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RENAISSANCE MEDIA GROUP LLC filed this Form S-4/A on 09/04/1998
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universal service and other technical requirements). These decisions have been
somewhat inconsistent and, until the U.S. Supreme Court rules definitively on
the scope of cable operators' First Amendment protections, the legality of the
franchising process generally and of various specific franchise requirements
is likely to be in a state of flux.
  Ownership Limitations
  Pursuant to the 1992 Cable Act, the FCC adopted rules prescribing national
customer limits and limits on the number of channels that can be occupied on a
cable system by a video programmer in which the cable operator has an
attributable interest. The FCC's horizontal ownership limits have been stayed
because a federal district court found the statutory limitation to be
unconstitutional. An appeal of that decision is pending and has been
consolidated with an appeal of the FCC's regulations which implemented the
national customer and channel limitation provisions of the 1992 Cable Act. The
1996 Telecom Act eliminates the statutory prohibition on the common ownership,
operation or control of a cable system and a television broadcast station in
the same service area and directs the FCC to eliminate its regulatory
restrictions on cross-ownership of cable systems and national broadcasting
networks and to review its broadcast-cable ownership restrictions to determine
if they are necessary in the public interest. Pursuant to the mandate of the
1996 Telecom Act, the FCC eliminated its regulatory restriction on cross-
ownership of cable systems and national broadcasting networks. In March 1998,
the FCC initiated a rulemaking proceeding to determine whether the cable
television/broadcast cross-ownership ban is necessary and in the public
interest or should be eliminated.
  Telephone Company Ownership of Cable Systems
  The 1996 Telecom Act makes far-reaching changes in the regulation of
telephone companies that provide video programming services. The new law
eliminates federal legal barriers to competition in the local telephone and
cable communications businesses, preempts legal barriers to competition that
previously existed in state and local laws and regulation and sets basic
standards for relationships between telecommunications providers. The 1996
Telecom Act eliminates the requirement that LECs obtain FCC approval under
Section 214 of the Communications Act before providing video services in their
telephone service areas and removes the statutory telephone company/cable
television cross-ownership prohibition, thereby allowing LECs to offer video
services in their telephone service areas. LECs may provide service as
traditional cable operators with local franchises or they may opt to provide
their programming over unfranchised "open video systems," subject to certain
conditions, including, but not limited to, setting aside a portion of their
channel capacity for use by unaffiliated program distributors on a non-
discriminatory basis.
  The 1996 Telecom Act generally limits acquisitions and prohibits certain
joint ventures between LECs and cable operators in the same market. There are
some statutory exceptions to the buy-out and joint venture prohibitions,
including exceptions for certain small cable systems (as defined by federal
law) and for cable systems or telephone facilities serving certain rural
areas, and the FCC is authorized to grant waivers of the prohibitions under
certain circumstances. The FCC adopted regulations implementing the 1996
Telecom Act requirement that LECs open their telephone networks to competition
by providing competitors interconnection, access to unbundled network elements
and retail services at wholesale rates. Numerous parties appealed these
regulations. The U.S. Court of Appeals for the Eighth Circuit, where the
appeals were consolidated, recently vacated key portions of the FCC's
regulations, including the FCC's pricing and nondiscrimination rules, and in
January 1998, the United States Supreme Court agreed to review the lower
court's decision. SBC Communications, Inc. also filed suit in Texas seeking to
overturn the long distance entry provisions of the 1996 Telecom Act on
constitutional grounds and obtained a favorable decision from the U.S.
District Court in Wichita Falls, Texas. This decision has been stayed pending
appeal. The ultimate outcome of the litigation and the FCC's rulemakings, and
the ultimate impact of the 1996 Telecom Act or any final regulations adopted
pursuant to the new law on the Company or its business cannot be determined at
this time.