Washington Post 2007 Annual Report Download - page 34

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.
During 2006, the U.S. Copyright Office commenced inquiries regarding clarification and revisions of certain cable
compulsory copyright license reporting requirements and clarification of certain issues relating to the application of the
compulsory license to the carriage of digital broadcast stations. In December 2007, the Copyright Office issued a
Notice of Inquiry to review whether cable operators must include in their compulsory license royalty calculation a
distant signal carried anywhere in the cable system as if it were carried everywhere in the system, thus resulting in
payments on “phantom signals.” Furthermore, the Copyright Office is reviewing an approach by which all copyright
payments would be computed electronically by a system administered by the Copyright Office that may not reflect the
unique circumstances of each of our systems and/or groupings of systems. We cannot predict the outcome of any such
inquiries, rulemakings or proceedings; however, it is possible that certain changes in the rules or copyright compulsory
license fee computations or compliance procedures could have an adverse effect on our business by increasing our
copyright compulsory license fee costs or by causing us to reduce or discontinue carriage of certain broadcast signals
that we currently carry on a discretionary basis.
Telephone Company Competition. The Telecommunications Act of 1996 permits telephone companies to offer
video programming services in areas where they provide local telephone service. 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. Still
other telephone companies have developed other methods to deliver video programming that, depending on the
technology employed, may be regulated in a manner similar to the Company’s cable systems. The FCC rejected the
argument that IPTV is not “cable service,” though the matter is still under consideration. Some telephone company
providers have taken the position that the specific technology employed in delivering video programming dictates
whether a local franchise is required. The theory is that because it is not providing a “cable service,” as that term is
defined in federal law, but rather is delivering an “information service,” which by law is not subject to regulation by
state and local governments, no local franchise is required. The FCC initially rejected this argument, but the matter is
still under consideration. 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, Missouri and Texas, which are states where the
Company has cable systems) have enacted legislation that permits telephone companies 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 obtain 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 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 competitive providers.
Wireless Services. At various times over the past decade, the FCC has taken steps to facilitate the use of certain
frequencies, notably the 2.5 GHz and 31 GHz bands, to deliverover-the-airmultichannelvideoprogramming
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. These services were initially
being provided on a fixed basis, delivering access to houses and businesses, but are expected shortly to accom-
modate mobile devices, such as laptop computers with a wireless adapter card. These wireless networks may use a
variety of advanced transmission standards, including an increasingly popular standard known as WiMAX. Also in
2006, a number of cellular telephone providers 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. During 2008, the FCC will auction off the 700 MHz
18 THE WASHINGTON POST COMPANY