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9 <br /> Effect Upon Competition <br /> Presently, three cable television service providers serve Triangle area residents, they are: Time <br /> Warner Cable, Cablevision Industries and Deacon Cable [Holly Springs]. The sale of Alert to <br /> Time Warner [transfer of control] will eliminate any opportunity, ever, for CVI and TWC to <br /> compete for subscribers. The chance for competition will be eliminated, granting a true <br /> monopoly to Time Warner, until such time [5-10 years] that a telephone company may be able <br /> to offer area-wide cable television service, thus establishing a true competitive marketplace. <br /> The CVI acquisition gives Time Warner virtually 100% coverage of the traditional wireline <br /> cable television service in North Carolina. <br /> In May, Bell Atlantic withdrew major video dial tone applications from the FCC, abandoning <br /> earlier plans to serve 3 million households. This has effectively forestalled competitive entry <br /> by the traditional telephone companies into the cable television business nationwide. <br /> Rate regulation was established in 1992 to off-set the absence of competition. The FCC's <br /> competitive differential reduced rates up to 17% and established an orderly process to adjust <br /> rates for channels, services, inflation and external program costs. Because of these and other <br /> related circumstances, the manner in which loss of a potential competitive provider from the <br /> marketplace is offset, must be carefully evaluated. <br /> Clustering <br /> Time Warner, is aggressively pursuing core markets in New York, North Carolina and Florida <br /> because of its wide ranging desire to offer telephone services. Ostensibly, telecommunication <br /> services would be offered to existing cable subscribers as well as new commercial and business <br /> customers [Multichannel News April 17, 1995]. Time Warner has embarked upon a program <br /> to send thousands of local telephone calls to and from multiple dwelling units [apartment and <br /> condo complexes] in Rochester, New York. This action is consistent with TWI's goal of <br /> entering the switched business and residential telephone and telecommunication marketplace <br /> [Multichannel News, February 27, 1995]. <br /> Basic Rates <br /> After the acquisition of Alert by TWI, it is unclear whether Time Warner will revalue <br /> intangible assets beyond present levels nor is it certain that Time Warner will submit another <br /> Cost-of-Service rated filing for its Alert franchises. Should Time Warner/Alert submit a <br /> Benchmark rate filing in 1997, intangible assets are not considered in the rate proceeding. <br /> Because 70% of Alert Cable's current rate base includes intangible assets, such as subscriber <br /> lists, a revaluation could increase the basic rate for cable service. Under FCC rate making <br /> rules, the new owner-operator is allowed two years in which to amortize the value of customer <br /> 7 <br />