FCC Denies Charter Dereg in Los Angeles

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Washington -- The Federal Communications Commission denied
rate deregulation to Charter Communications Inc. last week for systems serving nearly
200,000 subscribers in Los Angeles and Orange County, Calif.

The FCC said Charter's competitor, Pacific Bell Video
Services, failed to market its competing digital wireless cable service with sufficient
scope to justify total price deregulation of Charter systems serving 26 communities.

Under the law, a cable operator is deregulated when a phone
company unaffiliated with the cable operator offers comparable video programming by any
means other than direct-broadcast satellite service.

The FCC, in an action by the Cable Services Bureau, did not
dispute that the 11-month-old PBVS was affiliated with a local-exchange carrier (SBC
Communications Inc.), or that PBVS was offering comparable video programming.

However, the FCC said PBVS' deliberate,
"controlled-rollout" marketing strategy meant that "broad awareness"
of PBVS among potential subscribers was lacking. The agency added that while Charter
submitted direct-mail items and newspaper clippings to demonstrate consumer awareness of
PBVS, it failed to show that PBVS had utilized the mass-media to make itself widely known
to the public.

Steven Horvitz, Charter's attorney with Cole, Raywid
& Braverman, said the FCC is improperly reading a mass-media-advertising standard into
the effective-competition test.

"I don't think that there is any basis for it in
the statute," he said, adding that Charter would likely seek a review of the order
from the five FCC commissioners.

Charter said PBVS had 16,000 subscribers, but the FCC said
"several-thousand" were PBVS employees.

The FCC's decision could affect the status of several
pending petitions filed by other Los Angeles-area cable operators that involve PBVS'
wireless cable service.

Cox Communications Inc. is asking for deregulation of its
273,000-subscriber New Orleans cluster based upon BellSouth Corp.'s 160-channel
digital wireless cable service there.

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