program streams.
The Telecommunications Act of 1996 permits telephone companies to offer video programming services in areas where
they provide local telephone service, and over the past decade telephone companies have pursued multiple strategies to
enter the multichannel video programming delivery market. Initially, some telephone companies partnered with DBS
operators to resell a DBS service to their telephone customers. Other telephone companies have obtained traditional cable
franchise agreements and built their own cable systems. Verizon, the second-largest local telephone company in the
country, has obtained cable franchises in a number of states and announced plans to obtain cable franchises covering
most of its service territory. Verizon is using a fiber-to-the-home technology that permits it to deliver high-speed data and
Internet access, voice over Internet protocol (VoIP) digital telephone service, and a variety of video services including
video-on-demand. Verizon's cable systems are regulated in a manner similar to the Company's cable systems. AT&T
(formerly SBC), on the other hand, is deploying a type of system developed by Microsoft called Internet Protocol
Television (IPTV) that uses basic Internet protocol technology to deliver video programming. An IPTV system stores the
video programming on a local computer server and delivers to consumers just the content they request using the last-mile
copper wire that also provides conventional telephone service. AT&T has taken the position before the FCC that this new
offering does not require a local franchise because AT&T is not providing a ""cable service,'' as that term is defined in
federal law, but rather is using IPTV technology to deliver an ""information service,'' which by law is not subject to
regulation by state and local governments. The FCC has rejected AT&T's argument, but in June 2006 the U.S. Court of
Appeals for the District of Columbia Circuit remanded that determination back to the FCC for further consideration and
explanation. In the meantime, telephone companies have urged the adoption of state-wide or national franchise rules, in
order to circumvent the need for local franchise approvals before they can offer video service. Beginning in 2005, a
number of states (including Arizona, Kansas and Texas, which are states where the Company has cable systems) have
enacted legislation that permits Verizon, AT&T and others to offer cable service within the state without obtaining local
government approvals. A number of other states are considering similar legislation. State-issued franchises typically have
fewer requirements than franchises granted by local governmental authorities, and in some cases the Company's cable
systems may be able to eventually receive their own state-issued franchises. Telephone companies have also asked
Congress to pass legislation establishing a national franchise for certain types of video delivery systems, although the
prospects for such legislation are uncertain. In addition, in December 2006 the FCC adopted rules intended to speed up
the local franchising process by requiring local franchising authorities to act on franchise proposals from incumbent
telephone companies within 90 days and prohibiting those authorities from imposing various requirements (such as special
fees and payments) viewed by the FCC as unreasonable. All of these legislative and regulatory actions will likely have the
effect of accelerating the development of duplicative cable facilities.
At various times over the last decade, the FCC has taken steps to facilitate the use of certain frequencies, notably the
2.5 GHz and 31 GHz bands, to deliver over-the-air multi-channel video programming services to subscribers in
competition with cable television systems. However those services generally were not deployed in any commercially
significant way. Beginning in 2004, the FCC adopted rule changes that allowed the 2.5 GHz band to be used for non-
video services and permitted transmitters to be deployed in cellular patterns. With the assistance of these rule changes, the
2.5 GHz and other frequency bands (including the 1.7 GHz and 2.1 GHz bands in which the FCC auctioned spectrum in
2006) are now being adopted for the delivery of two-way broadband digital data and high-speed Internet access
services capable of covering large areas. Such services are initially being provided on a fixed basis, delivering access to
houses and businesses, but are expected to shortly accommodate mobile devices such as laptop computers with an
appropriate wireless adapter card. These wireless networks may use a variety of advanced transmission standards,
including an increasingly popular standard known as WiMAX. For example, in August 2006, Sprint Nextel Corp.
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