Print Page  Close Window

SEC Filings

S-4/A
CHARTER COMMUNICATIONS HOLDINGS CAPITAL CORP filed this Form S-4/A on 06/22/1999
Entire Document
 
<PAGE>   105
 
   
services provided by the local cable system. Accordingly, cable operators in
rural areas, where "off-air" reception is more limited, generally achieve higher
penetration rates than do operators in most major metropolitan areas, where
numerous, high quality "off-air" signals are available. The 1996 Telecom Act
directed the Federal Communications Commission to establish, and the Federal
Communications Commission has adopted, regulations and policies for the issuance
of licenses for digital television, known as DTV, to incumbent television
broadcast licensees. DTV is expected to deliver high definition television
pictures and multiple digital-quality program streams, as well as advanced
digital services such as subscription video.
    
 
   
     - DBS.  Direct broadcast satellite, known as DBS, has emerged as
significant competition to cable systems. The DBS industry has grown rapidly
over the last several years, far exceeding the growth rate of the cable
television industry, and now serves approximately 10 million subscribers
nationwide. DBS service allows the subscriber to receive video services directly
via satellite using a relatively small dish antenna. Moreover, video compression
technology allows DBS providers to offer more than 100 digital channels, thereby
surpassing the typical cable system. DBS providers offer most of the same
programming as cable television, but also offer certain sports packages not
available through cable systems and a wide array of pay-per-view movies. DBS,
however, is limited in the local programming it can provide because of the
current capacity limitations of satellite technology. In addition, existing
copyright rules restrict the ability of DBS providers to offer local broadcast
programming. At least one DBS provider is now attempting to provide this
programming in certain major markets. Congress is now considering legal action
that would remove these legal obstacles. After recent mergers, the two primary
DBS providers are DirecTV, Inc., and EchoStar Communications Corporation. In
addition, there are several companies licensed to operate a DBS system who have
yet to begin service.
    
 
   
     - TRADITIONAL OVERBUILDS.  Cable television systems are operated under
non-exclusive franchises granted by local authorities. More than one cable
system may legally be built in the same area. Although still relatively
uncommon, it is possible that a franchising authority might grant a second
franchise to another cable operator and that franchise might contain terms and
conditions more favorable than those afforded us. Well financed businesses from
outside the cable industry, such as the public utilities may over time become
competitors. There has been a recent increase in the number of cities that have
constructed their own cable systems, in a manner similar to city-provided
utility services. Although the total number of municipal overbuild cable systems
remains small, the potential profitability of a cable system is adversely
affected if the local subscriber base is divided among multiple cable systems.
Additionally, constructing a competing cable system is a capital intensive
process which involves a high degree of risk. We believe that in order to be
successful, a competitor's overbuild would need to be able to serve the homes
and businesses in the overbuilt area on a more cost-effective basis than us. Any
such overbuild operation would require either significant access to capital or
access to facilities already in place that are capable of delivering cable
television programming.
    
 
   
     We are aware of overbuild situations in six of our systems located in
Newnan, Columbus and West Point, Georgia; Barron, Wisconsin; and Lanett and
Valley, Alabama. Approximately 44,000 basic customers, approximately 1.9% of our
total basic customers, are passed by these overbuilds. Additionally, we have
been notified that franchises have been awarded, and present potential overbuild
situations, in four of our systems located in Southlake, Roanoke and Keller,
Texas and Willimantic, Connecticut. These potential overbuild areas service an
aggregate of approximately 45,000 basic customers or
    
 
                                       102