a number of companies, including telephone companies and Internet service
providers, have requested local authorities and the Federal Communications
Commission to require cable operators to provide access to cable's broadband
infrastructure, which allows cable to deliver a multitude of channels and/or
services, so that these companies may deliver Internet services directly to
customers over cable facilities. Broward County, Florida granted open access to
an Internet service provider as a condition to a cable operator's transfer of
its franchise for cable service. The cable operator has commenced legal action
at the federal district court level. Allocating a portion of our bandwidth
capacity to other Internet service providers would impair our ability to use our
bandwidth in ways that would generate maximum revenues. In addition, our
Internet service provider competitors would be strengthened. We may also decide
not to upgrade our systems which would prevent us from introducing our planned
new products and services. In addition, we cannot assure you that if we were
required to provide access in this manner, it would not adversely impact our
profitability in many ways, including any or all of the following:
- significantly increasing competition;
- increasing the expenses we incur to maintain our systems; and
- increasing the expense of upgrading and/or expanding our systems.
OUR CABLE SYSTEMS ARE OPERATED UNDER FRANCHISES WHICH ARE SUBJECT TO NON-
RENEWAL OR TERMINATION. THE FAILURE TO RENEW A FRANCHISE COULD ADVERSELY AFFECT
OUR BUSINESS IN A KEY MARKET.
Our cable systems generally operate pursuant to non-exclusive franchises,
permits or licenses typically granted by a municipality or other state or local
government controlling the public rights-of-way. Many franchises establish
comprehensive facilities and service requirements, as well as specific customer
service standards and establish monetary penalties for non-compliance. In many
cases, franchises are terminable if the franchisee fails to comply with material
provisions set forth in the franchise agreement governing system operations.
Franchises are generally granted for fixed terms and must be periodically
renewed. Local franchising authorities may resist granting a renewal if either
past performance or the prospective operating proposal is considered inadequate.
Franchise authorities often demand concessions or other commitments as a
condition to renewal, which have been and may continue to be costly to us. In
some instances, franchises have not been renewed at expiration, and we have
operated under either temporary operating agreements or without a license while
negotiating renewal terms with the local franchising authorities. We cannot
assure you that we will be able to renew these franchises in the future, and a
sustained failure to renew a franchise could adversely affect our business in
the affected geographic area.