Washington Post 2009 Annual Report Download - page 24

transmission standards, including an increasingly popular standard known as WiMAX, and may result in the increased
availability of mobile video services. 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. In 2008, the FCC
auctioned additional spectrum in the 700 MHz band, which historically has been used for analog television
broadcasting, and it is expected that this additional spectrum will be used to accommodate broadband, video and other
services to mobile devices. Although it is not yet clear what effect, if any, the increased availability of mobile video
services will have on the cable television industry, these developments likely will increase the number of competitive
alternatives to Cable ONE’s services.
Horizontal and Vertical Ownership Limits. In September 2009, a reviewing court struck down and remanded the
FCC’s horizontal cable ownership rule, which provided that a single company could not serve more than 30% of
potential cable subscribers (or “homes passed” by cable) nationwide. Although the reviewing court’s decision authorizes
the FCC to seek to justify the rule, it is not clear whether the FCC will attempt to do so. Separately, the FCC has
proposed reinstating vertical ownership restrictions that would cap the percentage of a cable system’s channel capacity
that could be used to carry channels in which the operator has an ownership interest, but it has taken no action to
implement such restrictions. There currently is no restriction on the ownership of both a television broadcast station and a
cable television system in the same market.
Set-Top Boxes. Pursuant to a Congressional directive to promote competition in the retail market for set-top converter
boxes, the FCC has adopted rules barring cable operators from deploying set-top boxes with “integrated” security and
navigation functions and requiring cable operators to support boxes and other devices designed to accept plug-in cards
(“CableCARDs”) that provide the descrambling and other security features that traditionally have been included in the
integrated set-top converter boxes leased by cable operators to their customers. The FCC has granted some requests for
waivers of this rule, including one such request filed by Cable ONE to allow it to offer low-cost, HD-capable integrated
set-top boxes to subscribers of its Dyersburg, TN, system. The general prohibition on integrated set-top boxes 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 is typically more expensive than the traditional integrated box).
Other Requirements. In February 2008, the FCC issued revised commercial leased access rules that require cable
operators to make a certain portion of their systems’ capacity available to parties desiring to transmit programming via
cable on a leased basis. These revised rules could substantially reduce the rates for parties desiring to lease capacity on
cable systems and also impose a variety of leased access customer service, information and reporting standards.
Implementation of these new rules has been stayed by the courts, and certain of the rules also were rejected by the Office
of Management and Budget (“OMB”) as inconsistent with the federal Paperwork Reduction Act. Certain parties have
requested that the FCC override the OMB ruling, but no action has been taken on that request. The FCC has not
indicated its intent to move forward with implementation of these new rules. If they take effect, however, they likely will
increase Cable ONE’s costs and could cause additional leased access activity on Cable ONE’s cable systems. As a
result, Cable ONE may find it necessary to either discontinue other channels of programming or opt not to carry new
channels of programming or other services that may be more desirable to its customers.
The FCC also regulates various other aspects of cable television operations. Long-standing FCC rules require cable
systems to black out from certain distant broadcast stations the syndicated programs for which local stations have
purchased exclusive rights and requested exclusivity, and 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.
Internet Access Services
In 2005, the U.S. Supreme Court upheld the FCC’s classification of cable modem service as an “information service.” As
a result, cable modem service is not subject to the full panoply of regulations that applies to “cable services” or
“telecommunications services” under the Communications Act of 1934, as amended (the “Communication Act”), nor is it
subject to state or local government regulation. In response to the Supreme Court’s decision, the FCC ruled that a
telephone company’s offering of digital subscriber line (“DSL”) Internet access service is also an “information service.”
Cable ONE currently offers broadband Internet access service on virtually all of its cable systems and is the sole Internet
service provider on those systems. Cable ONE does not restrict the websites that its broadband Internet access
subscribers may view; however, regulations that distinguish between interference with subscriber access and reasonable
network management are evolving and, over time, could begin to interfere with Cable ONE’s ability to manage its
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