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Exhibit 99.1

RISK FACTORS

Mr. Allens Controlling Position

Mr. Allen may have interests that conflict with your interests.

Mr. Allen controls approximately 92.3% of the voting power of the capital
stock of our manager, Charter Communications, Inc., and is entitled to elect
all but one of its board members. Accordingly, Mr. Allen controls Charter
Communications, Inc., which, in turn, controls Charter Communications Holding
Company and Charter Holdings. Mr. Allen thus has the ability to control
fundamental corporate transactions requiring equity holder approval, including,
but not limited to, the election of all of Charter Communications, Inc.s
directors, approval of merger transactions involving us and the sale of all or
substantially all of our assets.

Mr. Allens control over our management and affairs could create conflicts
of interest if he is faced with decisions that could have implications for him,
us and the holders of our public notes. Further, Mr. Allen could effectively
cause us to enter into contracts with another entity in which he owns an
interest or to decline a transaction that he (or another entity in which he
owns an interest) ultimately enters into.

Mr. Allen may engage in other businesses involving the operation of cable
television systems, video programming, high-speed Internet access, telephony or
business and financial transactions conducted through broadband interactivity
and Internet services. Mr. Allen may also engage in other businesses that
compete or may in the future compete with us. In addition, Mr. Allen currently
engages and may engage in the future in businesses that are complementary to
our cable and broadband technology business.

Accordingly, conflicts could arise with respect to the allocation of
corporate opportunities between us and Mr. Allen. Current or future agreements
between us and either Mr. Allen or his affiliates may not be the result of
arms-length negotiations. Consequently, such agreements may be less favorable
to us than agreements that we could otherwise have entered into with
unaffiliated third parties. Further, many past and future transactions with
Mr. Allen or his affiliates are informal in nature. As a result, there will be
some discretion left to the parties, who are subject to the potentially
conflicting interests described above. We cannot assure you that the interests
of either Mr. Allen or his affiliates will not conflict with the interests of
the holders of our public notes. We have not instituted any formal plans to
address conflicts of interest that may arise; however, our indentures impose
certain requirements on affiliate transactions, such as board approval by the
board of Charter Holdings and, in larger transactions, receipt of a fairness
opinion.

We are not permitted to engage in any business activity other than the cable
transmission of video, audio and data unless Mr. Allen authorizes us to pursue
that particular business activity. This could adversely affect our ability to
offer new products and services outside of the cable transmission business and
enter into new businesses, which could adversely affect our growth, financial
condition and results of operations.

Charter Communications, Inc.s certificate of incorporation and Charter
Communications Holding Companys limited liability company agreement provide
that Charter Communications, Inc. and Charter Communications Holding Company
and their subsidiaries cannot engage in any business activity outside the cable
transmission business except for specified businesses. This will be the case
unless the opportunity to pursue the particular business activity is first
offered to Mr. Allen, he decides not to pursue it and he consents to our
engaging in the business activity. The cable transmission business means the
business of transmitting video, audio, including telephone services, and data
over cable television systems owned, operated or managed by us from time to
time. These provisions may limit our ability to take advantage of attractive
business opportunities. Consequently, our ability to offer new products and
services outside of the cable transmission business and enter into new
businesses could be adversely affected, resulting in an adverse effect on our
growth, financial condition and results of operations.





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Our management may be responsible for managing other cable operations and may
not devote their full time to our operations. This could give rise to
conflicts of interest and impair our operating results.

Mr. Allen and certain other of our affiliates may from time to time in the
future acquire cable systems in addition to those owned by us. Charter
Communications, Inc., as well as some of the officers of Charter
Communications, Inc. who currently manage our cable systems, may have a
substantial role in managing outside cable systems that may be acquired in the
future. As a result, the time they devote to managing our systems may be
correspondingly reduced. This could adversely affect our growth, financial
condition and results of operations. Moreover, allocating managers time and
other resources of Charter Communications, Inc. and Charter Communications
Holding Company between our systems and outside systems that may be held by our
affiliates could give rise to conflicts of interest. Charter Communications,
Inc. and Charter Communications Holding Company do not have or plan to create
formal procedures for determining whether and to what extent cable systems
acquired in the future will receive priority with respect to personnel
requirements.

Our Structure

Charter Holdings is a holding company that has no operations and will depend on
its operating subsidiaries for cash to make payments on its public notes.
Charter Holdings subsidiaries are limited in their ability to make funds
available for the payment of our public notes and our other obligations.

As a holding company, we will depend entirely on cash from our operating
subsidiaries to satisfy our obligations under our public notes. Our operating
subsidiaries may not be able to make funds available to us.

We will not hold any significant assets other than our direct and indirect
interests in our subsidiaries which conduct all of our operations. Our cash
flow depends upon the cash flow of our operating subsidiaries and the payment
of funds by our operating subsidiaries to us. This could adversely affect our
ability to meet our obligations to the holders of our public notes or to our
other creditors.

Our operating subsidiaries are separate and distinct legal entities and
are not obligated to make funds available for payment of our public notes and
other obligations in the form of loans, distributions or otherwise. In
addition, our operating subsidiaries ability to make any such loans,
distributions or other payments to us will depend on their earnings, business
and tax considerations and legal restrictions. Furthermore, covenants in the
indentures and credit agreements governing the debt of our subsidiaries
restrict their ability to make loans, distributions or other payments to us.
This could adversely impact our ability to pay interest and principal due on
our public notes.

Because of our holding company structure, our public notes are structurally
subordinated to all liabilities of our subsidiaries.

The borrowers and guarantors under the Charter Operating credit
facilities, the CC VI Operating credit facilities, the CC VII credit facilities
and the CC VIII Operating credit facilities are our direct or indirect
subsidiaries. A number of our subsidiaries are also obligors under other debt
instruments. As of December 31, 2001, pro forma for the issuance and sale of
the January 2002 Charter Holdings notes and the application of the net proceeds
therefrom to repay a portion of the amounts then outstanding under the credit
facilities of our subsidiaries and for general corporate purposes, our total
debt would have been approximately $15.1 billion, $6.7 billion of which would
have been structurally senior to our public notes. Since December 31, 2001,
our subsidiaries have incurred substantial additional indebtedness under their
revolving credit facilities, all of which is structurally senior to our public
notes. The lenders under all of our subsidiaries credit facilities and the
holders of the other debt instruments and all other creditors of our
subsidiaries will have the right to be paid before us from any of our
subsidiaries assets. In addition, if we caused a subsidiary to pay a dividend
to enable us to make payments in respect of our public notes, and such transfer
were deemed a fraudulent transfer or an unlawful distribution, the holders of
our public notes could be required to return the payment to (or for the benefit
of) the creditors of our subsidiaries. In the event of the bankruptcy,
liquidation or dissolution of a subsidiary, following payment by such
subsidiary of its liabilities, such subsidiary may not have sufficient assets
remaining to make any payments to us as an equity holder or otherwise. This
adversely affects our ability to make any payments to the holders of our public
notes. In addition, our public notes are unsecured

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and therefore are effectively subordinated in right of payment to any
existing and future secured debt we may incur to the extent of the value of the
assets securing such debt.

If our subsidiaries default under their credit facilities or public notes, we
may not have the ability to make payments on our public notes.

In the event of a default under our subsidiaries credit facilities or
public notes, our subsidiaries creditors could elect to declare all amounts
borrowed, together with accrued and unpaid interest and other fees, to be due
and payable. In such event, our subsidiaries credit facilities and indentures
will not permit our subsidiaries to distribute funds to us to pay interest or
principal on our public notes or to meet our other obligations. If the amounts
outstanding under such credit facilities or public notes are accelerated, all
of our subsidiaries debt and liabilities would be payable from our
subsidiaries assets, prior to any distribution of our subsidiaries assets to
pay the interest and principal amounts on our public notes and we might not be
able to repay or make any payments on our public notes. Additionally, such a
default would cause a cross-default in the indentures governing the Charter
Holdings notes and would trigger the cross-default provision of the Charter
Operating Credit Agreement. Any default under any of our subsidiaries credit
facilities or public notes might adversely affect the holders of our public
notes and our growth, financial condition and results of operations.

We may not have the ability to raise the funds necessary to fulfill our
obligations under our public notes following a change of control. This would
place us in default under the indentures governing our public notes.

Under the indentures governing our public notes, upon the occurrence of
specified change of control events, including certain specified dispositions of
stock of Charter Communications, Inc. by Mr. Allen, we are required to offer to
repurchase all of our outstanding public notes. However, we may not have
sufficient funds at the time of the change of control event to make the
required repurchase of our public notes and our subsidiaries are limited in
their ability to make distributions or other payments to us to fund any
required repurchase. In addition, a change of control under our subsidiaries
credit facilities and the indentures governing our and our subsidiaries public
notes would require the repayment of borrowings under those credit facilities
and indentures. Because our subsidiaries credit facilities and public notes
are obligations of our subsidiaries, such credit facilities and public notes
would have to be repaid by our subsidiaries before our subsidiaries assets
could be available to us to repurchase our public notes. Our failure to make or
complete an offer to repurchase our public notes would place us in default
under the indentures governing our public notes. The failure of our
subsidiaries to make or complete a change of control offer or to repay the
amounts outstanding under their credit facilities would place us in default
under our indentures governing our public notes and our subsidiaries in default
under the indentures governing their public notes and their credit facilities.
A number of important corporate events, such as leveraged recapitalizations,
that would increase the level of our indebtedness would not constitute a change
of control under the indentures governing our public notes.

Our Business

We and our subsidiaries have substantial existing debt and may incur
substantial additional debt in the future, which could adversely affect our
financial health and our ability to obtain financing in the future and react to
changes in our business.

We and our subsidiaries have a significant amount of debt. As of December
31, 2001, pro forma for the issuance and sale of the January 2002 Charter
Holdings notes and the application of the net proceeds therefrom to repay a
portion of the amounts then outstanding under the credit facilities of our
subsidiaries and for general corporate purposes, our total debt would have been
approximately $15.1 billion, our members equity would have been approximately
$7.2 billion and the deficiency of our earnings available to cover fixed
charges would have been approximately $2.7 billion. Since December 31, 2001,
our subsidiaries have incurred substantial additional debt under their
revolving credit facilities. Our significant amount of debt could have
important consequences. For example, it could:



| |  |  | make it more difficult for us to satisfy our obligations to
the lenders under our subsidiaries credit facilities and to the
holders of our and our subsidiaries public notes;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  |  | increase our vulnerability to general adverse economic and
cable industry conditions, including interest rate increases,
because a significant portion of our borrowings are and will
continue to be at variable rates of interest;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | require us to dedicate a substantial portion of our cash flow
from operations to payments on our debt, which will reduce our funds
available for working capital, capital expenditures and other
general corporate expenses;       
|
| |  |  | limit our flexibility in planning for, or reacting to,
changes in our business, the cable and telecommunications industries
and the economy at large;                                                                              
|
| |  |  | place us at a disadvantage compared to our competitors that
have proportionately less debt; and                                                                                                                                    
|
| |  |  | limit our ability to borrow additional funds in the future,
if we need them, due to applicable financial and restrictive
covenants in our debt.                                                                                    

We anticipate that we may incur significant additional debt, including
through our subsidiaries, in the future to fund the expansion, maintenance and
upgrade of our cable systems. If current debt levels increase, the related
risks that we now face will intensify.

The agreements and instruments governing our debt and the debt of our
subsidiaries contain restrictions and limitations that could significantly
impact our ability to operate our business and adversely affect the holders of
our public notes.

The credit facilities of our subsidiaries and the indentures governing our
and our subsidiaries public notes contain a number of significant covenants
that could adversely impact our business and adversely affect the holders of
our public notes. In particular, the credit facilities of our subsidiaries and
the indentures of our and our subsidiaries public notes restrict our ability
and the ability of our subsidiaries to:



| |  |  | pay dividends or make other distributions;     
| | - |  | -----------------------------------------------
|
| |  |  | make certain investments or acquisitions;      
|
| |  |  | dispose of assets or merge;                    
|
| |  |  | incur additional debt;                         
|
| |  |  | issue equity;                                  
|
| |  |  | repurchase or redeem equity interests and debt;
|
| |  |  | grant liens; and                               
|
| |  |  | pledge assets.                                 

Furthermore, in accordance with our subsidiaries credit facilities, a
number of our subsidiaries are required to maintain specified financial ratios
and meet financial tests. The ability to comply with these provisions may be
affected by events beyond our control. The breach of any of these covenants
will result in a default under the applicable debt agreement or instrument and
could trigger acceleration of the debt under the applicable agreement. Such a
default would cause a cross-default in the indentures governing our notes and
would trigger the cross-default provision of the Charter Operating Credit
Agreement. Any default under our subsidiaries credit facilities or indentures
governing our outstanding debt might adversely effect our growth, our financial
condition, our results of operations and the ability to make payments on our
and our subsidiaries publicly held notes and on our subsidiaries credit
facilities.

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Our ability to generate the significant amount of cash needed to service our
debt and the debt of our subsidiaries and grow our business depends on many
factors beyond our control.

Our ability to service our debt and to fund our planned capital
expenditures for upgrading our cable systems and our ongoing operations will
depend on our ability to generate cash and to secure financing in the future.
This, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors beyond our control.
Additionally, it is difficult to assess the impact that the terrorist attacks
on September 11, 2001 and the subsequent armed conflict and related events,
combined with the general economic slowdown, will have on future operations.
These events, combined with the general economic slowdown, could result in
reduced spending by customers and advertisers, which could reduce our revenues
and operating cash flow. If our business does not generate sufficient cash
flow from operations, and sufficient future distributions are not available to
us from borrowings under our subsidiaries credit facilities or from other
sources of financing, we may not be able to repay our debt, to grow our
business or to fund our other liquidity and capital needs.

We have grown rapidly and have a limited history of operating our current
systems. This makes it difficult for you to completely evaluate our
performance.

We commenced active operations in 1994 and have grown rapidly since then
through acquisitions of cable systems. As of December 31, 2001, our systems
served over 300% more customers than were served as of December 31, 1998. As a
result, historical financial information about us may not be indicative of the
future or of results that we can achieve with the cable systems that are
currently under or will be under our control. Our recent growth in revenues
over our short operating history is not necessarily indicative of future
performance.

We have a history of net losses and expect to continue to experience net
losses. Consequently, we may not have the ability to finance future
operations.

We have had a history of net losses and expect to continue to report net
losses for the foreseeable future. We expect our net losses to increase as a
result of our recently closed acquisitions and our planned upgrades and other
capital expenditures. We reported net losses before extraordinary items of
$2.6 billion for 2001, $2.0 billion for 2000 and $640.9 million for 1999. On a
pro forma basis, giving effect to acquisitions in 2000 and 2001, the sale of an
insignificant subsidiary in December 2000, the sale of the January 2000,
January 2001, May 2001 and January 2002 Charter Holdings notes, the drawdown on
the Charter Holdings 2000 senior bridge loan facility, application of the net
proceeds contributed to us from the sale of Charter Communications, Inc.s
convertible senior notes in October and November 2000 and May 2001 and May 2001
sale of Class A common stock, we had a net loss of $2.7 billion for 2001. We
cannot predict what impact, if any, continued losses will have on our ability
to finance our operations in the future.

If we are unsuccessful in growing our net operating cash flow, our financial
condition and results of operations could be adversely affected.

If we are unable to grow our cash flow sufficiently, we may be unable to
repay our debt, to grow our business or to fund our other liquidity needs. We
expect that a substantial portion of our future growth will be achieved through
revenues from new products and services. We may not be able to offer these new
products and services successfully to our customers and these new products and
services may not generate adequate revenues. If we are unable to grow our cash
flow sufficiently, we may be unable to fulfill our obligations or obtain
alternative financing. Further, due to declining market conditions and slowing
economic trends during the last year, both before and after the terrorist
attacks on September 11, 2001, we cannot assure you that we will be able to
achieve our planned levels of growth as these conditions and events may
negatively affect the demand for our additional services and products and
spending by customers and advertisers.

Our programming costs are increasing. We may not have the ability to pass
these increases on to our customers, which would adversely affect our cash flow
and operating margins.

Programming has been, and is expected to continue to be, our largest
operating expense item. In recent years, the cable industry has experienced a
rapid escalation in the cost of programming, particularly

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sports programming. This escalation may continue, and we may not be able
to pass programming cost increases on to our customers. The inability to pass
these programming cost increases on to our customers would have an adverse
impact on our cash flow and operating margins. In addition, as we upgrade the
channel capacity of our systems and add programming to our basic, expanded
basic and digital services offerings, we may face additional market constraints
on our ability to pass programming costs on to our customers.

Our level of capital expenditures is dependent upon many circumstances,
including growth in digital cable customers and in the delivery of other
advanced services. If our required capital expenditures exceed our
projections, we may not have sufficient funding, which could adversely affect
our growth, financial condition and results of operations.

In 2002, we expect to spend a total of approximately $2.5 billion to
upgrade and rebuild our systems in order to offer advanced services to our
customers and for normal recurring capital expenditures. The actual amount of
our capital expenditures will depend, in part, on the level of growth in
digital cable customers and in the delivery of other advanced services.

We currently anticipate that we will have sufficient capital to fund our
capital expenditures through 2003. However, we may need additional capital if
there is accelerated growth in digital cable customers or in the delivery of
other advanced services, whether as a result of increasing demand for advanced
products and services in our upgraded service areas or a need to upgrade other
service areas ahead of schedule. We may also need additional capital if we
acquire substantial additional customers. If we cannot obtain such capital
from increases in our operating cash flow, additional borrowings or other
sources, we may not be able to fund any accelerated growth, offer advanced
products and services on a timely basis or compete effectively. Consequently,
our growth, financial condition and results of operations could suffer
materially.

We depend on third-party service suppliers for certain of our services. If we
are unable to procure the necessary services, our ability to offer our services
could be impaired. This could adversely affect our growth, financial condition
and results of operations.

We depend on third-party suppliers to supply the hardware, software and
operational support necessary to provide certain of our advanced services.
Currently, we obtain these services from a limited number of suppliers, some of
which do not have a long operating history. If demand for these services
exceeds our suppliers capacity or if our suppliers experience operating or
financial difficulties similar to those experienced by Excite@Home Corporation,
our ability to provide these advanced services might be adversely effected
which could adversely affect our growth, financial condition and results of
operations. In addition, the inability of these vendors to provide equipment
or services might result in additional costs to us, including the costs to
negotiate alternative vendor relationships, the cost to develop the capacity to
provide the equipment and services ourselves and the loss of customers as a
result of our inability to provide such advanced services or an interruption of
service following a vendors cessation of service. We are working to establish
alternative vendors for services we consider critical, but there can be no
assurance that we will be able to establish such relationships or that we will
be able to obtain such equipment and services on a equally favorable basis.

We may not be able to fund the capital expenditures necessary to keep pace with
technological developments or our customers demand for new products and
services. This could limit our ability to compete effectively. Consequently,
our growth, results of operations and financial condition could suffer
materially.

The cable business is characterized by rapid technological change and the
introduction of new products and services. We cannot assure you that we will
be able to fund the capital expenditures necessary to keep pace with
technological developments, or that we will successfully anticipate the demand
of our customers for products and services requiring new technology.
Additionally, many developers of advanced products and services do not have a
long operating history. As a result, if these developers experience financial
difficulties, our ability to offer these advanced products and services could
be adversely affected. Our inability to upgrade, maintain and expand our
systems and provide advanced services in a timely manner, or to anticipate the
demands of the marketplace, could adversely affect our ability to compete.
Consequently, our growth, financial condition and results of operations could
suffer materially.

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There is no expectation that Mr. Allen will fund our operations or obligations
in the future.

In the past, Mr. Allen and his affiliates have contributed funds to
Charter Communications, Inc., Charter Communications Holding Company and us.
There is no expectation that Mr. Allen or his affiliates will contribute funds
to Charter Communications, Inc., Charter Communications Holding Company, us or
to our subsidiaries in the future.

A sale by Mr. Allen of his direct or indirect equity interests could adversely
affect our ability to manage our business.

Mr. Allen is not prohibited by any agreement from selling the shares of
Class A or Class B common stock he holds in Charter Communications, Inc. or
causing Charter Investment, Inc. or Vulcan Cable III Inc. to sell their
membership units in Charter Communications Holding Company. We cannot assure
you that Mr. Allen or any of his affiliates will maintain all or any portion of
his direct or indirect ownership interests in Charter Communications, Inc. and
Charter Communications Holding Company. In the event he sells all or any
portion of his direct or indirect ownership interest in Charter Communications,
Inc. or Charter Communications Holding Company, we cannot assure you that he
would continue as Chairman of Charter Communications, Inc.s board of directors
or otherwise participate in our management. The disposition by Mr. Allen or
any of his affiliates of these equity interests or the loss of his services by
Charter Communications, Inc. and/or Charter Communications Holding Company
could adversely affect our growth, financial condition and results of
operations or adversely impact the market price of our public notes.

We operate in a very competitive business environment which can adversely
affect our business and operations.

The industry in which we operate is highly competitive. In some
instances, we compete against companies with fewer regulatory burdens, easier
access to financing, greater personnel resources, greater brand name
recognition and long-standing relationships with regulatory authorities and
customers. Increasing consolidation in the cable industry and the repeal of
certain cross-ownership rules may further enhance the ability of certain of our
competitors, either through access to financing, resources or efficiencies of
scale. We face competition within the subscription television industry, which
includes providers of paid television service employing technologies other than
cable, such as direct broadcast satellite, also known as DBS. A pending merger
between the two largest DBS providers, if approved by regulators and
consummated by the parties, would provide the surviving entity with increased
resources and could further strengthen competition from this sector. Local
telephone companies and electric utilities can compete in this area, and they
increasingly may do so in the future. The subscription television industry
also faces competition from broadcast companies distributing television
broadcast signals without assessing a subscription fee and from other
communications and entertainment media, including conventional radio
broadcasting services, newspapers, movie theaters, the Internet, live sports
events and home video products. With respect to our Internet access services,
we face competition from providers of digital subscriber line technology, also
known as DSL, including in many cases telephone companies. Additionally,
technological developments, such as the ability to stream video over the
Internet, could introduce additional competition into video programming
services, a core part of our business, particularly from high speed Internet
access providers, such as providers of DSL.

We cannot assure you that upgrading our cable systems will allow us to
compete effectively. Additionally, as we expand and introduce new and enhanced
services, including Internet and telecommunications services, we will be
subject to competition from telecommunications providers and Internet service
providers. We cannot predict the extent to which competition may affect our
business and operations in the future.

We may not have the ability to integrate the new cable systems that we acquire
and the customers they serve with our existing cable systems. This could
adversely affect our operating results and growth strategy.

We have grown through acquisitions of cable systems and now own and
operate cable systems serving approximately 7 million customers. We may
acquire more cable systems in the future, through direct

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acquisition, system swaps or otherwise. The integration of the cable
systems we have acquired or may in the future acquire, poses a number of
significant risks, including:



| |  |  | our acquisitions may not have a positive impact on our cash
flows from operations;                                                                                                                                                                                                                                                                                                     
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the integration of these new systems and customers will place
significant demands on our management and our operations,
information services, and financial, legal and marketing resources.
Our current operating and financial systems and controls and
information services may not be adequate, and any steps taken to
improve these systems and controls may not be sufficient; and
|
| |  |  | acquired businesses sometimes result in unexpected
liabilities and contingencies that could be significant.                                                                                                                                                                                                                                                                            

We cannot assure you that we will successfully integrate any acquired
systems into our operations.

The loss of any of our key executives could adversely affect our ability to
manage our business.

Our success is substantially dependent upon the retention and the
continued performance of our executive officers. Many of these executive
officers are uniquely qualified in their areas of expertise, making it
difficult to replace their services. The loss of the services of any of these
officers could adversely affect our growth, financial condition and results of
operations.

Regulatory and Legislative Matters

Our business is subject to extensive governmental legislation and regulation.
The applicable legislation and regulations, and changes to them, could
adversely affect our business by increasing our expenses.

Regulation of the cable industry has increased the administrative and
operational expenses and limited the revenues of cable systems. Cable
operators are subject to, among other things:



| |  |  | subscriber privacy;                                                                                                                                              
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | limited rate regulation;                                                                                                                                         
|
| |  |  | requirements that, under specified circumstances, a cable
system carry a local broadcast station or obtain consent to carry a
local or distant broadcast station;
|
| |  |  | rules for franchise renewals and transfers; and                                                                                                                  
|
| |  |  | other requirements covering a variety of operational areas
such as equal employment opportunity, technical standards and
customer service requirements.          

Additionally, many aspects of these regulations are currently the subject
of judicial proceedings and administrative or legislative proposals. There are
also ongoing efforts to amend or expand the federal, state and local regulation
of some of our cable systems, which may compound the regulatory risks we
already face. Certain states and localities are considering new
telecommunications taxes that could increase operating expenses. We cannot
predict whether in response to these efforts any of the states or localities in
which we now operate will expand regulation of our cable systems in the future
or how they will do so.

We may encounter substantially increased pole attachment costs.

Although cable system attachments to public utility poles historically
have been regulated at the federal or state level, utility pole owners in many
areas are attempting to circumvent or eliminate pole regulation by raising fees
and imposing other costs on cable operators and others. A recent decision by
the

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United States Supreme Court (reversing a lower appeals court decision)
rejected the efforts of some utility pole owners to make cable attachments
carrying Internet traffic ineligible for regulatory protection. This decision
significantly decreases the risk that utility pole owners will attempt to
impose surcharges on cable operators for the provision of new Internet-based
products and services. There are, however, additional utility pole owner
challenges to the federal pole attachment formula and other areas of pole
regulation pending in the courts which, if successful, could complicate our
operations and increase our costs. In addition, to the extent we offer
telecommunications services, such an offering will subject pole attachments to
increased rates under the federal formula.

We may be required to provide access to our networks to other Internet service
providers. This could significantly increase our competition and adversely
affect the upgrade of our systems or our ability to provide new products and
services.

A number of companies, including telephone companies and Internet service
providers (ISPs), have requested local authorities and the Federal
Communications Commission to require cable operators to provide access to
cables broadband infrastructure, which allows cable to deliver a multitude of
channels and/or services, so that these companies may deliver Internet services
directly to customers over cable facilities. Multiple federal courts have
struck down open-access requirements imposed by a variety of franchising
authorities as unlawful. Each of these decisions struck down the open-access
requirements on different legal grounds. In March 2002, the Federal
Communications Commission ruled that cable modem service is an interstate
information service, rather than a cable or telecommunications service. This
classification should leave cable modem service exempt from the burdens
associated with traditional cable and telecommunications regulations, including
any open-access requirement. This ruling, however, is still subject to
judicial review, and the Federal Communications Commission itself has initiated
a rulemaking proceeding to consider whether some form of open-access
requirement could be imposed in the future, notwithstanding the regulatory
classification of cable modem service.

We believe that allocating a portion of our bandwidth capacity to other
Internet service providers:



| |  |  | would impair our ability to use our bandwidth in ways that
would generate maximum revenues; and                                  
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | may cause us to decide not to upgrade our systems, which
would prevent us from introducing our planned new products and
services.

In addition, we cannot assure you that if we were required to provide
access in this manner, it would not have a significant adverse impact on our
profitability. This could impact us in many ways, including by:



| |  |  | reducing our ability to offer products and services as a result of decreased capacity;
| | - |  | --------------------------------------------------------------------------------------
|
| |  |  | increasing the expenses we incur to maintain our systems; and/or                      
|
| |  |  | increasing the expense of upgrading and/or expanding our systems.                     

Our cable systems are operated under franchises that are subject to non-renewal
or termination. The failure to renew a franchise could adversely affect our
business in a key market.

Our cable systems generally operate pursuant to franchises, permits or
licenses granted by a municipality or other state or local government
controlling the public rights-of-way. Many franchises establish comprehensive
facilities and service requirements, as well as specific customer service
standards and monetary penalties for non-compliance. In many cases, franchises
are terminable if the franchisee fails to comply with significant provisions
set forth in the franchise agreement governing system operations. Franchises
are generally granted for fixed terms and must be periodically renewed. Local
franchising authorities may resist granting a renewal if either past
performance or the prospective operating proposal is considered inadequate.
Franchise authorities often demand concessions or other commitments as a
condition to renewal. In some instances, franchises have not been renewed at
expiration, and we have operated under either temporary

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operating agreements or without a license while negotiating renewal terms
with the local franchising authorities.

We cannot assure you that we will be able to comply with all significant
provisions of our franchise agreements. Additionally, although historically we
have renewed our franchises without incurring significant costs, we cannot
assure you that we will be able to renew, or to renew as favorably, our
franchises in the future. A termination of and/or a sustained failure to renew
a franchise could adversely affect our business in the affected geographic
area.

Changes in channel carriage regulations could impose significant additional
costs on us.

Cable operators also face significant regulation of their channel
carriage. They currently can be required to devote substantial capacity to the
carriage of programming that they would not carry voluntarily, including
certain local broadcast signals, local public, educational and government
access programming, and unaffiliated commercial leased access programming.
This carriage burden could increase in the future, particularly if the Federal
Communications Commission were to require cable systems to carry both the
analog and digital versions of local broadcast signals. The Federal
Communications Commission currently is conducting a proceeding in which it is
considering this channel usage possibility, although it recently issued a
tentative decision against such dual carriage.

We operate our cable systems under franchises that are non-exclusive. Local
franchising authorities can grant additional franchises and create competition
in market areas where none existed previously.

Our cable systems are operated under franchises granted by local
franchising authorities. These franchises are non-exclusive. Consequently,
local franchising authorities can grant additional franchises to competitors in
the same geographic area. As a result, competing operators may build systems
in areas in which we hold franchises. In some cases municipal utilities may
legally compete with us without obtaining a franchise from the local
franchising authority. The existence of more than one cable system operating
in the same territory is referred to as an overbuild. These overbuilds could
adversely affect our growth, financial condition and results of operations by
increasing competition or creating competition. As of December 31, 2001, we
are aware of overbuild situations impacting approximately 3.5% of our total
basic customers, and potential overbuild situations in areas servicing
approximately 4.6% of our total basic customers, together representing a total
of approximately 8.1% of our basic customers. Additional overbuild situations
may occur in other systems.

Local franchise authorities have the ability to impose additional regulatory
constraints on our business. This could further increase our expenses.

In addition to the franchise document, cable authorities in some
jurisdictions have adopted cable regulatory ordinances that further regulate
the operation of cable systems. This additional regulation increases our
expenses in operating our business. We cannot assure you that the local
franchising authorities will not impose new and more restrictive requirements.
Local franchising authorities also have the power to reduce rates and order
refunds on the rates charged for basic services. For the year ended December
31, 2001, we have refunded approximately $500,000.

Despite deregulation of expanded basic cable programming packages, we are
concerned that cable rate increases could give rise to further regulation.
This could cause us to delay or cancel service or programming enhancements or
impair our ability to raise rates to cover our increasing costs.

On March 31, 1999, the pricing of expanded basic cable programming
packages was deregulated, permitting cable operators to set their own rates.
This deregulation was not applicable to basic services. However, the Federal
Communications Commission and the United States Congress continue to be
concerned that cable rate increases are exceeding inflation. It is possible
that either the Federal Communications Commission or the United States Congress
will again restrict the ability of cable system operators to implement rate
increases. Should this occur, it would impede our ability to raise our rates.
If we are unable to raise our rates in response to increasing costs, our
financial condition and results of operations could be materially adversely
affected.

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Offering telecommunications service will subject us to additional regulatory
burdens causing us to incur additional costs.

In 2002, we will begin to offer telephony on a limited basis through our
broadband network using switch technology and will continue with trials of our
voice-over Internet protocol telephony. Offering telecommunications services
will require us to obtain federal, state and local licenses or other
authorizations. We may not be able to obtain such authorizations in a timely
manner, or at all, and conditions could be imposed upon such licenses or
authorizations that may not be favorable to us. Furthermore,
telecommunications companies, including Internet protocol telephony companies,
generally are subject to significant regulation as well as higher fees for pole
attachments. Internet protocol telephony companies are companies that have the
ability to offer telecommunications services over the Internet. Pole
attachments are cable wires that are attached to poles.

In particular, cable operators who provide telecommunications services and
cannot reach agreement with local utilities over pole attachment rates in
states that do not regulate pole attachment rates will be subject to a
methodology prescribed by the Federal Communications Commission for determining
the rates. These rates may be higher than those paid by cable operators that
do not provide telecommunications services. The rate increases are being
phased in over a five-year period that began on February 8, 2001. If we become
subject to telecommunications regulation or higher pole attachment rates, we
may incur additional costs, which might be material to our business.

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