Washington Post 2014 Annual Report Download - page 29

and 149,513 subscriptions to VoIP (digital voice) service. As previously noted, the Company has announced its intention
to spin-off Cable ONE, holding the cable operations described herein, to the Company’s stockholders.
Regulation of Cable and Related Matters
Cable ONE’s cable, Internet and voice operations are subject to various requirements imposed by the U.S. local, state
and Federal governmental authorities. The regulation of certain cable rates pursuant to procedures established by
Congress has negatively affected Cable ONE’s revenue. Certain other legislative and regulatory matters discussed in this
section also have the potential to adversely affect Cable ONE’s cable, Internet and voice businesses.
Cable
U.S. Federal law requires or authorizes the imposition of a wide range of regulations on cable operations.
Franchising. Cable ONE’s cable systems are required to obtain franchises from state or local governmental authorities to
operate. Those franchises typically are nonexclusive and limited in time, contain various conditions and limitations and provide
for the payment of fees to the local authority, determined generally as a percentage of revenues. Failure to comply with any of
the terms and conditions of a franchise may give rise to rights of termination by the franchising authority. The U.S. Federal
Communications Commission (FCC) has adopted rules designed to expedite the process of awarding competitive franchises
and relieving applicants for competing franchises of some locally imposed franchise obligations. This development, which is
especially beneficial to new entrants, is expected to continue to accelerate the competition Cable ONE is experiencing in the
video service marketplace.
Rate Regulation. FCC regulations prohibit local franchising authorities or the FCC from regulating the rates that cable
systems charge for certain levels of video cable service, equipment and service calls when those cable systems are
subject to “effective competition.” The FCC has confirmed that some of the cable systems owned by Cable ONE fall
within the effective-competition exemption. Nevertheless, monthly subscription rates charged for the basic tier of cable
service, as well as rates charged for equipment rentals and service calls for many of Cable ONE’s cable systems, remain
subject to regulation by local franchising authorities in accordance with FCC rules.
“Must-Carry” and Retransmission Consent. U.S. Federal law provides that a television broadcast station may, subject to
certain limitations, insist on carriage of its signal on cable systems located within the station’s prescribed area. As a result,
certain of Cable ONE’s cable systems must carry broadcast stations that they might not otherwise have elected to carry.
In other cases, Cable ONE has been required to provide consideration to broadcasters to obtain retransmission consent, such
as commitments to carry other program services offered by a station or an affiliated company, to purchase advertising on a
station or to provide advertising availabilities on cable to a station, or to provide cash compensation. This development results
in increased operating costs for cable systems, which ultimately increases the rates cable systems charge subscribers. Recent
public retransmission consent disputes between broadcasters and cable providers may prompt the FCC or Congress to
impose new requirements in this area, which could affect Cable ONE’s business. In 2014, for example, the FCC amended
its rules governing “good faith” retransmission consent negotiations to prohibit most jointly negotiated retransmission consent
agreements. The FCC’s decision, however, is on appeal. Congress also has directed the FCC to commence a rulemaking
regarding good faith retransmission consent negotiations. Cable ONE cannot predict the outcome of these ongoing
proceedings.
Pole Attachments. U.S. Federal law requires most telephone and power utilities to charge reasonable rates to cable
operators for utilizing space on utility poles or in underground conduits. In May 2010 and again in April 2011, the FCC
adopted new requirements relating to pole access and construction practices that were expected to improve the ability of
cable operators to attach to utility poles on a timely basis and to lower the pole attachment rate for telecommunications
services. In October 2013, the U.S. Supreme Court declined to review a lower court’s decision to uphold the FCC’s pole
attachment regulations. The Company cannot predict the extent to which these and other rule changes will affect its ability
over time to secure timely access to poles at reasonable rates. As a general matter, changes to Cable ONE’s pole
attachment rate structure could significantly increase its annual pole attachment costs.
U.S. Federal Copyright Issues. The U.S. Federal Copyright Act of 1976, as amended, gives cable 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.
The U.S. Federal Copyright Office is considering requests for clarification and revisions of certain cable compulsory
copyright license reporting requirements, and from time to time, other revisions to the cable compulsory copyright rules are
considered. Cable ONE cannot predict the outcome of any such inquiries. However, it is possible that changes in the
rules or copyright compulsory license fee computations or compliance procedures could have an adverse effect on its
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