Charter 2005 Annual Report Download - page 38

CHARTER COMMUNICATIONS, INC. 2005 FORM 10-K
broadcast transmission (multicast carriage). Additional govern- that certain VoIP services are not subject to traditional state
ment-mandated broadcast carriage obligations could disrupt public utility regulation. The full extent of the FCC preemption
existing programming commitments, interfere with our preferred of VoIP services is not yet clear. Expanding our offering of these
use of limited channel capacity and limit our ability to offer services may require us to obtain certain authorizations, includ-
services that would maximize customer appeal and revenue ing federal, state and local licenses. We may not be able to
potential. Although the FCC issued a decision in February 2005, obtain such authorizations in a timely manner, or conditions
confirming an earlier ruling against mandating either dual could be imposed upon such licenses or authorizations that may
carriage or multicast carriage, that decision has been appealed. not be favorable to us. Furthermore, telecommunications com-
In addition, the FCC could reverse its own ruling or Congress panies generally are subject to significant regulation, including
could legislate additional carriage obligations. payments to the Federal Universal Service Fund and the
intercarrier compensation regime. In addition, pole attachment
Offering voice communications service may subject us to additional rates are higher for providers of telecommunications services
regulatory burdens, causing us to incur additional costs. than for providers of cable service. If there were to be a final
In 2002, we began to offer voice communications services on a legal determination by the FCC, a state Public Utility Commis-
limited basis over our broadband network. We continue to sion, or appropriate court that VoIP services are subject to these
explore development and deployment of Voice over Internet higher rates, our pole attachment costs could increase signifi-
Protocol or VoIP services. The regulatory requirements applica- cantly, which could adversely affect our financial condition and
ble to VoIP service are unclear although the FCC has declared results of operations.
Item 1B. UNRESOLVED STAFF COMMENTS.
None.
Item 2. PROPERTIES.
Our principal physical assets consist of cable distribution plant In addition, Charter has sold $15 million worth of surplus
and equipment, including signal receiving, encoding and decod- land and buildings. We plan to continue to reduce costs and
ing devices, headend reception facilities, distribution systems and excess capacity in this area through consolidation of sites within
customer drop equipment for each of our cable systems. our system footprints. Our subsidiaries generally have leased
Our cable plant and related equipment are generally space for business offices throughout our operating divisions.
attached to utility poles under pole rental agreements with local Our headend and tower locations are located on owned or
public utilities and telephone companies, and in certain locations leased parcels of land, and we generally own the towers on
are buried in underground ducts or trenches. We own or lease which our equipment is located. Charter Holdco owns the real
real property for signal reception sites and own most of our property and building for our principal executive offices.
service vehicles. The physical components of our cable systems require
Historically, our subsidiaries have owned the real property maintenance as well as periodic upgrades to support the new
and buildings for our data centers, customer contact centers and services and products we introduce. See ‘‘Item 1. Business — Our
our divisional administrative offices. Since early 2003 we have Network Technology.’’ We believe that our properties are
reduced our total real estate portfolio square footage by generally in good operating condition and are suitable for our
approximately 17% and have decreased our operating annual business operations.
lease costs by approximately 30%.
Item 3. LEGAL PROCEEDINGS.
Charter is a party to lawsuits and claims that have arisen in the outcome of these lawsuits and claims are not expected to have a
ordinary course of conducting its business. In the opinion of material adverse effect on our consolidated financial condition,
management, after taking into account recorded liabilities, the results of operations or our liquidity.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during
the fourth quarter of the year ended December 31, 2005.
28