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May 14, 2007. During 2004 some states sought to regulate VoIP service pursuant to their common carrier jurisdiction, but
VoIP providers challenged these actions before the FCC. Later in 2004, the FCC ruled that VoIP services are interstate
services subject exclusively to the FCC's federal jurisdiction. This decision, if upheld on appeal (consumer groups and
some state regulatory commissions have filed an appeal), is significant because it includes VoIP offered by cable systems
as within the scope of activities that are not subject to state telecommunications regulation. Legislation also has been
introduced in Congress to accomplish the same objective, though the prospect for passage of such legislation is uncertain.
The FCC has tentatively concluded that VoIP services provided by cable companies are properly classified as an
""information service'' rather than as a ""telecommunications service.'' If ultimately confirmed, that determination could
protect cable companies from having to pay higher pole attachment rates because of their provision of VoIP services.
In the interests of trying to promote competition in the market for set-top converter boxes, the FCC has adopted rules that
will require cable operators to support converter boxes and digital television tuners designed to accept plug-in cards
(known as ""CableCARDs'') that provide the descrambling and other security features which traditionally have been
included in the integrated set-top converter boxes leased by cable operators to their customers. This rule is currently
scheduled to go into effect on July 1, 2007, although the National Cable and Telecommunications Association has filed a
waiver request asking the FCC to delay the rule's effectiveness until after the transition to digital broadcasting in 2009. The
implementation of this rule has the potential to increase the capital costs of cable operators (because of the need to
provide CableCARDs to customers and because the new type of converter box may be more expensive than the traditional
integrated box) and, to the extent subscribers decide to buy their own boxes, to reduce the revenues cable operators
receive from leasing converter boxes (although in the case of the Company's Cable One subsidiary that revenue is not
material).
The regulation of certain cable television rates pursuant to the authority granted to the FCC 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 business.
Other Activities
Bowater Mersey Paper Company
The Company owns 49% of the common stock of Bowater Mersey Paper Company Limited, the majority interest in which is
held by a subsidiary of Bowater Incorporated. Bowater Mersey owns and operates a newsprint mill near Halifax, Nova
Scotia, and also owns extensive woodlands that provide part of the mill's wood requirements. In 2006 Bowater Mersey
produced about 270,000 tons* of newsprint.
BrassRing
On November 13, 2006, in a transaction in which all of the existing members sold their interests to a third party, the
Company sold the 49% equity interest it beneficially owned in BrassRing LLC, an Internet-based hiring management
company.
Production and Raw Materials
The Washington Post, Express
and
El Tiempo Latino
are all produced at the printing plants of WP Company in Fairfax
County, Virginia and Prince George's County, Maryland.
The Herald, The Enterprise Newspapers
and
La Raza del
Noroeste
are produced at The Daily Herald Company's plant in Everett, Washington, while
The Gazette Newspapers
and
Southern Maryland Newspapers
are printed at the commercial printing facilities owned by Post-Newsweek Media, Inc.
(which facilities also produce the division's military newspapers). Greater Washington Publishing's periodicals are
produced by independent contract printers with the exception of one periodical that is printed at one of the commercial
printing facilities owned by Post-Newsweek Media, Inc.
Newsweek
's domestic edition is produced by three independent contract printers at five separate plants in the United
States; advertising inserts and photo-offset films for the domestic edition are also produced by independent contractors.
The international editions of
Newsweek
are printed in England, Singapore, Switzerland, the Netherlands, South Africa and
Hollywood, Florida; insertions for
The Bulletin
are printed in Australia. Since 1997 Newsweek and a subsidiary of Time
* All references in this report to newsprint tonnage and prices refer to short tons (2,000 pounds) and not to metric tons (2,204.6 pounds), which
are often used in newsprint quotations.
18 THE WASHINGTON POST COMPANY