Extension Decision: Waived Ops Must Decide Whether They Need More Time

Charter says it will comply with the FCC‘s set-top integration ban, which requires operators to deploy boxes with CableCards. One year ago, the FCC’s Media Bureau gave the MSO a year-long waiver that allows it to deploy 7 STBs with integrated security through July 1, ’08 because of the financial hardship the ban would create. At the time, the Bureau gave Charter the option of applying for an extension if it believes financial difficulties warrant. A spokeswoman said Thurs that Charter won’t ask for it. "The majority of the set-tops we deploy today are advanced (HD or HD/DVR) and do have CableCard separable security. They were not part of the waiver that we received last year," she said. "We don’t expect a material financial impact from having to comply when the current extension expires." Some other operators granted similar 1-year waivers are asking for extra time. Last week, overbuilder WOW asked for at least another year-long extension so that it can continue to deploy Cisco‘s Explorer 2100, 2200, 3100 and 3200. "An extension of the waiver in order for WOW to have the capital necessary to compete has become even more critical in the past year given the continued decline in the debt market coupled with WOW’s negative free cash flow position, which has also deteriorated since its original waiver request…" the overbuilder told the FCC. WOW’s actual ’07 negative free cash flow came in at $55.4mln (up from a projected $41.3mln) and ’08 negative FCF is projected at $31.4mln (up from $27.7mln). WOW said the waiver has allowed it to deploy digital simulcast, replace advanced analog boxes and introduce 2-way video services. Without an extension, "these necessary initiatives will be substantially curtailed…" WOW wrote. James Cable also has asked for an extension based on its finances, telling the FCC that it posted negative free cash flow of nearly $900K last year, lost another 4% of its basic subs and has a penetration rate of only 36%.