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SEC Filings

S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 07/22/1999
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multiple dwelling unit owner at replacement cost or a negotiated price. If the
cable operator does not sell the inside wiring within a specified period after
termination of service or access rights, then the cable operator must remove
the wiring. If the cable operator neither sells nor removes its wiring, the
wiring is deemed abandoned. A competing provider can then use the inside wiring
to provide service to the individual subscriber or to the multiple dwelling
unit. These regulations increase our risk that a competitor can gain access to
inside wiring after termination of service by a subscriber or termination of
access rights by a multiple dwelling unit owner.
 
   The FCC has also issued a further notice of proposed rulemaking on other
inside wiring issues including possible restrictions on exclusive multiple
dwelling unit contracts and the applicability of the inside wiring rules to all
video providers, not just cable operators. We cannot predict the ultimate
outcome of this rulemaking or its impact on our cable systems.
 
Ownership Limitations
 
   Horizontal ownership limits. Under the Cable Television Consumer Protection
and Competition Act, the FCC adopted rules prescribing national subscriber
limits. A federal court found the statutory limitation unconstitutional and the
FCC stayed enforcement of its rules. On June 26, 1998, the FCC released an
order on reconsideration of its horizontal ownership rules, although it did not
lift its stay of those rules. In that order, the FCC denied petitions
requesting that it lower its horizontal ownership limits. The FCC has recently
sought comments on whether to change the definition of ownership that
constitutes a cognizable interest in a cable system. The results of these
proceedings could affect all ownership prohibitions.
 
   Affiliated programmer limits. The Cable Television Consumer Protection and
Competition Act requires the FCC to adopt limits on the number of channels on
which a cable operator can carry programming provided by an affiliated video
programmer.
 
   Changes to broadcast cross-ownership restrictions. The Telecommunications
Act of 1996 eliminated the statutory prohibition on the common ownership,
operation or control of a cable system and a television broadcast station in
the same service area and directed the FCC to review its broadcast/cable
ownership restrictions. Upon review, the FCC eliminated its regulatory
restriction on cross-ownership of cable systems and national broadcasting
network stations. The FCC has also released a notice of inquiry seeking comment
on all of the broadcast ownership rules not already under review in other
proceedings.
 
   Changes to satellite master antenna television and MMDS cross-ownership
restrictions. In January 1995, the FCC relaxed its restrictions on ownership of
satellite master antenna television systems. The revised rules permit a cable
operator to acquire satellite master antenna television systems in the
operator's existing franchise area so long as the programming services provided
through the satellite master antenna television system are offered according to
the terms of the cable operator's local franchise agreement. The
Telecommunications Act of 1996 provides that the cable/satellite master antenna
television and cable/multipoint, multichannel distribution service cross-
ownership rules do not apply in any franchise area where the operator faces
effective competition.
 
Competition with Local Exchange Carriers
 
   The Telecommunications Act of 1996 makes significant changes to the
regulation of local exchange carriers that provide cable services. The
Telecommunications Act of 1996:
 
  . Eliminates the requirement that local exchange carriers obtain Section
    214 approval from the FCC before providing video services in their
    telephone service areas.
 
  . Removes the statutory telephone company/cable television cross-ownership
    prohibition, allowing local exchange carriers to offer video services in
    their telephone service areas.
 
  . Permits local exchange carriers to provide service as franchised cable
    operators or as "open video system" operators. As an open video system
    operator, a local exchange carrier may face less
 
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