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SEC Filings

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service low density or economically depressed communities. It is possible that,
as a result of the expansion under the 1996 Telecom Act of the scope of entities
which are exempt from regulation as "cable systems," some SMATV systems
previously regulated as "cable systems" are now exempt from regulation under the
Communications Act of 1934, as amended. Exemption from regulation may provide a
competitive advantage to certain of our current and potential competitors.
     - WIRELESS DISTRIBUTION.  Cable television systems also compete with
wireless program distribution services such as multi-channel multipoint
distribution systems or "wireless cable", known as MMDS. MMDS uses low-power
microwave frequencies to transmit television programming over-the-air to paying
customers. Wireless distribution services generally provide many of the
programming services provided by cable systems, and digital compression
technology is likely to increase significantly the channel capacity of their
systems. However, most MMDS operators continue to program in analog technology
due to the significant capital cost in upgrading to digital technology, combined
with a high disconnect ratio for this service. Analog MMDS is limited to
approximately 33 channels. Additionally, both analog and digital MMDS services
require unobstructed "line of sight" transmission paths. While no longer as
significant a competitor, analog MMDS has impacted our customer growth in
Riverside and Sacramento, California and Missoula, Montana. Digital MMDS is a
more significant competitor, presenting potential challenges to us in Los
Angeles, California and Atlanta, Georgia.
     - OPEN-VIDEO SYSTEMS.  The 1996 Telecom Act established the open video
system, known as "OVS," as a new legal framework for the delivery of video
programming. Under the statute and the Federal Communication Commission's rules,
a local exchange carrier or other entrant, other than a cable system operator,
may distribute video programming to customers, without the requirement to obtain
a local franchise, although the OVS operator must provide non-discriminatory
access to unaffiliated programmers on a portion of its channel capacity. The
Federal Communications Commission has to date certified several different
companies to provide OVS in various parts of the United States. The Fifth
Circuit Court of Appeals, however, recently invalidated certain of the Federal
Communication Commission's OVS rules, including the Federal Communication
Commission's rule preempting local franchise requirements. The Fifth Circuit
decision may be subject to further appeal.
     - PUBLIC UTILITY HOLDING COMPANIES.  The 1996 Telecom Act also authorizes
registered utility holding companies and their subsidiaries to provide video
programming services, notwithstanding the applicability of the Public Utility
Holding Company Act. Electric utilities have the potential to become significant
competitors in the video marketplace, as many of them already possess fiber
optic and other transmission lines in areas they serve. In the last year,
several utilities have announced, commenced, or moved forward with ventures
involving multichannel video programming distribution. See "Regulation and
     Our principal physical assets consist of cable television plant and
equipment, including signal receiving, encoding and decoding devices, headend
reception facilities, distribution systems and customer drop equipment for each
of its cable television systems. Our cable television plant and related
equipment are generally attached to utility poles under pole rental agreements
with local public utilities and telephone companies, and in certain locations
are buried in underground ducts or trenches. The physical components of our