Adelphia Cites DBS Gains in Vermont Bid

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Washington -- Adelphia Communications Corp. became the
first major cable operator to rely chiefly on direct-broadcast satellite penetration as
the basis for seeking total rate deregulation from the Federal Communications Commission.

In recently obtained petitions Adelphia filed at the FCC,
the MSO asked the agency to bar Vermont authorities from regulating basic rates in the
nine franchise areas that it is authorized to serve. Adelphia has about 100,000
subscribers there, or 70 percent of the state's cable customers.

Should the FCC back Adelphia, the decision would probably
not affect two ongoing disputes the company has with Vermont regulators, according to
Adelphia vice president and general counsel Randall Fisher.

Vermont regulators want to fine Adelphia $5.26 million for
a number of alleged franchise infractions, including failure to list three small
communities on a rebuild schedule. The operator said those three communities are
uneconomical to upgrade at this time.

Vermont officials also want Adelphia to stop charging late
fees and to refund subscribers $220,000 for previous late-fee charges. The state claimed
that the cost of the late fees has been built into the regulated basic-tier price
structure, and it should not be recovered a second time through an additional charge.

Adelphia a filed an emergency stay with the FCC to block
Vermont's refund order. AT&T Corp. and the National Cable Television Association
backed Adelphia, saying that Vermont erred in its view that late-fee costs are embedded in
regulated basic rates.

DBS carriers have about 69,000 subscribers in Vermont, or
around 30 percent household penetration, according to satellite-industry analyst
SkyTRENDS. Only Montana has higher DBS penetration, at 34 percent.

Under federal law, cable competitors need a combined 15
percent household penetration in a franchise area for the incumbent cable operator to
claim "effective competition" and ask the FCC to bar basic-rate regulation by
local franchising authorities.

Adelphia's requests involve only the basic tier because
Congress ordered the FCC to stop price-regulating upper-tier rates as of this past March
31.

Although DBS has scored substantial gains in Vermont, its
penetration has been uneven.

In one petition that covered 36 Vermont communities --
including Burlington and the capital, Montpelier -- Adelphia said DBS penetration was just
below 15 percent.

But the MSO added that the penetration rose to 16 percent
when other cable and wireless cable operators within the franchise area were included.

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