Charter 2013 Annual Report Download - page 30

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Voice Service
The Telecommunications Act of 1996 created a more favorable regulatory environment for us to provide telecommunications and/
or competitive voice services than had previously existed. In particular, it established requirements ensuring that competitive
telephone companies could interconnect their networks with those providers of traditional telecommunications services to open
the market to competition. The FCC has subsequently ruled that competitive telephone companies that support VoIP services,
such as those we offer our customers, are entitled to interconnection with incumbent providers of traditional telecommunications
services, which ensures that our VoIP services can compete in the market. Since that time, the FCC has initiated a proceeding to
determine whether such interconnection rights should extend to traditional and competitive networks utilizing IP technology, and
how to encourage the transition to IP networks throughout the industry. New rules or obligations arising from these proceedings
may affect our ability to compete in the provision of voice services. On November 18, 2011, the FCC released an order significantly
changing the rules governing intercarrier compensation payments for the origination and termination of telephone traffic between
carriers. The new rules will result in a substantial decrease in intercarrier compensation payments over a multi-year period. We
received intercarrier compensation of approximately $21 million, $19 million and $23 million for the years ended December 31,
2013, 2012 and 2011, respectively. The decreases over the multi-year transition will affect both the amounts that Charter pays to
other carriers and the amounts that Charter receives from other carriers. The schedule and magnitude of these decreases, however,
will vary depending on the nature of the carriers and the telephone traffic at issue, and the FCC's new ruling initiates further
implementation rulemakings. We cannot yet predict with certainty the balance of the impact on Charter's revenues and expenses
for voice services at particular times over this multi-year period.
Further regulatory changes are being considered that could impact our voice business and that of our primary telecommunications
competitors. The FCC and state regulatory authorities are considering, for example, whether certain common carrier regulations
traditionally applied to incumbent local exchange carriers should be modified or reduced, and the extent to which common carrier
requirements should be extended to VoIP providers. The FCC has already determined that certain providers of voice services
using Internet Protocol technology must comply with requirements relating to 911 emergency services (“E911”), the CALEA
regarding law enforcement surveillance of communications, Universal Service Fund contributions, customer privacy and Customer
Proprietary Network Information issues, number portability, disability access, regulatory fees, and discontinuance of service. In
March 2007, a federal appeals court affirmed the FCC’s decision concerning federal regulation of certain VoIP services, but declined
to specifically find that VoIP service provided by cable companies, such as we provide, should be regulated only at the federal
level. As a result, some states have begun proceedings to subject cable VoIP services to state level regulation. Although we have
registered with, or obtained certificates or authorizations from, the FCC and the state regulatory authorities in those states in which
we offer competitive voice services in order to ensure the continuity of our services and to maintain needed network interconnection
arrangements, it is unclear whether and how these and other ongoing regulatory matters ultimately will be resolved. In addition,
in 2013 the FCC issued a broad data collection order that will require providers of point to point transport (“special access”)
services, such as Charter, to produce information to the agency concerning the rates, terms and conditions of these services. The
FCC will use the data to evaluate whether the market for such services is competitive, or whether the market should be subject to
further regulation, which may increase our costs or constrain our ability to compete in this market.
Employees
As of December 31, 2013, we had approximately 21,600 full-time equivalent employees. At December 31, 2013, approximately
90 of our employees were represented by collective bargaining agreements. We have never experienced a work stoppage.
Item 1A. Risk Factors.
Risks Related to Our Indebtedness
We have a significant amount of debt and may incur significant additional debt, including secured debt, in the future, which
could adversely affect our financial health and our ability to react to changes in our business.
We have a significant amount of debt and may (subject to applicable restrictions in our debt instruments) incur additional debt in
the future. As of December 31, 2013, our total principal amount of debt was approximately $14.2 billion.
Our significant amount of debt could have consequences, such as:
• impact our ability to raise additional capital at reasonable rates, or at all;
• make us vulnerable to interest rate increases, because approximately 16% of our borrowings are, and may continue to
be, subject to variable rates of interest;