Charter 2010 Annual Report Download - page 35

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consent are likely to further increase our programming costs.
Federal law allows commercial television broadcast stations to
make an election between “must-carry” rights and an alternative
“retransmission-consent” regime. When a station opts for the
latter, cable operators are not allowed to carry the station’s signal
without the station’s permission. In some cases, we carry stations
under short-term arrangements while we attempt to negotiate new
long-term retransmission agreements. If negotiations with these
programmers prove unsuccessful, they could require us to cease
carrying their signals, possibly for an indefinite period. Any loss of
stations could make our video service less attractive to customers,
which could result in less subscription and advertising revenue. In
retransmission-consent negotiations, broadcasters often condition
consent with respect to one station on carriage of one or more other
stations or programming services in which they or their affiliates have
an interest. Carriage of these other services, as well as increased fees
for retransmission rights, may increase our programming expenses
and diminish the amount of capacity we have available to introduce
new services, which could have an adverse effect on our business and
financial results.
Our inability to respond to technological developments and meet
customer demand for new products and services could limit our
ability to compete effectively.
Our business is characterized by rapid technological change and
the introduction of new products and services, some of which
are bandwidth-intensive. We may not be able to fund the capital
expenditures necessary to keep pace with technological developments,
or anticipate the demand of our customers for products and services
requiring new technology or bandwidth. Our inability to maintain
and expand our upgraded systems and provide advanced services in
a timely manner, or to anticipate the demands of the marketplace,
could materially adversely affect our ability to attract and retain
customers. Consequently, our growth, financial condition and results
of operations could suffer materially.
We depend on third party service providers, suppliers and
licensors; thus, if we are unable to procure the necessary services,
equipment, software or licenses on reasonable terms and on a
timely basis, our ability to offer services could be impaired, and
our growth, operations, business, nancial results and nancial
condition could be materially adversely affected.
We depend on third party service providers, suppliers and licensors
to supply some of the services, hardware, software and operational
support necessary to provide some of our services. We obtain these
materials from a limited number of vendors, some of which do not
have a long operating history or which may not be able to continue
to supply the equipment and services we desire. Some of our hardware,
software and operational support vendors, and service providers
represent our sole source of supply or have, either through contract or
as a result of intellectual property rights, a position of some exclusivity.
If demand exceeds these vendors’ capacity or if these vendors experience
operating or financial difficulties, or are otherwise unable to provide
the equipment or services we need in a timely manner and at reasonable
prices, our ability to provide some services might be materially
adversely affected, or the need to procure or develop alternative
sources of the affected materials or services might delay our ability to
serve our customers. ese events could materially and adversely
affect our ability to retain and attract customers, and have a material
negative impact on our operations, business, financial results and
financial condition. A limited number of vendors of key technologies
can lead to less product innovation and higher costs. For these reasons,
we generally endeavor to establish alternative vendors for materials we
consider critical, but may not be able to establish these relationships
or be able to obtain required materials on favorable terms.
In that regard, we currently purchase set-top boxes from a limited
number of vendors, because each of our cable systems use one or two
proprietary conditional access security schemes, which allows us to
regulate subscriber access to some services, such as premium channels.
We believe that the proprietary nature of these conditional access
schemes makes other manufacturers reluctant to produce set-top boxes.
Future innovation in set-top boxes may be restricted until these issues
are resolved. In addition, we believe that the general lack of compatibility
among set-top box operating systems has slowed the industry’s
development and deployment of digital set-top box applications.
We depend on patent, copyright, trademark and trade secret laws
and licenses to establish and maintain our intellectual property
rights in technology and the products and services used in our
operating activities. Any of our intellectual property rights could be
challenged or invalidated, or such intellectual property rights may
not be sufficient to permit us to continue to use certain intellectual
property, which could result in discontinuance of certain product or
service offerings or other competitive harm, our incurring substantial
monetary liability or being enjoined preliminarily or permanently
from further use of the intellectual property in question.