Charter 2013 Annual Report Download - page 28

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the new rules. Although the order maintains the status quo treatment of cable-provided VoIP service as an unclassified service
eligible for the favorable cable rate, the issue has not been fully resolved by the FCC, and a potential change in classification in
a pending proceeding (as well as an unresolved dispute over the telecommunications rate calculation) could adversely impact our
pole attachment rates.
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 commenced a proceeding in 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. Some of the FCC’s rules requiring support for
CableCARDs were vacated by the United States Court of Appeals for the District of Columbia in 2013, and the FCC has an open
proceeding to consider the adoption of replacement rules. Either of the above proceedings could result in additional equipment-
related obligations. In April 2013, Charter received a two-year waiver from the FCC’s “integration ban,” which otherwise requires
all new leased cable set-top boxes to have separable security such as CableCARDs. A condition to the waiver is the requirement
for Charter to meet certain milestones regarding downloadable security. By the end of the waiver period, Charter intends to have
deployed a downloadable security system that will comply with the integration ban without the use of CableCARDs. This waiver
is affording Charter the ability to use lower-cost set-top boxes as it transitions to all-digital operations. In connection with our
request for this waiver, Charter committed to continue to support CableCARDs and to follow the CableCARD-related rules that
were struck down by the court in 2013. Outside parties have appealed our waiver to the FCC. The outcome of those appeals
could adversely impact the waiver; however, Charter intends to defend the waiver with the FCC.
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, voice, and 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 restrictions on the
collection, use and disclosure of consumer, subscriber and employee information. 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) licensing of systems and facilities; (8) maintenance of public files; (9) emergency alert systems; and
(10) 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
proposals and administrative review and could adversely affect our ability to obtain desired broadcast programming. Pursuant to
the Satellite Television Extension and Localisms Act of 2010 (“STELA”), 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. STELA also establishes a new audit mechanism for copyright owners to review
compulsory copyright filings, which the Copyright Office is still in the process of implementing.