Print Page  Close Window

SEC Filings

AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 05/28/1999
Entire Document

could be placed at a competitive disadvantage if the delivery of video services
by local exchange carriers becomes widespread. Issues of cross-subsidization by
local exchange carriers of video and telephony services also pose strategic
disadvantages for cable operators seeking to compete with local exchange
carriers which provide video services. Ameritech Corporation has obtained cable
television franchises in southeastern Michigan and has overbuilt some cable
operators thereby creating a competitive environment. To date, Ameritech has
not applied for cable franchises in the areas served by us, including after
giving effect to the pending Michigan acquisitions. We cannot predict the
likelihood of success of video service ventures by local exchange carriers or
their impact on us.

   We face additional competition from private satellite master antenna
television systems. Satellite master antenna television systems offer both
improved reception of local television stations and many of the same satellite-
delivered programming services offered by franchised cable television systems.
Satellite master antenna television operators often enter into exclusive
agreements with building owners or homeowners' associations to provide cable
programming to condominiums, apartments, office complexes and private
residential developments. Cable operators are, therefore, generally required to
obtain the approval of the building owners or homeowners' associations to
provide cable programming. However, some states have enacted laws to provide
franchised cable systems access to such private complexes and the Cable
Communications Policy Act of 1984 gives a franchised cable operator the right
to use existing compatible easements within its franchise area under certain
circumstances. These laws have been challenged in the courts with varying
results. The Telecommunications Act of 1996 broadens the definition of
satellite master antenna television systems not subject to regulation as a
franchised cable television service. A July 1998 FCC decision allowed satellite
master antenna televisions to interconnect facilities using common carrier
facilities located in public rights of way without obtaining cable television
franchises. This decision could spur growth of satellite master antenna
television systems. In addition, some companies are developing and/or offering
packages of telephony, data and video services to these private residential and
commercial developments.

   We also compete with wireless terrestrial program distribution services such
as multipoint, multichannel distribution service which use low-power microwave
frequencies to transmit video programming over-the-air to subscribers. There
are multipoint, multichannel distribution service operators who are authorized
to provide or are providing broadcast and satellite programming to subscribers
in areas in the Michigan cluster and the New England cluster. Additionally, the
FCC recently adopted new regulations allocating frequencies in the 28-GHz band
for a new multichannel wireless video service similar to multipoint,
multichannel distribution service. We are unable to predict whether wireless
terrestrial video services will have a material impact on its operations.

   Other new technologies, including Internet-based services, may become
competitive with services that cable television systems can offer. Pursuant to
the Telecommunications Act of 1996, the FCC adopted regulations and policies
for the issuance of licenses for digital television to incumbent television
broadcast licensees. Digital television is expected to deliver high definition
television pictures, multiple digital-quality program streams, as well as CD-
quality audio programming and advanced digital services, such as data transfer
and subscription video. In July 1998, the FCC commenced a rulemaking to
determine the extent to which cable operators will be required to carry these
digital signals. The FCC also has authorized television broadcast stations to
transmit textual and graphic information useful both to consumers and
businesses. The FCC also permits commercial and non-commercial FM stations to
use their subcarrier frequencies to provide non-broadcast services including
data transmissions. The FCC established an over-the-air Interactive Video and
Data Service that will permit two-way interaction with commercial and
educational programming along with informational and data services. Local
exchange carriers and other common carriers also provide facilities for the
transmission and distribution to homes and businesses of interactive computer-
based services, including the Internet, as well as data and other non-video
services. The FCC has conducted spectrum auctions for licenses to provide
personal communication systems. Personal communication systems will enable
license holders, including cable operators, to provide voice and data services.

   Advances in communications technology as well as changes in the marketplace
and the regulatory and legislative environment are constantly occurring. Thus,
we cannot predict the effect that ongoing or future