Charter 2010 Annual Report Download - page 39

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significant change as a result of various federal and state
actions. Some of the new state franchising laws do not allow us
to immediately opt into statewide franchising until (i) we have
completed the term of the local franchise, in good standing, (ii) a
competitor has entered the market, or (iii) in limited instances, where
the local franchise allows the state franchise license to apply. In
many cases, state franchising laws, and their varying application to
us and new video providers, will result in less franchise imposed
requirements for our competitors who are new entrants than for us
until we are able to opt into the applicable state franchise.
We cannot assure you that we will be able to comply with all
significant provisions of our franchise agreements and certain of our
franchisors have from time to time alleged that we have not complied
with these agreements. Additionally, although historically we have
renewed our franchises without incurring significant costs, we cannot
assure you that we will be able to renew, or to renew as favorably, our
franchises in the future. A termination of or a sustained failure to
renew a franchise in one or more key markets could adversely affect
our business in the affected geographic area.
Our cable system franchises are non-exclusive. Accordingly,
local and state franchising authorities can grant additional
franchises and create competition in market areas where none
existed previously, resulting in overbuilds, which could adversely
affect results of operations.
Our cable system franchises are non-exclusive. Consequently, local
and state franchising authorities can grant additional franchises to
competitors in the same geographic area or operate their own cable
systems. In some cases, local government entities and municipal
utilities may legally compete with us without obtaining a franchise
from the local franchising authority. In addition, certain telephone
companies are seeking authority to operate in communities without
first obtaining a local franchise. As a result, competing operators may
build systems in areas in which we hold franchises.
In a series of recent rulemakings, the FCC adopted new rules that
streamline entry for new competitors (particularly those affiliated
with telephone companies) and reduce franchising burdens for these
new entrants. At the same time, a substantial number of states
recently have adopted new franchising laws. Again, these new laws
were principally designed to streamline entry for new competitors,
and they often provide advantages for these new entrants that are
not immediately available to existing operators. As a result of these
new franchising laws and regulations, we have seen an increase in the
number of competitive cable franchises or operating certificates being
issued, and we anticipate that trend to continue.
Local franchise authorities have the ability to impose additional
regulatory constraints on our business, which could further
increase our expenses.
In addition to the franchise agreement, cable authorities in some
jurisdictions have adopted cable regulatory ordinances that further
regulate the operation of cable systems. is additional regulation
increases the cost of operating our business. Local franchising
authorities may impose new and more restrictive requirements.
Local franchising authorities who are certified to regulate rates in the
communities where they operate generally have the power to reduce
rates and order refunds on the rates charged for basic service and
equipment.
Tax legislation and administrative initiatives or challenges to our
tax positions could adversely affect our results of operations
and nancial condition.
We operate cable systems in locations throughout the United States
and, as a result, we are subject to the tax laws and regulations of
federal, state and local governments. From time to time, various
legislative and/or administrative initiatives may be proposed
that could adversely affect our tax positions. ere can be no
assurance that our effective tax rate or tax payments will not be
adversely affected by these initiatives. As a result of state and local
budget shortfalls due primarily to the recession as well as other
considerations, certain states and localities have imposed or are
considering imposing new or additional taxes or fees on our services
or changing the methodologies or base on which certain fees and
taxes are computed. Such potential changes include additional
taxes or fees on our services which could impact our customers,
combined reporting and other changes to general business taxes,
central/unit-level assessment of property taxes and other matters that
could increase our income, franchise, sales, use and/or property tax
liabilities. In addition, federal, state and local tax laws and regulations
are extremely complex and subject to varying interpretations. ere
can be no assurance that our tax positions will not be challenged by
relevant tax authorities or that we would be successful in any such
challenge.