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programming service tier rate. We currently have rate complaints relating to
approximately 240,000 subscribers pending at the Federal Communications
Commission. Significantly, the Federal Communications Commission's authority to
regulate cable programming service tier rates expired on March 31, 1999. The
Federal Communications Commission has taken the position that it will still
adjudicate cable programming service tier complaints filed after this sunset
date, but no later than 180 days after the last cable programming service tier
rate increase imposed prior to March 31, 1999, and will strictly limit its
review, and possibly refund orders, to the time period predating the sunset
date. We do not believe any adjudications regarding these pre-sunset complaints
will have a material adverse effect on our business. The elimination of cable
programming service tier regulation, which is the rate regulation of a
particular level of packaged programming services, typically referring to the
expanded basic level of services, in a prospective basis affords us
substantially greater pricing flexibility.
     Under the rate regulations of the Federal Communications Commission, most
cable systems were required to reduce their basic service tier and cable
programming service tier rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price cap scheme that allows for the
recovery of inflation and certain increased costs, as well as providing some
incentive for expanding channel carriage. The Federal Communications Commission
has modified its rate adjustment regulations to allow for annual rate increases
and to minimize previous problems associated with regulatory lag. Operators also
have the opportunity to bypass this "benchmark" regulatory scheme in favor of
traditional "cost-of-service" regulation in cases where the latter methodology
appears favorable. Cost of service regulation is a traditional form of rate
regulation, under which a utility is allowed to recover its costs of providing
the regulated service, plus a reasonable profit. The Federal Communications
Commission and Congress have provided various forms of rate relief for smaller
cable systems owned by smaller operators. Premium cable services offered on a
per-channel or per-program basis remain unregulated, as do affirmatively
marketed packages consisting entirely of new programming product. However,
federal law requires that the basic service tier be offered to all cable
subscribers and limits the ability of operators to require purchase of any cable
programming service tier if a customer seeks to purchase premium services
offered on a per-channel or per-program basis, subject to a technology exception
which sunsets in 2002.
     As noted above, regulation by the Federal Communications Commission of
cable programming service tier rates for all systems, regardless of size, sunset
pursuant to the 1996 Telecom Act on March 31, 1999. Certain legislators,
however, have called for new rate regulations if unregulated cost rates increase
dramatically. The 1996 Telecom Act also relaxes existing "uniform rate"
requirements by specifying that uniform rate requirements do not apply where the
operator faces "effective competition," and by exempting bulk discounts to
multiple dwelling units, although complaints about predatory pricing still may
be made to the Federal Communications Commission.
     CABLE ENTRY INTO TELECOMMUNICATIONS.  The 1996 Telecom Act creates a more
favorable environment for us to provide telecommunication services beyond
traditional video delivery. It provides that no state or local laws or
regulations may prohibit or have the effect of prohibiting any entity from
providing any interstate or intrastate telecommunications service. A cable
operator is authorized under the 1996 Telecom Act to provide telecommunication
services without obtaining a separate local franchise. States are authorized,
however, to impose "competitively neutral" requirements regarding universal
service, public safety and welfare, service quality, and consumer protection.
State and local governments also retain their authority to manage the public
rights-of-way and may require