Charter 2011 Annual Report Download - page 26

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attachments to make it roughly equivalent to the more favorable “cable” attachment rate. Although the new order maintains the
status quo treatment of cable-provided VoIP service as an unclassified service eligible for the favorable cable rate, there is still
some uncertainty in this area. The new order allows for new penalties in certain cases involving unauthorized attachments, but it
generally strengthens the cable industry's ability to access investor-owned utility poles on reasonable rates, terms, and conditions.
Several electric utilities have, however, sought review of the new order at the FCC and in the D.C. Circuit Court of Appeals, and
another May 2011 FCC order restricting pole attachment rates has also been appealed to the same court. The outcome of these
cases could impact the pole attachment rates we pay utility companies.
Cable Equipment. In 1996, Congress enacted a statute requiring the FCC to adopt regulations designed to assure the development
of an independent retail market for “navigation devices,” such as cable set-top boxes. As a result, the FCC generally requires
cable operators to make a separate offering of security modules (i.e., a “CableCARD”) that can be used with retail navigation
devices, and to use these separate security modules even in their own set-top boxes. The FCC’s National Broadband Plan
acknowledges that the existing CableCARD rules have not resulted in a competitive retail market for navigation devices. In
response to this finding, the FCC commenced a proceeding in April 2010 to adopt standards for a successor technology to
CableCARD that would involve the development of smart video devices that are compatible with any multichannel video
programming distributor service in the United States. In October 2010, the FCC adopted new interim CableCARD rules applicable
until a successor solution emerges. The new rules require cable operators to allow customers to self-install CableCARDs. They
also require cable operators to provide and advertise a reasonable discount if subscribers use their own equipment, rather than
using the operator-provided equipment otherwise included in a bundled package. The FCC’s actions in this area could impose
additional costs on us and affect our ability to innovate.
MDUs / Inside Wiring. The FCC has adopted a series of regulations designed to spur competition to established cable operators
in MDU complexes. These regulations allow our competitors to access certain existing cable wiring inside MDUs. The FCC also
adopted regulations limiting the ability of established cable operators, like us, to enter into exclusive service contracts for MDU
complexes. In their current form, the FCC’s regulations in this area favor our competitors.
Privacy and Information Security Regulation. The Communications Act limits our ability to collect and disclose subscribers’
personally identifiable information for our video, telephone, and high-speed Internet services, as well as provides requirements
to safeguard such information. We are subject to additional federal, state, and local laws and regulations that impose additional
subscriber and employee privacy restrictions. Further, the FCC, FTC, and many states regulate and restrict the marketing practices
of cable operators, including telemarketing and online marketing efforts. Various federal agencies, including the FTC, are now
considering new restrictions affecting the use of personal and profiling data for online advertising.
Our operations are also subject to federal and state laws governing information security, including rules requiring customer
notification in the event of an information security breach. Congress is considering the adoption of new data security and
cybersecurity legislation that could result in additional network and information security requirements for our business.
Other FCC Regulatory Matters. FCC regulations cover a variety of additional areas, including, among other things: (1) equal
employment opportunity obligations; (2) customer service standards; (3) technical service standards; (4) mandatory blackouts of
certain network, syndicated and sports programming; (5) restrictions on political advertising; (6) restrictions on advertising in
children's programming; (7) restrictions on origination cablecasting; (8) restrictions on carriage of lottery programming; (9)
sponsorship identification obligations; (10) closed captioning of video programming; (11) licensing of systems and facilities; (12)
maintenance of public files; (13) emergency alert systems; and (14) disability access, including new requirements governing video-
description and closed-captioning. Each of these regulations restricts our business practices to varying degrees.
It is possible that Congress or the FCC will expand or modify its regulation of cable systems in the future, and we cannot predict
at this time how that might impact our business.
Copyright. Cable systems are subject to a federal copyright compulsory license covering carriage of television and radio broadcast
signals. The possible modification or elimination of this compulsory copyright license is the subject of continuing legislative and
administrative review and could adversely affect our ability to obtain desired broadcast programming. Pursuant to the Satellite
Television Extension and Localism Act of 2010, the Copyright Office, the Government Accountability Office and the FCC all
issued reports to Congress in 2011 that generally support an eventual phase-out of the compulsory licenses, although they also
acknowledge the potential adverse impact on cable subscribers and the absence of any clear marketplace alternative to the
compulsory license. If adopted, a phase-out plan could adversely affect our ability to obtain certain programming and substantially
increase our programming costs.
Copyright clearances for non-broadcast programming services are arranged through private negotiations. Cable operators also