UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal yearperiod ended December 31, 20162018

Commission File Numbers:333-72440

                                                       333-82124-02

Mediacom Broadband LLC

Mediacom Broadband Corporation*

(Exact names of Registrants as specified in their charters)

1 Mediacom Way

Mediacom Park, New York 10918

(Address of principal executive offices)

(845)443-2600

(Registrants’ telephone number)

Securities registered pursuant to Section 12(b) of the Exchange Act:

None

Securities registered pursuant to Section 12(g) of the Exchange Act:

None

Indicate by check mark if the Registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

Indicate by check mark if the Registrants are not required to file pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  ☒    No  ☐

Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15(d)15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.    ☐  Yes    ☐☒  No  ☒

Note: As voluntary filers, not subject to the filing requirements, the Registrants have filed all reports under Section 13 or 15(d) of the Exchange Act during the preceding 12 months.

Indicate by check mark whether the Registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the Registrants were required to submit and post such files).    ☒  Yes    ☒☐  No  ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K is not contained herein, and will not be contained, to the best of the Registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form10-K. Not Applicable.

Indicate by check mark whether the Registrants are large accelerated filers, accelerated filers,non-accelerated filers, or smaller reporting companies, or emerging growth companies. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” inRule 12b-2 of the Exchange Act.

If emerging growth companies, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the Registrants are shell companies (as defined in Rule12b-2 of the Exchange Act).    ☐  Yes    ☐☒  No  ☒

State the aggregate market value of the common equity held bynon-affiliates of the Registrants: Not Applicable

Indicate the number of shares outstanding of the Registrants’ common stock: Not Applicable

MEDIACOM BROADBAND LLC

20162018 FORM10-K ANNUAL REPORT

TABLE OF CONTENTS

This Annual Report on Form10-K is for the year ended December 31, 2016.2018. Any statement contained in a prior periodic report shall be deemed to be modified or superseded for purposes of this Annual Report to the extent that a statement herein modifies or supersedes such statement. The Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with them, which means that we can disclose important information by referring you directly to those documents. Information incorporated by reference is considered to be part of this Annual Report.

Mediacom Broadband LLC is a Delaware limited liability company and a wholly-owned subsidiary of Mediacom Communications Corporation, a Delaware corporation. Mediacom Broadband Corporation is a Delaware corporation and a wholly-owned subsidiary of Mediacom Broadband LLC. Mediacom Broadband Corporation was formed for the sole purpose of acting asco-issuer with Mediacom Broadband LLC of debt securities and does not conduct operations of its own.

References in this Annual Report to “we,” “us,” or “our” are to Mediacom Broadband LLC and its direct and indirect subsidiaries (including Mediacom Broadband Corporation), unless the context specifies or requires otherwise. References in this Annual Report to “Mediacom” or “MCC” are to Mediacom Communications Corporation.

Cautionary Statement Regarding Forward-Looking Statements

You should carefully review the information contained in this Annual Report and in other reports or documents that we file from time to time with the SEC.

In this Annual Report, we state our beliefs of future events and of our future financial performance. In some cases, you can identify thoseso-called “forward-looking statements” by words such as “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should” or “will,” or the negative of those and other comparable words. These forward-looking statements are not guarantees of future performance or results, and are subject to risks and uncertainties that could cause actual results to differ materially from historical results or those we anticipate as a result of various factors, many of which are beyond our control. Factors that may cause such differences to occur include, but are not limited to:

Statements included in this Annual Report are based upon information known to us as of the date that this Annual Report is filed with the SEC,hereof, and we assume no obligation to update or alter our forward-looking statements made in this Annual Report, whether as a result of new information, future events or otherwise, except as required by applicable federal securities laws.

PART I

Mediacom Communications Corporation

We are a wholly-owned subsidiary of Mediacom Communications Corporation (“Mediacom” or “MCC”). MCC is the fifth largest cable operator in the U.S., serving almost 1.4 million residential and business customer relationshipscustomers, primarily in smaller markets primarily in the Midwest and Southeast. MCC offers a wide array of information, communications and entertainment services to households and businesses, including video, high-speed data (“HSD”), phone, and home security and automation. Through Mediacom Business, MCC provides scalable broadband communications solutions to commercial and public sector customers of all sizes, and sells advertising and production services under the OnMedia brand.

MCC’s cable systems are owned and operated through our operating subsidiaries and those of Mediacom LLC, another wholly-owned subsidiary of MCC. As of December 31, 2016,2018, MCC’s cable systems passed an estimated 2.82.9 million homes and served approximately 828,000776,000 video customers, 1,156,0001,264,000 HSD customers and 479,000614,000 phone customers, aggregating 2.5 million2,654,000 primary service units (“PSUs”).

MCC is a privately-owned company. An entity wholly-owned by Rocco B. Commisso and related parties is the sole shareholder of MCC, a C corporation. Mr. Commisso is MCC’s founder, Chairman and Chief Executive Officer. MCC manages us pursuant to management agreements with our operating subsidiaries. See Note 9 in our Notes to Consolidated Financial Statements.

Mediacom Broadband LLC

We are a holding company and do not have any operations or hold any assets other than our investments in our operating subsidiaries. As of December 31, 2016,2018, our cable systems passed an estimated 1.5 million homes and served approximately 463,000428,000 video customers, 643,000699,000 HSD customers and 264,000339,000 phone customers, aggregating 1.4 million1,466,000 PSUs. As of the same date, our cable systems served 754,000had 753,000 residential and business customer relationships.

Our phone number is(845) 443-2600 and our principal executive offices are located at 1 Mediacom Way, Mediacom Park, New York, 10918. Our Annual Report on Form10-K, Quarterly Reports on Form10-Q, Current Reports on Form8-K and any amendments to such reports filed with or furnished to the SEC under sections 13(a) or 15(d) of the Securities Exchange Act of 1934 are made available free of charge on MCC’s website (www.mediacomcc.com) as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. The information posted on MCC’s website is not incorporated into our SEC filings.

Recent2018 Developments

MCC’s Capital Plan2018 Financing Activity

In 2016,On March 2, 2018, we called for the redemption of the entire $300.0 million principal amount outstanding of our 6³⁄₈% senior notes due April 2023 (the “6³⁄₈% Notes”). On March 30, 2018, we received $158.0 million of cash contributions from our parent, MCC, announced a plan for approximately $1 billionwhich, in turn, received such contributions from Mediacom LLC on the same date. On April 2, 2018, such cash contributions, along with $151.6 million of total capital expendituresborrowings under our revolving credit commitments, were used to be made by usfund the redemption of the 6³⁄₈% Notes.

See “Liquidity and Capital Resources— Capital Structure— 2018 Financing Activity.”

Tower Asset Sale

On November 15, 2017, MCC entered into an asset purchase agreement (the “APA”) to sell substantially all of our and Mediacom LLC’s tower assets (the “tower assets”) to CTI Towers (“CTI”), subject to closing conditions and requirements per the APA. CTI leases space on towers to wireless carriers and such tower assets werenon-strategic to MCC’s cable operations. On December 21, 2017, March 15, 2018 and September 25, 2018, we and Mediacom LLC duringcontributed certain tower assets to MCC which were sold to CTI. These transactions substantially completed the three years ending December 2018 (“MCC’s Capital Plan”). Amongtower asset sale pursuant to the planned initiatives under MCC’s Capital Plan include:

During the year ended December 31, 2016, MCC made an aggregate $335.2 million of capital expenditures, of which $179.9 million was invested by us. We expect similar levels of capital investments by usterms and MCC over eachconditions of the next two years, with our portion ofAPA. MCC received equity in CTI, representing a minority position, in exchange for the initiatives outlined above approximating a level that is commensurate with our capital expenditures as a percentage of MCC’s total capital expenditures. We have already made meaningful progress under MCC’s Capital Plan, including the recent announcement that MCC has become the first major U.S. cable company to have fully installed the necessary equipment to transition to the DOCSIS 3.1 platform. We believe these initiatives will allow us to continue to improve our competitive position for both residential and business services customerstower assets.

See Note 13 in our markets, with additional future revenue and cash flow growth driven by incremental gains in market share than we would have experienced otherwise.Notes to Consolidated Financial Statements.

Description of Our Business

The following table provides an overview of selected operating data for our cable systems as of December 31:

Services

We offer video, HSD and phone services individually and in bundled packages to residential and small- tomedium-sized business (“SMB”) customers, over our hybrid fiber and coaxial cable (“HFC”) network, and provide fiber-based network and transport services to medium- andlarge-sized businesses, governments and educational institutions. We also sell advertising to local, regional and national advertisers on television and digital platforms, and offer home security and automation services to residential customers.

Our servicescustomers are typically offeredbilled on a subscriptionmonthly basis, with subscription rates, installation fees monthly rates and relatedotherone-time charges associated withthat vary depending on the services, equipment and features customers choose.taken. We generally offer discounted packages for new customers, and for those who take multiple services. CustomersOur bundled packages are typically billed in advance on a monthly basis, andintended to meet the disparate demands of our customer base with discounts provided as an additional charges may apply for installation and otherone-time items.incentive. Residential customers are generally not subject to minimum-term contracts, while substantially all of our business services customers are under contracts that typically have 3 to 75 year terms.

Our Service Areas

Approximately 75%78% of our homes passed are in between the top 11065^th and 130^th television markets in the United States, or designated market areas (“DMAs”), substantially all of which rank between the 65^th and 110^th largest.

. Our largest markets are:

Residential Services

We market our residential services individually and in bundled packages, with discounts generally available for the subscription to bundled packages or other combinations of services. As of December 31, 2016,2018, approximately 57%58% of our residential customers took a bundle of two or more of our services, including about 25% that took all three.services.

Video

We offer a wide variety ofresidential video services, with multiple packages, tiers and equipment options to appeal tocustomers a variety of customer preferencesservice levels, ranging from a limited basic tier to a full service tier with access to hundreds of channels. Video customers may also take premium networks that provide commercial-free original programming, movies, live and demographics.taped sporting events and concerts, and other special events. Residential video customers are charged a monthly fee that varies depending on the level of video service and equipment taken, with additional revenues generated fromone-time installation expenses,video-on-demand (“VOD”) fees and other ancillary purchases.

Our residential video customers receive, at a minimum, a limited basic tier that includes local broadcast stations and public, government and leased access channels, with additional packages and tiers available that include national cable networks and regional sports networks, foreign-language and international programming, digital music channels and other specialty programming. Video customers may also subscribe to premium network programming from HBO, Showtime, Starz and Cinemax that provides commercial-free original programming, movies, live and taped sporting events and concerts, and other special events. We have recently introduced “skinny bundles” as a value proposition to video customers that do not require certain national and regional sports networks, but seek a lower cost option that offers most of thenon-sports content in our most popular video packages. Most of our video programming including many titles in our VOD library, is available in a high-definition (“HD”) format that offers a higher resolution picture, improved audio qualityfor no additional charge. We also enable video customers to watch certain programming on personal devices connected to the Internet, whether in or outside their home, and a wide-screen format.manage their content through our mobile apps and online portal.

Our VODvideo service requires the use of a digitalset-top box(“set-top”), which provides video customersan interactiveon-screen program guide and access to over 27,000 titles, including a wide selection of movies, national broadcast and cable network shows, music videos, and locally produced events. Most of our VOD content carries nolibrary. For an additional charge when customers take a content package that includes the affiliated content. Special event programs, including live concerts, sporting events, andfirst-run movies are also available on apay-per-view basis. Ourmonthly fee, our digital video recorder (“DVR”) service allows customers to record and store content to view at their convenience, along with the ability to pause and rewind live programming.

Our video service generally requires the use of a digitalset-top box(“set-top”), which typically provides an interactive,on-screen program guide and access to our VOD library. A rapidly increasing number Approximately 40% of our video customers take our next-generation Internet Protocol (“IP”)set-top that offers a cloud-based, graphically-rich TiVo guide with integrated access and search functionality to certain Internet-based, orseveral“over-the-top” (“OTT”) video services, such asincluding Netflix, Hulu, and YouTube, along withYouTube. We also offer a multi-room DVR service and the ability to download certain content to personal devices. In 2017, we plan to introduce a new, lower-cost, IPset-top that offersprovides customers with the TiVo guide and OTTsame high-quality video services, butexperience without the required equipment for DVR service.

We also enable videoability to record and store content. In 2018, we introduced a voice-controlled remote which allows customers to watch certain programming on personal devices connectedquickly search for content, tune to the Internet connection, whether in or outside their home, which we refer to as “TV Everywhere.” Our video customers currently have access to online content for up to 76 channels and we plan to further expand our “TV Everywhere”line-up in 2017. Our video customers that take aset-top with the TiVo guide may also remotely view programming listings and schedule and manage DVR recordings remotely through our mobile apps and online portal.control their DVR.

HSD

We offer high-speed Internet access to suit the requirements of our HSD customers,services with a minimum downstream speedsspeed of up to 60 megabits per second (“Mbps”), and packages available that providea maximum downstream speeds up to 200 Mbps. Through Project Gigabit, we have installed the necessary equipment to transition substantially all our homes passed to the DOCSIS 3.1 platform, which will allow us to introduce packages offering speedsspeed of up to 1 Gbps across most of our markets in 2017. We will also deploy communityWi-Fi access points throughout high-traffic commercial and public areas in our markets, which we believe will add additional value for our HSD customers.

gigabit per second (“Gbps”). Our residential HSD customers are charged a monthly fee that varies depending on the speeds and usage allowance associated with their level of HSD service.service and equipment taken. Our residential HSD service requires a modem, which most of our customers lease from us for a monthly fee.fee and typically includes abuilt-in wireless, orWi-Fi, gateway. Our WiFi360 service provides additional wireless access points that improve wireless signal quality through the home. We have also offer wireless gateways that combine a modemdeployed communityWi-Fi access points in high-traffic commercial and public areas in certain of our markets, providing our HSD customers with a wireless router and phone adapter for an additional monthly fee, which ensures the performanceconnectivity outside of multiple personal devices used at the same time.their home.

Phone

Our residential phone customers enjoyservice includes unlimited nationwide calling and other popularcertain features includingsuch as Caller ID, call waiting, call forwarding, andthree-way calling and, for those who also take our video service, the ability to receive Caller ID information on the customer’s television.calling. Residential phone customers are charged a monthly fee, with voicemail services, directory assistance, and international calling plans madeand other services available for an additional fee. Our residentialcharge. Residential phone service requires equipment that is either included in the wireless gateway takenmodem leased by many customers that take bothwho also purchase HSD andservice. Due to our low delivery costs for phone service and given the high degree of wireless substitution for wireline phone service, we typically bundle our phone service on a discounted basis with our HSD and/or is typically leased by our customers for a monthly fee.video services.

Business Services

Mediacom Business providesis our commercial division providing innovative data, voice and video solutions to commercial- and public-sector customers of all sizes. We provide SMB customers video,with HSD, phone, and phonevideo services similar to those offered to our residential customers, along with a multi-line phone service, music servicescustomers. For medium- and other features. We alsolarge-sized businesses and institutions, we furnish custom fiber solutions with transmission speeds up to 10 Gbps, for medium-cloud-based managed voice solutions, andlarge-sized businesses and institutions, withIP-enabled trunk-based voice services andalong with privatepoint-to-point, multi-point wide area, and local area network solution. Wesolutions. Mediacom Business also supplyprovides direct and wholesale high-capacity fiber transport and dedicated Internet access up to 100 Gbps to national and regional carriers to support cell towerwireless backhaul, Ethernet and regional transport. Our initiation of “Project Open Road” willFixed wireless and small-cell solutions are offered as well. We continue to extend our network to tens of thousands of new commercial locations that contain multiple businesses, in an effortbuildings to sustain or accelerategrow our rate of growth in business services revenues.

Advertising

We sell targeted, data-driven television and digital advertising solutions and production services to local, regional and national customers under our OnMedia brand. As part of the programming agreements with nationalTelevision advertising is linear video inserted on local commercial time allocated by cable networks, we generally receive an allocation of scheduled advertising time, typically two minutes per hour, and insert commercials during this allotted time. Our localhour. OnMedia’s sales team generally sells the placement of advertisingmarkets these availabilities to local businesses directly and in certain markets, we have entered into agreements withto national and regional businesses directly and through agency relationships. OnMedia represents other cable operatorsmultichannel video programming distributors (“MVPDs”) in the same DMA where we sellas a single-source buying contact in certain markets, and conversely, is represented by other MVPDs in some markets. Digital advertising on behalf of these other operators, or vice versa, facilitating customers’ ability to purchase local advertising in multiple markets. We also sell digitaloffers includepre-roll,mid-roll, and post-roll ads for online videos, display ad placement, and other media services as an extensionsearch engine optimization and marketing. Digital advertising represents the fastest-growing product of ourOnMedia, reflective of the broader advertising business.industry budget shift to digital.

Marketing and Sales

We employ a wide range of sales channels to reach current and potential customers, including outbound telemarketing, direct mail,in-bound customer care centers, retail locations,door-to-door field technician sales, and anoure-commerce site. Customers are directed to our inboundin-bound call centers or website through various forms of advertising, including television advertising on our own cable systems. Mediacom Business has a dedicated sales force and outbound telemarketing, and we have several relationships with third-party agents who sell our services. Xtream isWe market our marketingflagship bundles under the “Xtream” brand, for bundled packages that includewhich typically includes video with multi-room DVR service, andset-tops with the TiVo guide, HSD with aminimum speeds of up to 100 Mbps and wireless gateway, and phone service. We believe the simplified pricing and value proposition of our Xtream bundles has positively influenced the market’s perception of our products and services, and has driven higher levels of sales activity.

Customer Care

We continue to make investments that improve the reliability and quality of our services to enhance our customers’ experience. Our field operations team focuses on providing a quality experience during installation and service calls, with the goal of resolving any technical issues on the first attempt. We offer 30 minute30-minute arrival windows and evening and weekend availability for installation and service calls to provide more convenient scheduling for our customers. Field activity is scheduled and routed seamlessly with remote dispatching and workflow management, and GPS systems that facilitateon-time arrival for customer appointments. Our technicians are equipped with diagnostic and monitoring tools that determine the quality of service at the customer’s home in real-time.

Our customer care group has multiple contact centers with dedicated customer service, sales, and technical support representatives available at all times, and our virtual contact center allows us to manage resources efficiently and effectively function as a single, unified call center. Our website and mobile applications allow customers to manage their billing account, utilize self-help tools and schedule appointments. Customers who are seekingOur Total Care Text Messaging platform allows us to speakcommunicate with our customers through text messaging, informing them about outage notifications, billing status and payment confirmation,Wi-Fi password management, appointment scheduling and data usage information. Molli, a digital assistant that interacts with our customers through text messages, website usage and social media, provides initial support for our customers and manages connections to an agent for further assistance maylive customer representatives, allowing our customers access to a full support experience without the use the “call back” feature where our technical staff will call the customer when available, eliminating the need for excessive wait times. We maintainof a strong presence on many social networking websites and message boards, including Facebook and Twitter, allowing us the ability to be more proactive in customer service, along with providing customers another point of contact.phone call.

Technology

Our services are delivered through a fiber-rich, technologically-advanced, route-diverse network that consists of a national backbone; large-scale, centralized platforms; regional networks and headends; neighborhood nodes; and last-mile connectivity to customer homes or businesses. We utilize an IP ring architecture that minimizes service outages through its redundant design, and our network operations center supports and continuously monitors our network. We believe our network infrastructure provides several advantages over most of our competitors, including significantly more bandwidth capacity, greater reliability and higher quality of service.

Our national backbone is connected to leading carriers, with a presence in several major carrier hotels, and allows us to introduce new services across all our markets and realize greater economic efficiencies and scale. Our national backbone connects centralized platforms that control video content delivery, HSD and phone services, provisioning, customer care and email, and provides access to several aggregation and exchange points in our regional networks to ensure network redundancy and enhanced quality of service.

The last-mile connectivity is delivered through our HFChybrid fiber and coaxial (“HFC”) network, transporting content vialaser-fed fiber-optic cable by regional networks and headends to local nodes, and by coaxial cable from these nodes to our customers. We have installedback-up power supplies that are intended to allow our services to continue to be available in the event of a commercial power outage. For certain business customers that have high-capacity requirements, we extend fiber-optic cable from the node site directly to the customer’s premise.

HSD customers have consumedcontinue to rapidly increasingincrease the amounts of bandwidth over the last several years,they consume, largely driven by increased usage of OTT video, and we expect this trendtheir bandwidth usage to continue.grow. To provide additional network capacity to facilitate meaningful bandwidth consumption increases, we have deployed multiple tools to recapture bandwidth and optimize our network, to allow for faster HSD speeds and greater levelsincluding the conversion of capacity. In substantially

all of our markets, we have converted video servicedelivery network to an“all-digital” delivery platform,technology, freeing up spectrum that was previously used to deliver analog video signals that require more capacity. We have installed the necessary equipment to transition to the DOCSIS 3.1 platform inalso transitioned substantially all of our markets, which allowsHSD delivery to DOCSIS 3.1, allowing us to use our existing network capacitybandwidth in a more efficient manner. These bandwidth reclamation and optimization efforts and capital investments have enabled continuingprogressive increases in the speeds and usage allowances inof our HSD service packages, and we will further increase our maximumculminating in the current availability of 1 Gbps downstream speeds to 1 Gbps in manysubstantially all of our marketsmarkets.

Our future plans revolve around the cable industry’s recently announced development of a 10 gigabit network, which has been named 10G. The 10G platform will enable symmetrical residential internet speeds of up to 10 Gbps and will be a substantial enhancement of our existing DOCSIS platform, greatly improving latency, reliability and security. In the future, we expect to make the necessary investments in 2017.our network to begin testing 10G, which would position us to meet the future anticipated needs of a fully connected community.

Community Relations

We are dedicated to fostering strong relations with the communities we serve and believe our local involvement strengthens the awareness and favorable perception of our brand. We support local charities and community causes in our markets with scholarships, events and campaigns to raise funds and supplies for persons in need, andin-kind donations that include production services and free airtime on cable networks. As of December 31, 2016,2018, we provided free video service to over 1,7001,600 schools and free HSD service to overnearly 200 schools, and also provided free video service to over 1,600 government buildings, libraries andnot-for-profit hospitals, nearly 200 of which over 170 also receive free HSD service.

Franchises

As of December 31, 2016,2018, we served 501478 communities undernon-exclusive franchises granted to us by local or state governmental authorities. Many of the provisions of local franchises are subject to federal regulation under the Communications Act of 1934, as amended (the “Cable Act”). Our franchises typically impose numerous conditions, including requirements around construction of the cable network in certain of the franchise areas; customer service requirements; the broad categories of programming required; the provision of free service to schools and other public institutions; and the provision and funding of public access channels.    Many of the provisions of local franchises are subject toimpose a fee based onnot exceeding 5% of the gross revenues of specified cablevideo services, thatwhich we typically pass through directly to the customer. The Cable Act prohibits such franchise fees from exceeding 5%.

We believe that we have satisfactory relationships with our franchising communities, and have never had a franchise revoked, or had a community refuse to consent to a franchise transfer to us. The Cable Act provides comprehensive renewal procedures, which require that an incumbent franchisee’s renewal application be assessed on its own merits and not as part of a comparative process with competing applications. For more information around our franchises, see “Legislation and Regulation –State and Local Regulation – Franchise Matters.”

Sources of Supply

Programming

TheOur video programming content carried by our cable systems is generally obtained pursuant to fixed-term contracts, with suppliers whose compensation is typically based on a fixed monthly fee per video customer, subject to contractual escalations. Most of our contracts are entered into directly, with the programmers, but we also secure certain content through a programming cooperative in certain cases where we receiveif more favorable pricing or terms than are available to us independently. In general, we attempt to secure longer-term programming contracts, ranging from three to eight years.available. We also have various retransmission consent agreements that permit us to retransmit the signals of local broadcast television stations. Under FCC rules, localLocal broadcast stations must elect, on a three-year cycle, either “must-carry” rights or “retransmission consent,” where we are not allowed to carry the station’s signals without its permission. Retransmission consentwhich is generally conditioned upon our payment of cash fees and/or our carriage of one or more of their affiliated stations or programming networks.    

Programming expenses have historically been our largest single expense item and, these costs have historically increased substantially more than the inflation rate on aper-unitper-video customer basis, have continually increased at a higher rate than our ability to offset such increases with rate increases to our customers, particularly fordue to sports programming and retransmission consent. Consolidation amongThe primary reason behind our programming cost increases is significant media companies and independent broadcast station groupsindustry consolidation, which has been significant over the past several years, and may further continue. As a result of such consolidation,resulted in many popular cable networks arebeing owned by a relatively small number of large media conglomerates and many local broadcast stations are owned by largein independent television broadcast groups that own, control or represent a significant number of local broadcast stations across the country and, in some cases, multiple stations in the same market.

Moreover, manyMany of those powerful owners of programmingthese large media conglomerates and independent broadcast groups require us to purchase their content in bundles and dictate how we offer them to our customers. Consequently, we have little or nocustomers, which has materially diminished our ability to individually or selectively negotiate for the carriage or tier placement of individual networks or broadcast stations, and to forego purchasing networks or stations that generate low customer interest, to offer sports programming services, such as ESPN and regional sports networks, on one or more separate tiers, or to offer networks or stations on an a la carte basis to give our customers more choice and potentially lower their costs. In many instances, such programmers have created additional networks and migrated popular programming, particularly sports programming, to these new networks, which has contributed to the increases in our programming costs. Additionally, we believe certain programmers may also demand higher fees from us in an effortWe have been unable to partiallyfully offset declines in their advertising revenue as more advertisers allocate a greater portion of their spending to Internet advertising. All of these practices increase our programming expense, and while such growth in programming expenses can be offset, in whole or in part, bycost increases over the past several years through customer rate increases and do not expect this dynamic to change in the foreseeable future. Our inability to fully recover programming cost increases is expected to continue to adversely impact our video customers, our video grossservice margins will continue to decline if they cannot be fully offset.and related cash flows.

HSD Service

We deliver HSD service through route-diverse fiber networks that are owned by us or leased from third parties and through backbone networks that are operated by third parties. We pay fees for leased circuits based on the amount of capacity and for Internet connectivity based on the amount of HSD traffic over the provider’s network.

Phone Service

Our phone service is delivered through a Voice over Internet Protocol (“VoIP”) platform over a route-diverse infrastructure. We source certain services from outside parties to support our phone service, the most significant of which are long-distance services from a number of Tier 1 carriers, E911 database management, and leased circuits from incumbent local exchange carriers (“ILECs”).

Set-Tops, Programming Guides, Cable Modems and Network Equipment

We purchaseset-tops from a limited number of suppliers principally Arris Group Inc., and lease these devices to customers on a monthly basis. We provide our customers withset-top program guides from TiVo Inc. and Rovi Corporation.guides. We mainly purchase cable modems from Hitron Technologies and Technicolor SA, and routers, switches and other network equipment from Cisco Systems, Casa Technology Systems and Huawei Technologies Co. Ltd.equipment.

Competition

We face competition for residential and business customers from a wide range of communication, entertainment and information services. Our residential video, HSD and phone servicesWe have historically faced, and continue to face, intense competition from existing providers in the areas of price, product offerings and service reliability.providers. Rapid technological advances and changes in consumer behavior and demands have led to an increasing number of companies that offer new products and services that compete with ours, including OTT video and wireless Internet and phone services.all of our residential products. Our business services generally compete with existing providers who may have a stronger foothold and customer penetration in our markets, and we continue to face a number of challengers for advertising sales.

Many of our current and potential future competitors have strong brand name recognition, a nationwide platform and significant financial resources, which may allow them to react to technological developments or changes in consumer behavior quicker than us. Recent consolidation has resulted in certain competitors becoming larger and offering additional services. AT&T’s acquisition of DirecTV in 2015 enhanced their ability to offer bundled wireline and wireless services, and facilitated their recent launch of “DirecTV Now,” an OTT video servicea vMVPD that competes with ours. In 2016,our video service. AT&T announced a proposed merger with&T’s acquisition of Time Warner Inc. which, if completed, wouldin 2018 will allow them to integrate a variety of video content with its establishedon to their distribution platforms. Further consolidation may occur inplatforms, and they have announced plans to launch a new SVOD service that includes films and television shows from the future, which may further pressure our competitive position.HBO, Turner and WarnerMedia properties.

Video

Direct Broadcast Satellite (“DBS”) Providers

We face our most significant competition for video customers from DBS providers, principally DirecTV, which is owned by AT&T, and DISH Network, whomwhich offer satellite-delivered video packages and collectively have over 33 million video customers throughout the U.S., based on publicly filed information. These DBS providers offer similar video packages to ours, including certain features we may not provide includingad-skipping functionality and exclusive content such as DirecTV’s agreement with the National Football League. DBS providers also have certain other advantages over us, including a national brand and marketing platform, and greater operational efficiencies resulting from theirthe ability to avoid certain expenses which we incur, principally franchise fees, property taxes and property taxes.other expenses that we typically incur. We believe aggressive promotional pricing and advanced customer equipment offered by these DBS providers have contributed to our historical video customer losses. Additionally, DirecTV and Dish have both launched virtual multichannel video provider services, allowing them to further compete with our video services.

Phone Companies

Certain phone companies have built fiber-based networks that allow them to offer a video service whichthat is then bundled with Internet, phone and, in some cases, wireless, services.substantially similar to ours. As of December 31, 2016,2018, approximately 5% and 4% of our homes passed faced wireline video competition from AT&TU-Verse and CenturyLink Prism, respectively, based on internal estimates. The video servicesservice offered by these phone companies are substantially similar to ours.is typically bundled with Internet, phone and, in some cases, wireless services. In markets where phone companies do not offer wireline video service, they have typically bundled their Internet and/or phone services with a DBS video service.

Other Overbuilders

We compete with other operators knownwhich we refer to as “overbuilders”“overbuilders,” that operate undernon-exclusive franchises granted by local authorities and offer video service to markets representing approximately 24% (excluding the phone companies noted above) of our homes passed. The level of competition provided by these overbuilders varies, depending on the quality of their network and services offered, but they generally market bundled packages similar to ours. Some of these competitors,overbuilders, including municipally-owned entities, may be granted franchises on more favorable terms than ours, or enjoy other advantages, such aswhich may include exemptions from property taxes certain operating cost and/or regulatory requirements, and pole rental charges, to which we are subject. We believe there has been limited expansion of such entitiesoverbuilders in our markets in the past several years.

OTT Video

Our video service faces increasing competition from aan increasing variety of OTT video providers that offer streaming and downloading of video content over the Internet, often available for a monthly subscription priced meaningfully lower than our video service, or free of charge.include:

OTT services have become increasingly accessible as technological advances have facilitated the ability of consumers to watch OTTsuch video products on their television and a variety of platformsdevices, and devices. The quality and amount of content offered by these providers continueswe have integrated many such services into ourset-top to improve, and some OTT video services, including Netflix, Hulu and Amazon Prime Video have also recently introduced high-quality original content that is exclusive tofacilitate their respective service. OTT video packages have also been recently made available, or will soon become available including DISH’s SlingTV, DirecTV Now, YouTube TV and Hulu that replicate the linear video experience and provide additional competition to our video service. Additionally, certain content providers, including HBO, Showtime and CBS, have begun selling their programming direct to consumers over the Internet, bypassing distribution by a traditional video provider and additional content providers have announced intentions to do so in 2017 and beyond.

If OTT video providers continue to add popular content, including services that offer linear video, substitution of our video services may accelerate.usage. Additionally, because OTT video is very popular with younger demographics, there may be an increasing substitution of traditional video if newly formed households were more likely to choose one or several OTT video services as their only video provider. However, we believe mostOur HSD customers who rely on OTT video services are used to supplement traditional video, and we have facilitatedservice for their usage by integrating many third-party video services on our next-generationset-top. While increasing use of OTT video services may lead to lower demand for our VOD and, to a lesser extent,only video service in general, we expect the associated bandwidthare likely to choose a higher tier of service, given their greater requirements will result in greater HSD customer growthfor speed and retention given our competitive position.data consumption.

Other

We also face competition for our video service fromover-the-air broadcast television, of which the extent of such competition for our video service is dependent on the quality and quantity of broadcast signals available through an“off-air” antenna.

HSD

Phone Companies

Our HSD service faces its most significant competition from local phone companies, including CenturyLink, AT&T and Windstream, that generally offer digital subscriber line (“DSL”) based Internet service,services, which is limited by technical constraints to maximum speeds considerably slower than ours. These phone companies generally market their DSL service at a lower price than our HSD service, but in certain markets where they have upgraded portions of their network to allow for faster speeds, their higher-speed DSL tiers wereare typically available at similar or higher prices than ours.

Some phone companies have upgraded portions of their network to afiber-to-the-node (“FTTN”) system that allows for Internet speeds comparable to our minimum speed of up to 60 Mbps, service orfiber-to-the-home (���(“FTTH”) systems, which are capable of providing Internet speeds as fast as our highest speeds. AT&T and CenturyLink have upgraded their networks to FTTN delivery systems in several of our markets, and AT&T has committed to deploying FTTH service to 12.5 million nation-wide locations within four years of their 2016 acquisition of DirecTV. We do not compete with FTTH services in a meaningful number of our markets. We generally believe our markets have been a lower priority for these phone companies, given the higher costs associated with building out such fiber networks in lower density markets such as ours, as compared to larger metropolitan markets. However, we may face greater competition for HSD customers if these companies were to continue, or accelerate, the deployment of fiber in markets which we compete.

Wireless Providers

We also face competition from wireless providers such as AT&T, Verizon Wireless,T-Mobile, Sprint and SprintUS Cellular that offer third and fourth generation, or “3G” and “4G,” wireless Internet service. While certain households or individuals with minimal bandwidth requirements may fully substitute their wireline Internet service for a wireless one, we do not believe that wireless Internet service offers a full replacement to our HSD service given higher data usage costs, slower speeds and lower reliability. Some of these drawbacks have been mitigated with the introduction of unlimited bandwidth consumption packages, but we believe our HSD offerings are compellingly priced and more widely available throughout our markets. However, the level of competition provided by wireless Internet services may increase in the future with the deployment of fifth generation, or “5G” technologytechnology. Verizon Wireless has launched 5G services in four select cities and has committed to reaching 30 million households by 2023. AT&T has launched 5G services in twelve select locations and plans to launch in an additional seven cities by the recent introductionend of packages with unlimited bandwidth consumption.2019. Given the lower density of our overall service areas, we do not believe 5G will have a near-term impact on our business.

Other

Our HSD service also faces limited competition from other providers, including manymost of the overbuilders noted above,that compete with our video service, and certain municipalities and commercial entities that have built fiber networks and offer Internet service that competes with ours. In a limited

number of markets outside our service area, Google has launched a FTTH service, and has announced plans to expand to additional markets. Some local governments in our footprint are consideringmay consider or actively pursuingpursue the subsidized build out of additional fiber and/orWi-Fi networks. Our HSD service also faces competition from certain commercial venues, such as retail shopping areas, restaurants and airports that offerWi-Fi Internet service, sometimes free of charge. If any of these providers were to significantly expand services in our markets, we would face additional competitive pressures.

Phone

Our phone service faces its most significant competition from the phone companies noted above that offer wireline phone service that is substantially similar to ours and, increasingly, from the wireless providers noted above. As households continue to utilize cell phones as their only phone service, the number of customers taking a wireline phone service has meaningfully declined, a trend we believe will continue.

Our phone service also competes with providers ofIP-based phone services such as Vonage, Skype and magicJack, and from other forms of communication such as text and video messaging.

Business Services

Our business services primarilyWe mainly compete for SMB customers with local phone companies, many of which have had a historical advantage given long-term relationships with such customers, a nation-wide footprint that allows them to more effectively serve multiple locations,of incumbency and existing networks built in certain commercial areas that we do not currently serve.monopoly for phone and internet services. However, in recent years, we have aggressively marketed our business services and expanded our high-capacity network into additional commercial areas, which havehas led to significant customer and revenue increases associated with business services, which we expect to continue.continue as the market for true broadband services grows.

Our cell towerwireless backhaul and enterprise-level services also face competition from these local phone companies as well as other carriers, including metro and regional fiber-based carriers. However, many of these same competitors lease network access and bandwidth from Mediacom Business on a wholesale basis given our network availability in rural and underserved areas.

Advertising

We compete for the sale of advertising against a wide variety of traditional media outlets, including local broadcast stations, national broadcast networks, national and regional programming networks, local radio broadcast stations, local and regional newspapers, magazines and Internet sites.magazines. Increasingly,non-traditional competitors in the digital media market are competing for the advertising budget shared with the traditional media outlets. This is a function of the industry trend to digital-inclusive multi-media ad campaigns. Competition has increased and will likely continue to increase as digital and other new formats for advertising seek to attract the same advertisers.

Other Competition

We also face competition for all of our services with all other sources of leisure, news, information and entertainment, including movies, sporting or other live events, radio broadcasts, home video services, console games, print media and the Internet. There can be no assurance that these or other existing, proposed, or as yet undeveloped technologies will not become dominant in the future and render our products and services less profitable or even obsolete.

Employees

As of December 31, 2016,2018, we had 2,4452,325 employees. None of our employees are organized under, or covered by, a collective bargaining agreement. We consider our relations with our employees to be satisfactory.

Legislation and Regulation

General

Federal, state and local laws regulate the development and operation of cable systems and, to varying degrees, the services we offer. Significant legal requirements imposed on us because of our status as a cable operator, or by virtue of the services we offer, are described below. Changes in these legal requirements, whether through legislation, administrative action or judicial decisions can impact our business.

While some legal requirements affect our business overall, many of our operations are regulated to a varying degree under different provisions of federal law, principally Title I (information services), Title II (telecommunications services) and Title VI (cable services) of the Communications Act of 1934, as amended (“Communications Act”).

Recent Significant FCC Activity

HSD Regulatory ReclassificationIn September 2018,Truth-In-Billing, Remedies, and Network Neutrality

In 2015,User Empowerment over Fees (“TRUE Fees”) Act of 2018 was introduced and would require cable, Internet and phone providers to include all charges (to the FCC adopted its Open Internet Order changing the historical classification of HSD Services, commonly referred to as broadband Internet access services (“BIAS”), from lightly regulated Title I information services to telecommunications services subject to regulation under Title II of the Communications Act. Although the FCC acted to forebear enforcement of many of Title II’s provisions, the FCC may rescind any or all such forbearance at will. With the Republicans in charge of both houses of Congress and the White House, reports have circulated that legislation may be introduced to undo in whole or in part the effect of the 2015 Order. We cannot predict if such changes will be adopted or what the impact of those changes may be.

The Open Internet Order established three “bright line rules” that restrict blocking of content, throttling of speed and paid prioritization of traffic (giving certain traffic priority in return for consideration). More generally, a provider of BIAS also cannot unreasonably interfere with or unreasonably disadvantage: (i) consumers’ ability to select, access or use lawful content, applications, services or devices; or (ii) edge providers’ ability to make lawful content, applications, services or devices available to consumers. To determine what conduct is “reasonable” or “unreasonable,” the FCC will resolve complaints on acase-by-case basis. Until complaints are filed and resolved, the scope of permitted conduct is not known and this creates regulatory uncertainty.

The Open Internet Order mandates additional consumer disclosures regarding promotional rates, fees, surcharges and data caps or allowances, and packet loss measures. Network management practices must continue to be disclosed with the added requirement of disclosure if a network practice is likely to significantly affect an end user’s use of the service. The Open Internet Order distinguishesso-called “legitimate network management” practices from other business practices. Our interconnections with other networks in order to exchange broadband traffic are now subject to FCC regulation. These arrangements will be regulated on acase-by-case basis if and as complaints are filed. Until complaints against ISPs are filed and resolved, it is difficult to determine the standards that distinguish permitted from proscribed conduct and, therefore, the potential impact upon our existing interconnection arrangements or future needs.

On October 27, 2016, the FCC adopted new privacy and data security requirements for BIAS providers pursuant to its Title II authority. These include specific disclosures and the timing of such disclosures, enhanced choice by subscribers over the use of sensitive data and data breach notification requirements. On March 1, 2017, the FCC stayed the effective date of the new rules to allow time to work with the Federal Trade Commission to create a comprehensive and consistent framework with respect to online privacy. We cannot predict if or when new rules will be issued or what effect they will have, if any, on our business.

We provide HSD services to business customers. On April 28, 2016, the FCC adopted a Tariff Investigation Order and Further Notice of Proposed Rulemaking that sought, among other things, to impose price caps on the provision of business data services. In late January 2017, a proposed order was removed from the FCC’s list on items on circulation, meaning that it could no longer be voted upon. It is unclear whether the proposed order will be reinstated, the new FCC Chairman would propose an alternative order or no order would be issued at all.

Preemption of State Restriction of Municipal-Based Broadband Systems

In a limited number of our markets, our products and services face competition from municipally owned electric utilities that have constructed telecommunications systems. Certain of the states in which we operate have adopted laws that impose conditions upon the conduct of a telecommunications business by local municipalities. For example, some states may require voter approval and prohibit cross-subsidization of the telecommunications business by electric, gas and water utility customers. In 2015, the FCC adopted a Memorandum Opinion and Order preempting certain state laws imposing restrictions or conditions upon the ability of municipal utilities in North Carolina and Tennessee to offer or expand broadband service. However, on August 10, 2016,extent uniform across the United States Court of AppealsStates) in advertised prices, restrict increases in service fees and equipment costs to consumers under contract to amounts equal to “objectively quantifiable increase in the cost to the provider” by reference to some external index, permit the consumer to cancel its service contract without any early termination fee or other penalty. Equipment rates could not be increased unless equipment hardware or software is upgraded to substantially increase functionality. Providers could not require binding arbitration for the Sixth Circuit struck down the FCC’s ban and the FCC did not to appeal.

Federal Telecommunications Act Rewrite

Members of Congress have discussed undertaking a rewrite of the telecommunications laws that is necessary to develop laws that can be applied on a technology- and platform-neutral basis. Currently, each technology, regardless of whether it offers a similar service,e.g., multichannel video programming, broadband access or phone service, is regulated in a silo subject to a different regulatory regime. Such treatment often disadvantages one technology compared to others. We cannot predict whether such a rewrite and/or network neutrality legislation to establish a statutory framework to replace the Open Internet Order will occur. Any changes in regulation that would result from a rewrite could affect all of our products and services, the outcome of which, if any, cannot be predicted.dispute resolution.

Privacy and Data Security

How we collect, use, disclose and retain personally identifiable information and other sensitive information about our customers and what we do in the event of a data security breach is governed by federal and state laws. In addition, manyEfforts to regulate privacy at the federal level continue, including Congressional hearings and introduced legislation. Many states in which we operate have also enacted customer privacy statutes, including obligations to notify customers when certain customer information is accessed or believed to have been accessed without authorization. These state provisions are in some cases more restrictive than those in federal law. In 2018, California, a state where we operate, enacted the California Consumer Privacy Act which, when it takes effect, impacts a wide-range of personal data of California residents, restricts the collection, use and disclosure of that data, gives consumers the right, with certain exceptions, to have their personal information deleted by a business, imposes data security requirements on business that collect the data and provides consumers a private right of action with the ability to recover statutory damages.

TheIn addition to these general requirements, the Cable Act imposes a number of restrictions on the manner in which cable operators can collect, disclose and retain data about individual system customers and requires cable operators to take actions to prevent unauthorized access to such information. The statute also requires that the systemcable operator periodically provide all customers with written information about its policies, including the types of information collected; the use of such information; the nature, frequency and purpose of any disclosures; the period of retention; the times and places where a customer may have access to such information; the limitations placed on the cable operator by the Cable Act; and a customer’s enforcement rights. In the event that a cable operator is found to have violated the customer privacy provisions of the Cable Act, it could be required to pay damages, attorneys’ fees and other costs. Certain of these Cable Act requirements have been modified by more recent federal laws. Other federal laws currently impact the circumstances and the manner in which we disclose certain customer information and future federal legislation may further impact our obligations.

As more fully discussed inIn January 2019, the US General Accounting Office issued a study on Internet privacy and concluded that comprehensive Internet privacy legislation that establishes specific standards and includes traditionalnotice-and-comment rulemaking and broader Federal Trade Commission (“FTC”) civil penalty authority could enhance the federal government’s ability to protect consumer privacy.

The Federal Communications Commission’s (“FCC”) 2017 decision reclassifying broadband Internet access service as an “information service,” (see “Recent Significant FCC Activity – HSD Regulatory ReclassificationService, Federal Regulation and Network NeutralityNeutrality” section above, our HSD Service has become subject)restored the FTC’s ability, pursuant to new requirements, someits general authority to enforce against unfair or deceptive acts and practices, to protect the privacy of which have and others which are scheduled to take effect, regarding the collection,Internet service customers, including our use and disclosure of certain customer usage and network information.

In addition to any privacy laws that may apply to our provision of VoIP services, we must comply with additional privacy provisions contained in the FCC’s CPNICustomer Proprietary Network Information (“CPNI”) regulations related to certain telephone customer records. In addition to employee training programs and other operating and disciplinary procedures, the CPNI rules require establishment of customer authentication and password protections, limit the means that we may use for such authentication, and provide customer approval prior to certain types of uses or disclosures of CPNI.

Pole Attachment RegulationPreemption of State Restriction of Municipal-Based Broadband Systems

The Cable Act requires certain public utilities, including all local telephone companiesIn a limited number of our markets, our products and services face competition from municipally owned electric utilities except those owned by municipalities andco-operatives, to provide cable operators andthat have constructed telecommunications carriers with nondiscriminatory access to poles, ducts, conduits andrights-of-way at just and reasonable rates. This rightsystems. Certain of access is beneficial to us. Federal law also requires the FCC to regulate the rates, terms and conditions imposed by such public utilities for cable systems’ use of utility pole and conduit space unless state authorities have demonstrated to the FCC that they adequately regulate pole attachment rates, as is the case in certain states in which we operate. Inoperate have adopted laws that impose conditions upon the absenceconduct of state regulation, the FCC will regulate pole attachment rates, termsa telecommunications business by local municipalities. For example, some states may require voter approval and conditions only in response to a formal complaint. The FCC established a rate formula which governs the maximum rate certain utilities may charge for attachments to their poles and conduit by companies providing telecommunications services, including cable operators.

In 2011, the FCC adopted an Order modifying the pole attachment rules to promote broadband deployment. Previously, poles subject to the FCC attachment rules used a formula that resulted in lower rates for cable attachments and higher rates for telecommunication services attachments. The FCC had previously ruled that the provisionprohibit cross-subsidization of Internet services would not, in and of itself, trigger use of this new formula and the U.S. Supreme Court affirmed this decision.

Pursuant to the FCC’s 2011 Order, the telecommunications attachment rate formula would yield results that would approximate the attachment rates for cable television operators. On November 17, 2015, the FCC adopted an Order on Reconsideration that revised the FCC’s pole attachment rate formula to lessen the disparity between the cablebusiness by electric, gas and telecommunications rates that arose under certain factual scenarios. As a result, in almost all circumstances the cable and telecommunications rates now approximate each other. Thus, even though it remains unclear whether the reclassification of broadband service as a telecommunications service pursuant to the Open

Internet Order discussed more fully inRecent Significant FCC Activity – HSD Regulatory Reclassification and Network NeutralityBroadband Infrastructure Support above, will impact our ability to continue to seek attachment rates computed as a cable operator as opposed to as a telecommunications provider, the practical effect of that distinction has been virtually eliminated. However, to the extent the FCC’s action lowers the pole attachment costs of our competitors, that could adversely impact us.

Universal Service Fund

In recent years, the FCC has adopted a series of reforms to the Universal Service Fund (“USF”) support mechanism to help to make broadband available to areas that do not have or would not have broadband service. In addition, the FCC has expanded the types of services that must contribute to the USF. Since 2006, VoIP providers must contribute to the USF, and it is possible that in the future the FCC has a pending rulemaking that, if adopted, could impose fees on currentlynon-assessablesubject Internet access services, such as broadband Internet access.including our HSD Service to Universal Service funding requirements.

Any increased costs resulting from having to contribute to USF, however, would increase our cost of service to consumers and that could adversely affect our business. We cannot predict how these various changes either may add costs or burdens to our existing VoIP and broadband services or how they may potentially benefit those who provide competing services.

Other Potential Governmental Support

In 2018, President Trump signed an executive order designed to make it easier for companies to install high-speed broadband networks in rural areas. He has further introduced a plan suggesting that funding for broadband deployment may also be part of a trillion dollar plus infrastructure package that his administration may propose. In addition, numerous pieces of legislation have been introduced in Congress, and the FCC has undertaken, to facilitate and/or fund more rapid and widespread high-speed broadband deployment. In 2018, the FCC committed $1.98 billion over ten years ($198 million annually) to support the deployment and provision of voice and fixed broadband services in unserved high-cost areas. In February 2019, the Secretaries of Agriculture and Commerce issued the American Broadband Initiative Milestones Report as required by the Agricultural Improvement Act of 2018 to President Trump. The report makes specific recommendations to accelerate the deployment and adoption of high-speed broadband connectivity. In the report, the United States Department of Agriculture announced that it is preparing to deploy a new congressional appropriation of $600 million of an innovative broadband pilot program to spur further private investment with priority given to improving broadband infrastructure in underserved rural areas. We cannot predict the impact of these efforts and actions could have on our business, but to the extent that it permits competitors to build out into our service areas that could adversely affect our business.

Cable System Operations and Video Services

Federal Regulation

Title VI of the Communications Act, referred to as the Cable Act, establishes the principal federal regulatory framework for our operation of cable systems and for the provision of our video services. The Cable Act allocates primary responsibility for enforcing the federal policies among the FCC and state and local governmental authorities.

The Communications Act and FCC regulations include content andnon-content rules that impact our cable operations. These include, for example, rules (i) pursuant to which cable systems may retransmit over the air broadcast stations, as detailed more below; (ii) network nonduplication and syndicated exclusivity rules that allow broadcasters, under some circumstances, to require a cable system to block subscriber access to certain programming; (iii) political programming requirements, that impose obligations on cable operators to maintain records regarding advertising on the cable system by candidates and with respect to certain controversial issues of public importance, and, during weeks leading up to elections, offer political candidates the lowest unit charge paid by a commercial advertiser for the same class of advertising; (iv) customer service standards, that regulate certain aspects of our interactions with our subscribers (e.g., telephone availability and officer hours), (v) commercial limits during children’s programming; (vi) emergency alert system requirements to ensure delivery to our subscribers of certain emergency information; (vii) multiple dwelling unit (“MDU”) inside wiring and exclusive contract restrictions (see,Multiple Dwelling Unit Buildings, below); (viii) equal employment opportunity requirements; (ix) obligation to allow subscribers to use compatible retail navigation devices and related security issues (e.g., CableCards) (x) accessibility, both in terms of video description and closed captioning; (xi) requirements for cable systems to make available public, educational and governmental (“PEG”) channels, as well as leased access channels (which leased access rules are under review by the FCC in an pending rulemaking) and (xii) pole attachment rate rules (see, Pole Attachment Regulation, below).

Content RegulationsBroadcast Signal Carriage

Must Carry and Retransmission Consent

The FCC’sFCC regulations require local commercial television broadcast stations to elect once every three years whether to require a cable system to carry the primary signal of their stations, subject to certain exceptions, commonly called must-carry, or to negotiate the terms by which the cable systemoperator may carry the station on its cable systems, commonly called retransmission consent. The most recent elections took effect through December 31, 2017.2020. Through January 1, 2020, Congress bars broadcasters from entering into exclusive retransmission consent agreements. Congress also requires all parties to negotiate retransmission consent agreements in good faith.

The Satellite Television Extension and Localism Act Reauthorization Act (“STELAR”)Federal law prohibits stations not under common ownership from engaging in joint negotiations with multichannel video programming distributors (“MVPDs”) and restrictingrestricts broadcasters from generally limiting carriage of stations that are significantly viewed or otherwise entitled to carriage, and eliminating the restriction on removing or repositioning stations during certain periods of time when network ratings are assessed, known as “sweeps.” Pursuant to STELAR, incarriage. In 2015, the FCC issuedinitiated a Notice of Proposed Rulemaking (“NPRM”)rulemaking, which still remains pending, to review the “totality of the circumstances” test applied, in part, to determine whether parties have attempted to negotiate retransmission consent in good faith and whether certain other actions should evidence bad faith. We cannot predict whether the FCC will modify its rules or the impact of any such modifications. If the FCC fails to modify its rules, such action could be seen as an endorsement of current broadcaster negotiating tactics that often introduce challenges to the negotiation of retransmission consent agreements.agreements, especially in light of the increasing consolidation of broadcast station ownership.

There have long existed a variety of restrictions on media ownership to ensure advancement of diverse viewpoints, localism and competition. Congress, however, requires the FCC issued an NPRM revisitingto review its media ownership rules periodically to ensure the definitioncontinued need for them. In recent years, the FCC has modified or repealed several of an MVPD, whether it should be technology-neutralits ownership restrictions, which has allowed for greater consolidation among broadcast stations. In July 2018, the D.C. Circuit Court of Appeals rejected a challenge to allow inclusionthe FCC’s reinstatement of certain Internet-delivered video services, the impactUHF Discount, which allows broadcasters to count their UHF stations at half their reach, pending the outcome of the FCC’s 2017 rulemaking to review the national audience reach cap and the UHF discount. This rulemaking, along with the FCC’s 2018 quadrennial review of other media ownership rules, remain pending. The outcomes of these proceedings could pave the way for greater broadcast station ownership consolidation, which could increase the leverage of such change on various industry players and consumers, and how to ensure any change promotes competition and broadband adoption. We cannot predictgroup owners when or if, the FCC will implement any new rules or change existing rules or the impact that any new rules or legislation may have on our business. Any new rules or legislation that would strengthen the relative negotiating position of broadcasters or the competitive position of Internet-delivered video service providers could have an adverse effect on our business.retransmission consent agreements.    

We carry both must-carry broadcast stations and broadcast stations that have granted retransmission consent. A significant number of local broadcast stations carried by our cable systems have elected to negotiate for retransmission consent, and we have entered into retransmission consent agreements with substantially all of them. Retransmission consent agreements representing approximately 37%substantially all of our video customers receiving local broadcast stations will expire and require renegotiation prior to January 1, 2018.

Syndicated Exclusivity/NetworkNon-duplication/Sports BlackoutBroadcast ATSC 3.0 (Next Gen TV) Transmission Standard

Pursuant to FCC regulations, under certain circumstances, broadcasters can bar us from carrying certain network and syndicated programming. In 2014,2017, the FCC issuedauthorized a Further NPRMnew television broadcast transmission standard (referred to expand the record on whether it should eliminate the ability of broadcasters to impose such restrictions on us.

Other Content Regulations

On February 18, 2016, the FCC issued an order reapportioning the responsibilities regarding closed captioning quality, between video programming distributors (“VPDs”) and video programming owners and producers. Initially, the burden had ultimately been borne by VPDs. Moreover, the FCC also adopted a burden-shifting model for investigation of complaintsas ATSC 3.0 or Next Gen TV) that can, in certain instances, shift the investigatory obligations to the owners or producers.

Pursuant to the Twenty-First Century Communications and Video Accessibility Act of 2010, the FCC has adopted rules that,would, among other things, imposeincrease the amount of data that could be broadcast in a signal allowing transmission in higher definition formats such as 4K or UltraHD, add additional multicast channels and/or convert the transmission of exiting multicast channels to high definition. The Next Gen TV transmission standard would also allow reception of the broadcast signal on certain accessibility requirements on navigationmobile devices, such as smart phones, that have abuilt-in ATSC 3.0 receiver. Stations considering transitioning to ATSC 3.0 are in most cases required to partner with another station to facilitate simulcasting of the station’s signal in ATSC 1.0 and digital apparatus that utilize encryption or3.0 formats (one station would transmit the signals of both in ATSC 1.0 format while the other forms of conditional access to display video programming. Such devices must makeon-screen text menus and guides forwould do the display or selection of MVPD programming audibly accessible and make video programming accessible to individuals who are blind or visually impaired. These rules also require MVPDs to not rely solely on voice controls to activate closed captioning, establish customer notification requirements on manufacturers to publicizesame but in ATSC 3.0 format). While the availability of audibleon-screen program guides, established information and documentation thatsimulcast signals must be made available to persons with disabilities and specified customer service training requirement topics for MVPDs.

Usemost areas of Our Cable Systemsthe stations’ DMA, it might not be available to all locations in the DMA. The FCC is developing rules to permit waivers pursuant to which stations could convert to ATSC 3.0 transmission without offering a simulcast. To the extent a Next Gen TV station’s signal may not reach areas of the DMA served by the Government and Unrelated Third Parties

The Cable Act allows local franchising authorities and unrelated third partiesour systems or a station licensee were to obtain accessa waiver from the simulcast requirements, this could impact our ability to a portionoffer subscribers all of our cable systems’ channel capacitythe programming we currently offer. In addition, while the FCC will consider requests for their own use through channels set aside for PEG programmingATSC 3.0 market trials and requires most cable operators to designate a significant portion of its activated channel capacity for commercial leased access by third parties to provide programming that may compete with services offered by the cable operator.

Cable Equipment

The Cable Act and FCC regulations gave consumers the right to purchaseset-top converters from third parties as long as the equipment does not harm the network, does not interfere with services purchased by other customers andproduct development, it is not used to receive unauthorized services. In 2016, the FCC adopted an NPRM and Memorandum Opinion and Order that removed the ban on the integrationyet accepting applications for Next Gen TV licenses; other than a small number of security andnon-security function inset-tops and proposed new rules aimed at increasing the availability of navigation devicesreported market trials. Therefore, we do not know how quickly broadcasters will either begin transitioning or apps that have the functional equivalency ofset-tops from providers unaffiliated with an MVPD. To accomplish this, the FCC proposed rules requiring MVPDs to split their signal into three core information streams: (i) Service discovery:information about what programming is availableconverting to the consumer, such asnew standard or how long a transition period would continue and when stations we retransmit would convert to transmitting in the channel listingATSC 3.0 format andvideo-on-demand lineup, and what is on those channels; (ii) Entitlements:information about what a device is allowed to do with content, such as recording; and (iii) Content delivery:the video programming itself. The FCC declined to establish standards, instead recommending that they be established by an unnamed independent open standards body. It remains unclear whether these rules, if adopted, would interfere with contractual security requirements of programming networks, impair subscriber privacy, impair or duplicate an MVPD’s ability to capture and use viewing information or otherwise adversely impact the subscriber experience. In late January 2017, a proposed order was removed from the FCC’s list of items on circulation, meaning that it could no longer be voted upon. It is unclear whether the proposed order will be reinstated, the new FCC Chairman would propose an alternative order or no order would be issued at all. Should these or similar rules ultimately be enacted, we cannot predict what reengineeringthe impact any of this would have on our systems would be required, if any, or the cost of implementing and providing such split streams of information. We also cannot predict whether a subscriber’s use of such alternative device or app would impair our accessibility to or the value of viewing information.operations.

Multiple Dwelling Unit Building WiringUnits

The FCC has adoptedFCC’s cable inside wiring rules to provide a more specific procedure for the disposition of residential home wiring and internal building wiring that belongs to an incumbent cable operator that is forced by the building owner to terminate its cable services in a building with multiple dwelling units. The FCC has issued rules voiding existing, and prohibiting future,regulations also prohibits exclusive service contracts for services to multiple dwelling unitunits or other residential developments, however, the FCC has affirmed the permissibility of bulk rate agreements and exclusive marketing agreements.agreements, while the permissibility of which is under review by the FCC, currently remain permissible. In 2017, the FCC issued a Notice of Inquiry to facilitate greater consumer choice and enhance broadband deployment in multiple tenant environments that could impact the provision of service to commercial customers in those environments. Our potential loss of such rights and the inability to secure such express rights in the future may adversely affect our business to customers residing in multiple dwelling unit buildings and certain other residential developments.

Copyright

Our cable systems typically include in their channelline-ups local and distant television and radio broadcast signals, which are protected by the copyright laws. We generally do not obtain a license to use this programming directly from the owners of the copyrights associated with this programming, but instead comply with an alternative federal compulsory copyright licensing process. In exchange for filing certain reports and contributing a percentage of our revenues to a federal copyright royalty pool, we obtain blanket permission to retransmit the copyrighted material carried on these broadcast signals. The nature and amount of future copyright payments for broadcast signal carriage cannot be predicted at this time.

DBS providers, to become more competitive with cable operators, operate under a similar statutory compulsory license that unlike that of cable operators, has a fixed term. In 2014, Congress extended the satellite compulsory license through 2019. As part of that legislation, Congress required the United States Government Accountability Office (“GAO”) to conduct another study regarding carriage and copyright issues relating to broadcast programming and the impact of the current regulatory regime on consumers. Pursuant to an earlier mandate, in 2011, GAO issued a report to Congress that found that the impact of aphase-out of the compulsory copyright licenses would have an uncertain impact on the market and regulatory environment. In part, the scheme (i.e., direct licensing, collective licensing or sublicensing) that would replace the compulsory licenses would impact the outcome. Additionally, in 2008 and 2011periodic Congressionally mandated reports, the Copyright Office issued reports to Congress recommendinghas repeatedly recommended phasing out the distant signal compulsory license. We cannot predict whether Congress will eliminate the cable compulsory license, or what scheme would replace it, if any; however, any loss of the current compulsory license could increase our costs.

Pole Attachment Regulation

The Cable Act requires certain public utilities, including all local telephone companies and electric utilities, except those owned by municipalities andco-operatives, to provide cable operators and telecommunications carriers with nondiscriminatory access to poles, ducts, conduits andrights-of-way at just and reasonable rates. This right of access is beneficial to us. Federal law also requires the

FCC to regulate the rates, terms and conditions imposed by such public utilities for cable systems’ use of utility pole and conduit space unless state authorities have demonstrated to the FCC that they adequately regulate pole attachment rates, as is the case in certain states in which we operate. In the absence of state regulation, the FCC will regulate pole attachment rates, terms and conditions only in response to a formal complaint. The FCC established a rate formula that governs the maximum rate certain utilities may charge for attachments to their poles and conduit by companies providing telecommunications services, including cable operators, for which, in almost all circumstances, the cable and telecommunications rates now approximate each other.

State and Local Regulation

Franchise Matters

Our cable systems use local streets andrights-of-way. Consequently, we must comply with state and local regulation, which is typically imposed through the franchising process. We havenon-exclusive franchises granted by municipal, state or other local government entities for virtually every community in whichwhere we operate that authorize us to construct, operate and maintain our cable systems. Our franchises generally are granted for fixed terms and in many cases are terminable if we fail to comply with material provisions. The terms and conditions of our franchises can vary materially from jurisdiction to jurisdiction. Each franchise granted by a municipal or local governmental entity generally contains provisions governing:

Although franchising matters havewere traditionally been regulated at the local level through a franchise agreement and/or a local ordinance, many states now allow or require cable service providers to bypass the local process and obtain franchise agreements or equivalent authorizations directly from state government. Many of the states in whichwhere we operate, including Illinois, Iowa, Missouri and Wisconsin, make state-issued franchises available, which typically contain less restrictive provisions than those issued by municipal or other local government entities. State-issued franchises in many states generally allow local telephone companies or others to deliver services in competition with our cable service without obtaining equivalent local franchises. In states where available, we are generally able to obtain state-issued franchises upon expiration of our existing franchises. Our business may be adversely affected to the extent that our competitors are able to operate under franchises that are more favorable than our existing local franchises. While most franchising matters are dealt with at the state and/or local level, the Cable Act provides oversight and guidelines to govern our relationship with local franchising authorities whether they are at the state, county or municipal level.

HSD Service

Federal Regulation and Network Neutrality

ForIn 2017, the FCC issued a complete discussionDeclaratory Ruling reversing its 2015 action that had classified the provision of broadband Internet access service as a regulated telecommunications service under Title II of the federal regulatory statusCommunications Act(so-called “net neutrality” rules) and restoring its classification as a Title I information service. As an information service, broadband Internet access services are not subject to the utility-style regulations under Title II. Broadband access service providers are required to comply with the FCC’s refined transparency rule, including disclosures of network management practices (for example, blocking, throttling and traffic prioritization), performance and commercial terms of service, and the Federal Trade Commission will again have enforcement jurisdiction over certain business practices. A suit by at leasttwenty-two state Attorneys General seeks to overturn the FCC’s action. Some members of Congress have also undertaken efforts to reinstate net neutrality requirements, seeRecent Significantrequirements. We cannot predict the outcome or what the impact of such litigation, legislation or executive orders may be.

We provide HSD services to business customers. In 2017, the FCC Activity – HSD Regulatory Reclassificationadopted a Report and Network Neutrality.Order that found the market for packet-based services to businesses at speeds exceeding 45 Mbps as widespread therefore negating the need for any price regulation.

Digital Millennium Copyright Act

We regularly receive notices of claimed infringements by our HSD service users. The owners of copyrights have been active in seeking to prevent use of the Internet to violate their rights.rights, and we regularly receive notices of claimed infringements by our HSD customers. In many cases, their claims of infringement are based on the acts of customers of an Internet service provider — for example, a customer’s use of an Internet service or the resources it provides to post, download or disseminate copyrighted music, movies, software or other content without the consent of the copyright owner or to seek to profit from the use of the goodwill associated with another person’s trademark. In some cases, copyright and trademark owners have sought to recover damages from the Internet service provider, as well as or instead of the customer. The law relating to the

potential liability of Internet service providers in these circumstances is unsettled. In 1996, Congress adopted the Digital Millennium Copyright Act, which is intended to grant ISPs protection against certain claims of copyright infringement resulting from the actions of customers, provided that the ISP complies with certain requirements.

International Law

Our HSD service enables individuals to access the Internet and to exchange information, generate content, conduct business and engage in various online activities on an international basis. The law relating to the liability of providers of these online services for activities of their users is currently unsettled both within the United States and abroad. Potentially, third parties could seek to hold us liable for the actions and omissions of our HSD customers, such as defamation, negligence, copyright or trademark infringement, fraud or other theories based on the nature and content of information that our customers use our service to post, download or distribute. We also could be subject to similar claims based on the content of other websites to which we provide links or third-party products, services or content that we may offer through our Internet service. Due to the global nature of the Web, it is possible that the governments of other states and foreign countries might attempt to regulate its transmissions or prosecute us for violations of their laws.

State and Local Regulation and Competition

Our HSD servicesservice provided over our cable systems generally have not generallybeen subject to regulation by state or local jurisdictions. Five states have enacted state laws through legislation or executive orders in some fashion governing net neutrality, including California where we have systems. More than thirty states considered similar legislation during 2018 and we do not know whether other states may undertake similar legislative efforts to enact statutes to regulate the provision of broadband service, primarily with respect toso-called net neutrality issues, and several governors have signed executive orders to the same effect. We cannot predict whetherthe outcome or not our HSD services will become subject to increased state regulation as a result of the Open Internet Order as more fully discussed in theRecent Significant FCC Activity—HSD Regulatory Reclassification and Network Neutralitysection, above, or if they are,what the impact thatof such regulation would have on our business.legislation or executive orders may be.

Voice-over-Internet Protocol Phone Service

Federal Law

The 1996 amendments to the Cable Act created a more favorable regulatory environment for cable operators to enter the phone business. Most major cable operators now offer voice-over-Internet protocol (“VoIP”) phone service as a competitive alternative to traditional circuit-switched telephone service. Various states, including states where we operate, considered or attempted differing regulatory treatment, ranging from minimal or no regulation to heavily-regulated common carrier status. As part of the proceeding to determine any appropriate regulatory obligations for VoIP phone service, the FCC decided that alternative voice technologies, like certain types of VoIP phone service, should be regulated only at the federal level, rather than by individual states. Many implementation details remain unresolved, and there are substantial regulatory changes being considered that could either benefit or harm VoIP phone service as a business operation.

Federal Regulatory Obligations

The FCC has applied some traditional landline telephone provider regulations to VoIP services. In addition to certain USF obligations as discussed inRecent Significant FCC ActivityBroadband Infrastructure Support – Universal Service Fund,—HSD Regulatory Reclassification and Network Neutrality section, above, the FCC also has extended other regulations and reporting requirements to VoIP providers, includingE-911, CPNI, local number portability, disability access, Form 477 (subscriber information) reporting obligations, international service revenue reporting and outage reporting. In 2010, the FCC issued an NOI and an NPRM that would transition high-cost program funds from analog phone service to the provision of broadband services.

State and Local Regulation

Although our entities that provide VoIP phone service services are certificated as competitive local exchange carriers in most of the states in whichwhere they operate, they generally provide few, if any, services in that capacity. Rather, we provide VoIP services that are not generally subject to regulation by state or local jurisdictions. The FCC has preempted some state commission regulation of VoIP services, but has stated that its preemption does not extend to state consumer protection requirements. Some states continue to attempt to impose obligations on VoIP service providers, including state universal service fund payment obligations.

Risks Related to our Operations

We face intense competition that could adversely affect our business, financial condition and results of operations.

We face significant competition for our products and services from a growing number of competitors that offer a wide range of communication, entertainment and information services. Many of our competitors have, compared to us, greater financial resources, more favorable brand recognition, fewer regulatory burdens, national footprints and scale, and long-standing relationships with regulatory authorities and customers. Technological advances and changes in consumer behavior and demands have led to an increasing number of companies that offer new products and services that compete with ours, including“over-the-top” (“OTT”) OTT video, and wireless Internet and phone services.

We face significant competition for video service from:

Our HSD service faces its most meaningful competition from:

Other services that we provide that may also face significant competition:

Although we have generally eliminated or reduced tactical discounts for video customers that do not take bundled services, in order to attract new customers and maintain our existing customer base, we continue to make certain promotional offers that include short-term discounted service or equipment rates for bundled services, which may result in lower revenues and greater marketing expenses. Customers who take these discounted bundled services may not remain customers following the end of the promotional period, which could adversely affectperiod. If our ability to attract new customers or retain existing customers is impeded due to increased levels of competition, our business, financial condition and results of operations.

operations may be adversely affected. For additional information regarding our competitors, see “Business Description – Competition.”

Continued increases in video programming expenses may drive the pricing of our video services to levels that customers deem unaffordable, which could have an adverse effect on our business, financial condition and results of operations.

Video programming expenses have historically been, and we expect will continue to be, our largest single expense item and, in recent years, have reflected substantialon aper-unitper-video percentage increases. The rate of increase in such expensescustomer basis, has been well in excess ofincreased at a substantially higher pace than the inflation rate andor increase in U.S. wages,wages. The higher rates is primarily caused by higher per unit rates for national and regional sports and other popular cable networks and rapidly rising retransmission consent fees imposed by local broadcast stations.

We believe these expenses will continue to grow at a significant rate because of the demands of the small number of large media conglomerates or other owners of most of the popular cable networks and major market local broadcast stations, and large independent television broadcast groups whothat own, control or otherwise represent a significant number of local broadcast stations across the country and, in some cases, own or control multiple stations in the same market. Consolidation among these independent broadcast station groups has beencontinues at a significant over the past several years,pace, and given recent proposed and completed transactions in the broadcast marketplace, the pace of consolidation has accelerated. Asas a result, the independent broadcast groupsthey have become much larger based on the number of stations that they own in our markets. This will strengthen theirstrengthened position by allowingallows them to negotiate on behalf of a larger amount of local stations at one time.

Moreover,for even higher retransmission consent fees. Additionally, many of those powerful owners of programmingthese large media conglomerates and independent broadcast groups require us to purchase their content in bundles and dictate how we offer them to our video customers, and impose economic penalties if we fail to comply. Consequently, we have little or nowhich has materially diminished our ability to individually or selectively negotiate for the carriage or tier placement of individual networks or local broadcast stations and to forego purchasing networks or local broadcast stations that generate low subscriber interest, to offer sports programming services, such as ESPN and regional sports networks, on one or more separate tiers, or to offer networks or stations on an a la carte basis to give our customers more choice and potentially lower their costs. In many instances, programmers have created additional networks and migrated popular programming, particularly sports programming, to these new networks that contributed to the increases in our programming costs. Additionally, we believe certain programmers may also demand higher fees from us in an effort to partially offset declines in their advertising revenue as more advertisers allocate a greater portion of their spending to Internet advertising. These practices, along with costs associated with offering the same programming on additional outlets including online and VOD platforms, increase our programming expense. Because of the leverage these large programming companies have over us, we also are obligated to carry additional programming that we would otherwise not offer, which increases our programming expense and lowers our capacity to introduce other new products and services.

If we are unable to successfully negotiate new agreements with these programmers before our current agreements expire, the programmers could require us to cease carrying their signals, possibly for an indefinite period, which may result in a loss of video customers and advertising revenue. On certain occasions in the past, negotiations have led to disputes with programmers that have resulted in temporary periods where we were not carrying a particular broadcast network or programming service or services, which increases the risk of customer dissatisfaction and the loss of customers. Because of the leverage these large programming companies have over us, we also may be obligated to carry additional programming that we would otherwise not offer, which may increase our programming expenses and lower our capacity to introduce other new products or services. We may also selectively choose not to renew our agreements with certain content providers if we believe it is uneconomical to do so, which could result in a loss of video customers and advertising revenues. In addition, if our HSD customers are unable to access desirable content online because content providers block or limit access by our customers if we do not carry their video programming, we may have difficulty retaining certain HSD customers.

While we attempt to offset such growth in programming expenses by customer rate increases, including the direct pass-through of increases in retransmission consent and regional sports network fees, our video gross margins will likely continue to decline given the outsized increases to our programming costs we expect in the future. IfSuch increases in our programming costs werehave forced us to drivepush the pricing of our video services to levels that are deemed unaffordable, our customers may deem unaffordable or undesirable. As such, our customers may choose to no longer purchase our video services and instead rely onover-the-air viewing or use an OTT video service, which could have an adverse effect on our business, financial condition and results of operations.

Weak economic conditions maycould adversely impact our business, financial condition and results of operations.

Most of our revenues are sourced from consumers whose spending behavior is impacted by prevailing economic conditions. Weak job and business creation, occupied housing levels, personal income growth and consumer confidence can adversely impact demand for our services, and may cause increased cancellations by our customers or lead to unfavorable changes in the mix of products taken. The expanded availability of free or lower cost services that may compete with ours, including OTT video and wireless Internet available in certain commercial or public locations, may further pressure our customer retention. Weak economic conditions also maycan decrease advertising demand and negatively impact our advertising revenues.

Because our video service is an established and highly penetrated business, ourOur ability to gain new video customers depends, in part, on growth in occupied housing in our service areas, which is influenced by both local and national economic conditions. If the number of occupied homes in our service areas were to decline or not grow at all, our ability to attract and retain new video customers may be negatively impacted, and could adversely impact our business, financial condition and results of operations.

An acceleration in bandwidth consumption by HSD customers greater than current expectations could require unplanned network investments and meaningfully increase our capital expenditures.

The level of bandwidth consumption by our HSD customers has grown at sizeable rates for the past several years as usage of many Internet-based services, particularly OTT video, has rapidly increased. If bandwidth consumption were to accelerate greater than current expectations,grow at accelerated rates compared to recent experiences, we may need to make unplanned network investments and meaningfully increase our capital expenditures to expand the bandwidth capacity of our systems andbeyond current expectations to ensure the quality of service provided to our HSD customers. Our ability to develop, implement and refine business models that respond to changing consumer bandwidth usage and demands efficiently could be restricted by regulatory and legislative efforts to imposeso-called “net neutrality” requirements on Internet providers. See “Business— Legislation and Regulation—General HSD Service— Recent Significant FCC ActivityFederal Regulation and Network Neutrality.”

We face risks as we attempt to continue to grow our business services customer base and associated revenues.

Business services customers, and associated revenues, have made increasing contributions to our results of operations in the last several years, and we may encounter challenges as we attempt to further expand the delivery of HSD and phone to small- andmedium-sized businesses, and data networking and fiber connectivity to medium- andlarge-sized businesses and wireless carriers’ cellular towers. We expect to continue to commit significant investments on technology, equipment and personnel focused on our business services, including the 2016 introductionextension of “Project Open Road” where we plan to extend our network to numerous locations that contain multiple potential business customers. If we are unable to sufficiently build the necessary infrastructure and internal support functions to scale and expand our customer base, the potential growth of business services would be limited. In many cases, business service customers have service level agreements that require us to provide higher standards of service and reliability. If we are unable to meet these service level requirements, or more broadly, the expectations of SMB and enterprise customers, or we fail to properly scale and support these activities, our business, financial condition and results of operations may be adversely affected.

We may not realize the expected benefits of the major initiatives under MCC’s Capital Plan

We believe the major initiatives under MCC’s Capital Plan will improve our competitive position and provide additional opportunities to grow our customer base and associated revenues than we would have experienced otherwise. If we were to face greater levels of competition that impaired our ability to gain incremental market share or anticipated revenues, or higher than expected capital expenditures as we deploy such initiatives, we may not fully realize the expected benefits under MCC’s Capital Plan.

If we are unable to keep pace with rapid technological developments and respond effectively to changes in consumer behavior and demand, our business, financial condition and results of operations may be adversely affected.

We operate in a rapidly changing environment and our success depends, in part, on our ability to maintain or improve our competitive position by acquiring, developing, adopting and exploiting new and existing technologies to add introduce new products and services, or enhance existing ones. Continued development of newer technologies and services and rapidly evolving consumer preferences will likely continue to drive expansion of the products and services offered by our existing competitors and increase the number of competitors that we face. Next-generation technology has allowed for linear OTT video services that may sufficecan serve as a full replacement for our video service and may allowis allowing for wireless Internet providers to offer a service based on “5G” technology that may adequately serve as a full replacement for our HSD service. If our competitors were to introduce new or products and services that we do not currently offer, or enhanced versions of existing products and services that consumers find more compelling than ours, we may be required to deploy greater levels of marketing expenditures and capital investments to maintain our competitive position. We may also recognize lower revenues if such new products and services require us to offer certain of our existing services at a lower or no cost to our customers. Such changes could cause our business, financial condition and results of operation may be adversely affected.

To keep pace with future developments, we must choose third-party suppliers whose technologies or equipment are more effective, cost-efficient and attractive to customers than those offered by our competitors. We rely on third-party providers to make available to us new, cost-effectiveset-tops and programming guides that allow us to offer our video customers an enhanced user experience. If our vendors were unable to provideset-tops and programming guides that our customers prefer in a timely manner, compared to those offered by our competitors, we may experience greater video customer losses, and our business, financial condition and results of operation may be adversely affected.

We depend on network and information systems and other technologies to operate our businesses. A disruption or failure in such networks, systems or technologies resulting from “cyber-attacks,” natural disasters or other events outside our control have a materialan adverse effect on our business, financial condition and results of operations.

Because of the importance of network and information systems and other technologies to our business, disruptions or failures caused by “cyber-attacks” such as computer hacking, computer viruses, denial of service attacks, worms or other disruptive software could have a devastating impact on our business. Both unsuccessful and successful “cyber-attacks” on companies have continued to increase in frequency, scope and potential harm in recent years. Because the techniques used in such attacks have become more sophisticated and change frequently, we may be unable to anticipate these techniques or implement adequate preventative measures. SuchThese “cyber-attacks” maycould result in misappropriation, misuse, leakage, falsification and accidental release or loss of information maintained in our information technology system and networks, including customer, personnel and vendor data. Wedata, and we could also be subject to employee error or malfeasance, or other disruptions. Such events could damage our reputation and credibility, which could adversely affect our business, financial condition, and results of operations.

As a result of the increasing awareness concerning the importance of safeguarding personal information and the potential misuse of such information, businesses such as ours that handle a large amount of personal customer data are subject to legislation that has been adopted or is being considered regarding the protection, privacy and security of personal information and information-related risks. We may also provide certain customer and employee information to third parties in connection with our business. While we obtain assurance such data will be protected by these third-parties, they are potentially vulnerable to the same threats noted above. If such risks were to materialize, we may be subject to significant costs and expenses, or damage to our reputation and credibility, which could adversely affect our business, financial condition, and results of operations.

Our network and information systems are also vulnerable to damage resulting from power outages, natural disasters, terrorist attacks and other material events that are outside our control. Any such event may degrade or disrupt our service, lead to excessive volume at our call centers, and damage our plant, equipment, data and reputation. While we generally implement redundant systems to allow our network to continue to function in an outage, these measures may be ineffective in certain events. We are unable to predict the impact of such events, and any resulting customer or revenue losses, or increases in costs and expenses or capital expenditures, could have a material adverse effect on our business, financial condition, and results of operations.

We are unable to predict the impact of such events, and any resulting customer or revenue losses, or increases in costs and expenses or capital expenditures, could have a materialan adverse effect on our business, financial condition, and results of operations.

We may be unable to secure necessary hardware, software, telecommunications components and their operational support, and the related product development, which may impair our ability to provision and service our customers and to compete effectively.

Third-party firms supply most of the components used in delivering our products and services, includingset-tops and VOD equipment; interactive programming guides; cable modems; routers and other switching equipment; provisioning and other software; network connections for our phone services; fiber-optic cable and construction services for expansion and upgrades of our network; and our customer billing platform. Some of these companies may have negotiating leverage over us because they are the sole supplier of certain products and services, or because there may be a long lead time and/or significant expense required to transition to another provider. We also rely on these third-party firms to develop next-generation technology so that we may stay competitive with the latest products and services, and such reliance may result in less product innovation or higher costs than we would experience with multiple suppliers. In many cases, these hardware, software and operational support vendors and service providers have, either through contract or as a result of intellectual property rights, a position of some exclusivity, and our operations depend on a successful relationship with these companies.

Any delays or disruptions in the relationship as a result of contractual disagreements, operational or financial failures on the part of the suppliers, or other adverse events affecting these suppliers could negatively affect our ability to effectively provision and service our customers. We may face significant lapses in service and costs to upgrade our networks to allow them to operate with alternate equipment if such events were to occur, which would negatively affect our business, financial condition and results of operations.

One of our significant third-party suppliers is Windstream Holdings Inc. or its affiliates (“Windstream”). Key components we use in important segments of our network include fiber and conduit that we use under leases, “indefeasible right of use” and other arrangements we currently have or originally entered into with Windstream, including certain fiber and conduit that Windstream transferred to, and then leased back from Uniti Group Inc. (“Uniti”) in 2015. As a result of recent adverse rulings in litigation arising out of its transaction with Uniti, Windstream recently filed a petition for reorganization under Chapter 11 of the US Bankruptcy Code in the Southern District of New York (CaseNo. 19-22312). It is possible that our right to continue to use such fiber and conduit, or our costs for such usage, could be negatively impacted as a result of the Chapter 11 proceeding or the challenges to the transaction between Windstream and Uniti, in which case our business, results of operations and financial condition could be adversely affected unless we were able to secure replacements or work arounds on a timely basis and at comparable costs.

Our business depends on certain intellectual property rights and on not infringing on the intellectual property rights of others.

We rely on our copyrights, trademarks and trade secrets, as well as licenses and other agreements with our vendors and other parties, to use our technologies, conduct our operations and sell our products and services. Third-party firms have in the past, and may in the future, assert claims or initiate litigation related to patent, copyright, trademark, and other intellectual property rights to technologies and related standards that are relevant to us. These assertions have increased over time as a result of our growth and the general increase in the pace of patent claims assertions, particularly in the United States. Recently, the number of intellectual property infringement claims has been increasing in the communications and entertainment fields, and from time to time, we have been party to litigation alleging that certain of our services or technologies infringe upon the intellectual property rights of others. Because of the large number of patents in the networking field, the secrecy of some pending patents and the rapid rate of issuance of new patents, it is not economically practical or, in some cases, possible to determine in advance whether a product or any of its components infringes or will infringe on the patent rights of others. Asserted claims and/or initiated litigation can include claims against us or our manufacturers, suppliers, or customers, alleging infringement of their proprietary rights with respect to our existing or future products and/or services or components of those products and/or services. Regardless of the merit of these claims, they can be time-consuming to defend; result in costly litigation and diversion of technical and management personnel; and require us to develop anon-infringing technology or enter into license agreements. There can be no assurance that licenses will be available on acceptable terms and conditions, if at all, or that any indemnification by our suppliers will be adequate to cover our costs if a claim were brought directly against us or our customers. Furthermore, because of the potential for high monetary awards that are not predictable, it is not unusual to find even arguably unmeritorious claims settled for significant amounts.

If any infringement or other intellectual property claim made against us by any third-party is successful, if we are required to indemnify a customer with respect to a claim against the customer, or if we fail to developnon-infringing technology or license the proprietary rights on commercially reasonable terms and conditions, our business, results of operations, and financial condition could be adversely affected.

The loss of key personnel could have a material adverse effect on our business.

Our success is substantially dependent upon the retention of, and the continued performance by, MCC’s key personnel, including Rocco B. Commisso, MCC’s Chairman and Chief Executive Officer. If any of MCC’s key personnel cease to participate in our business and operations, it could have an adverse effect on our business, financial condition and results of operations.

Risks Related to our Financial Condition

We have a significant amount of debt, and the associated interest and principal payments could limit our operational flexibility and have an adverse effect on our business, financial condition, liquidity, and results of operations.

As of December 31, 2016,2018, our total debt was $1.628$1.224 billion. Given our substantial debt, we are highly leveraged and will continue to be so. Our debt obligations require us to use a largemeaningful portion of our cash flows from operations to pay interest and principal payments on such debt, resulting in less cash available to finance our operations, capital expenditures and other activities.

Our significant amount of debt and associated debt service requirements could have adverse consequences, such as:

If we are unable to obtain financing on acceptable terms, or at all, to refinance our debt as it comes due, we would need to take other actions, including selling assets or seeking strategic investments from third parties, potentially on unfavorable terms, and deferring capital expenditures or other discretionary uses of cash. Such potential asset sales or third-party investments could adversely affect our results of operations, liquidity and financial condition, and any significant reduction in capital expenditures could affect our ability to compete effectively. If such measures were to become necessary, there can be no assurance that we would be able to sell assets or raise strategic investment capital sufficient enough to meet our scheduled debt maturities as they come due.

The financial markets are subject to volatility and disruptions, which may adversely affect our access to, or the cost of, new capital or our ability to refinance our scheduled debt maturities and other obligations as they come due.

Volatility and disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation of financial institutions, reduced alternatives or failures of significant financial institutions could adversely affect our access to the liquidity needed for our businesses. Such disruptions could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged.

Our access to funds under our revolving credit commitments is dependent on the ability of the financial institutions that are parties to those facilities to meet their funding commitments. Those financial institutions may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time. Moreover, the obligations of the financial institutions under our revolving credit commitments are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the others.

We are a holding company, and if our operating subsidiaries are unable to make funds available to us, we may not be able to fund our indebtedness and other obligations.

We are a holding company, and do not have any operations or hold any assets other than our investments in, and our advances to, our operating subsidiaries. Our operating subsidiaries conduct all of our consolidated operations and own substantially all of our consolidated assets. Our operating subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to make funds available to us.

The only source of cash that we have to fund our senior notes (including, without limitation, the payment of interest on, and the repayment of, principal) is the cash that our operating subsidiaries generate from operations or borrow under their bank credit facility (the “credit facility”). The ability of our operating subsidiaries to make funds available to us will depend upon their results and applicable laws and contractual restrictions, including the covenants set forth in the credit agreement governing the credit facility (the “credit agreement”). If our operating subsidiaries were unable to make funds available to us, then we may not be able to make payments of principal or interest due under our senior notes. If such an event occurred, we may be required to adopt one or more alternatives, such as refinancing our senior notes or the outstanding debt of our operating subsidiaries at or before maturity, or raising additional capital through debt or equity issuance, or both. If we were not able to successfully accomplish those tasks, then we may have to take other actions, including selling assets or seeking strategic investments from third parties, potentially on unfavorable terms, and deferring capital expenditures or other discretionary uses of cash.

There can be no assurance that any of the foregoing actions would be successful. Any inability to meet our debt service obligations or refinance our indebtedness would materially adversely affect our business, financial condition and results of operations.

A default under our credit agreement or indenturesindenture could result in an acceleration of our indebtedness and other material adverse effects.

As of December 31, 2016,2018, the principal financial covenants of the credit agreement required our operating subsidiaries to maintain a total leverage ratio (as defined in the credit agreement) of no more than 5.0 to 1.0 and an interest coverage ratio (as defined in the credit agreement) of no less than 2.0 to 1.0. The credit agreement also contains various other covenants that, among other things, impose certain limitations on mergers and acquisitions, consolidations and sales of certain assets, liens, restricted payments and certain transactions with affiliates. See Note 6 in our Notes to Consolidated Financial Statements.

As of December 31, 2016,2018, the principal financial covenant of the indenturesindenture governing our senior notes (the “indentures”“indenture”) was a limitation on the incurrence of additional indebtedness based upon a maximum debt to operating cash flow ratio (as defined in the indenture) of 8.5 to 1.0. The indenturesindenture also contain various other covenants, though they are generally less restrictive than those found in our credit facility. See Note 6 in our Notes to Consolidated Financial Statements.

The breach of any of the covenants under the credit agreement or indenturesindenture could cause a default, which may result in the associated indebtedness becoming immediately due and payable. If this were to occur, we would be unable to adequately finance our operations. The membership interests of our operating subsidiaries are pledged as collateral under our credit facility. A default under our credit agreement could result in a foreclosure by the lenders on the membership interests pledged under that facility. Because we are dependent upon our operating subsidiaries for all of our cash flows, a foreclosure would have a material adverse effect on our business, financial condition, liquidity, and results of operations.

In the event of a liquidation or reorganization of any of our subsidiaries, the creditors of any of such subsidiaries, including trade creditors, would be entitled to a claim on the assets of such subsidiaries prior to any claims of the stockholders of any such subsidiaries, and those creditors are likely to be paid in full before any distribution is made to such stockholders. To the extent that we, or any of our direct or indirect subsidiaries, are a creditor of another of our subsidiaries, the claims of such creditor could be subordinated to any security interest in the assets of such subsidiary and/or any indebtedness of such subsidiary senior to that held by such creditor.

A lowering or cessation of the ratings assigned to our debt securities by ratings agencies may increase our future borrowing costs and reduce our access to capital.

Our future access to the debt markets and the terms and conditions we receive are influenced by our debt ratings. MCC’s corporate credit ratings currently are Ba3 with a positive outlookBa1 by Moody’s, and BB with a stable outlook, and BB by Standard and Poor’s (“S&P”)., with a positive outlook. Our senior unsecured ratings currently are B2 with a positive outlookBa2 by Moody’s, and B+ with a stable outlook, and B+ by S&P.&P, with a positive outlook. There can be no assurance that Moody’s or S&P will maintain their ratings on MCC and us. A negative change to these credit ratings could result in higher interest rates on future debt issuance than we currently experience, or adversely impact our ability to raise additional funds.

Impairment of our goodwill and other intangible assets could cause significant losses.

As of December 31, 2016,2018, we had approximately $1.4 billion of unamortized intangible assets, including franchise rights of $1.2 billion and goodwill of $0.2 billion on our consolidated balance sheets. These intangible assets represented approximately 60%59% of our total assets.

Accounting Standards Codification (“ASC”) No. 350 — Intangibles — Goodwill and Other(“ASC 350”) requires that goodwill and other intangible assets deemed to have indefinite useful lives, such as cable franchise rights, cease to be amortized. ASC 350 also requires that goodwill and certain intangible assets be tested at least annually for impairment. If we find that the carrying value of goodwill or cable franchise rights exceeds its fair value, we will reduce the carrying value of the goodwill or intangible asset to the fair value, and will recognize an impairment loss in our results of operations. See “Management’s Discussion and Analysis – Critical Accounting Policies –Valuation and Impairment Testing of Indefinite-lived Intangibles”and Note 2 in our Notes to Consolidated Financial Statements.

Risks Related to Legislative and Regulatory Matters

Changes in government regulation could adversely impact our business.

The cable industry is subject to extensive legislation and regulation at the federal and local levels and, in some instances, at the state level. Additionally, our HSD and phone services are also subject to regulation, and additional regulation is under consideration. Aspects of such regulation are currently the subject of judicial and administrative proceedings, legislative and administrative proposals, and lobbying efforts by us and our competitors. Legislation is reportedlyperiodically under consideration that could entirely rewrite our principal regulatory statute, and the FCC and/or Congress may attempt to change the classification of, or change the way that, our video and/or HSD services are regulated and/or change the framework under which broadcast signals are carried, remove the copyright compulsory license and change the rights and obligations of our competitors. We expect that court actions and regulatory proceedings will continue to refine our rights and obligations under applicable federal, state and local laws. The results of current or future judicial and administrative proceedings and legislative activities cannot be predicted. Modifications to existing requirements or imposition of new requirements or limitations could have an adverse impact on our business including those described below. See “Business — Legislation and Regulation.”

Recent FCC action and possible court proceedings and legislation could adversely affectto declassify our HSD service.service from Title II regulation under the Communications Act could be overturned by the courts or legislation.

ReclassificationA reclassification of the regulatory status ofour HSD service toas a telecommunications service under Title II of the Communications Act maycould significantly impact how we provide and charge for our HSD service and operate our network by imposing significant regulationsrequirements and limitations on us and introducing regulatory uncertainty due to lack of clarity of new regulations. The FCC could choose to impose this regulation in a way that adversely affects our business by imposing new regulatory burdens and limiting our business and customer relationships. The regulatory scheme introduced in the FCC’s Open Internet Order relies heavily on forbearance of many types of Title II regulations, however, the FCC could at any time in the future choose to forgo forbearance and impose significant new regulations of our HSD service. As only one example, the FCC has decided to forebear from applying its extensive authority to regulate prices under Title II, and if it decided to end that forbearance, our results of operations could suffer. Even if the FCC continues to forebear from applying certain provisions of Title II, our business, financial condition and results of operations could be adversely impacted by the provisions that it does intend to apply. In addition, the uncertainty created by the fact that the impact of the new rules cannot yet be determined and the fact that the FCC could end forbearance in the future may impede our ability to obtain financing for our business or increase the cost of that financing.us. See “Business — Legislation and Regulation—General — Recent Significant FCC Activity —HSD Regulatory Reclassification and Network Neutrality, “Business — Legislation and Regulation —General —Privacy and Data Security,”“Business — Legislation and Regulation —General —Pole Attachment Regulation,” “Business — Legislation and Regulation —General —Universal Service Fund” and“Business — Legislation and Regulation —HSD Service —State and LocalFederal Regulation and CompetitionNetwork Neutrality.”

Government financing of broadband providers in our service areas could adversely impact our business.

Possible changesIn 2018, the FCC committed $1.98 billion over ten years ($198 million annually) to how USF monies are distributedsupport the deployment and provision of voice and fixed broadband services in unserved high-cost areas which could be used to build or upgrade systems owned by those who compete with us. In 2019, the USDA announced plans to deploy an additional $600 million appropriation to spur additional private investment in improving broadband infrastructure in underserved rural areas. Major government infrastructure spending packages and/or other pieces of legislation currently under consideration in Congress or others that may be introduced may provide funding and subsidies to those who either compete with us or seek to compete with us and therefore may put us at a competitive disadvantage. Moreover, if the FCC chooses to imposebroaden the imposition of USF fees on broadband services bundled services or VoIP services that could increasewe provide, the cost of our services could increase and harm our ability to compete. See “Business — Legislation and Regulation —General —Broadband Infrastructure Support —Universal Service Fund,” “Business — Legislation and Regulation —General — Governmental Broadband Infrastructure Support– Governmental Support” and “Business — Legislation and Regulation —Voice-over-Internet-Protocol Phone Service —Federal Regulatory Obligations.”

Changes in the definitionAdoption of an MVPDATSC 3.0 transmission standard by stations whose broadcast signals we retransmit may make programming availableincrease our costs or cause loss of our ability to Internet providers of video services.receive some signals.

In the event of a simulcast, a change in transmission location could impair our ability or increase our cost to obtain a station’s broadcast signal. If there is no ATSC 1.0 simulcast, unless we are permitted to downconvert a signal from ATSC 3.0 to ATSC 1.0, we will either lose the FCC changesaffiliated network content or we would have to modify the definitionconfiguration and possibly some components of an MVPDour system to include those distributors of multiple channels of video programming over the Internet that do not own physical distribution facilities, competitorspermit retransmissions in ATSC 3.0 format, which could increase our costs and potential competitors may have access to certain traditional cable programming under the FCC’s program access rules. If Internet-based providers have greater access to programming of value to our customers and can offer service at a lower price because they are not facilities-based, that could hurt our business, financial condition and results of operations.require additional capital investment. See “Business – Legislation and Regulation –Cable System OperationsMust Carry and Video ServicesRetransmission Consent.”–Access to Certain Programming.”

Opening our services to third-party navigation devices or apps, requiring downloadable security and limiting how much we charge for leased navigation devices may adversely impact our provisionLoss of services, raise our costs and decrease our revenues.

If the FCC changes its regulations to require that we reengineer our systems to permit subscribers to use third-party devices and/or apps in place of our leasedset-tops, that could impair the subscriber experience potentially causing a loss of subscribers, raise our costs, decrease our revenues from leasedset-tops, cause early retirement ofset-tops, increase liability arising from security vulnerabilities created by either the mandatory structure to allow third-party navigation devices or by the devices or apps themselves and could devalue viewing information by either limiting our access to it or by allowing third-parties to capture and use such data for their own gain. If rules are adopted requiring the usage of downloadable security configurations from a third-party trust authority, the risk of security breaches to our system may increase and the protection of the content that we provide as part of our cable service may be compromised, which in turn could increase our exposure to legal actions by affected third parties, such as the content owners. Any rules that would limit how much we charge for leased navigation devices could adversely impact our revenue stream or our ability to priceprovide bulk rate services to multiple dwelling unit buildings could decrease the number of such devices competitively.units purchasing our services.

Any loss of the ability to provide services on a bulk rate basis to multiple dwelling unit buildings could result in a decrease in the number of such customers and the total amount of replacement revenue from full-rate individually billed customers may not offset such loss as it is unlikely that all residents of such units would take our services on an individual basis. See “Business“Business — Legislation and Regulation—Cable System Operations and Video Services—Cable Equipment —Multiple Dwelling Units.”

Denials of franchise renewals or continued absence of franchise parity can adversely impact our business.

Where state-issued franchises are not available, local franchising authorities may demand concessions, or other commitments, as a condition to renewal, and these concessions or other commitments could be costly. Although the Cable Act affords certain protections, there is no assurance that we will not be compelled to meet such demands in order to obtain renewals.

Our cable systems are operated undernon-exclusive franchises. We believe that, as of December 31, 2016,2018, various other entities are currently offering video service, through wireline distribution networks, to about 33%29% of our estimated homes passed. Because of the FCC’s actions to speed issuance of local competitive franchises and because many states in which we operate cable systems have adopted, and other states may adopt, legislation to allow others, including local telephone companies, to deliver services in competition with our cable service without obtaining equivalent local franchises, we may face not only increasing competition but we may be at a competitive disadvantage due to lack of regulatory parity. Any of these factors could adversely affect our business. See “Business — Legislation and Regulation —Cable System Operations and Video Services —State and Local Regulation —Franchise Matters.”

Our phone service may become subject to additional regulation.

The regulatory treatment of phone services that we and other providers offer remains uncertain. The FCC, Congress, the courts and the states continue to look at issues surrounding the provision of VoIP, including whether this service is properly classified as either a telecommunications service or an information service.VoIP. Any changes to existing law as it applies to VoIP or any determination that results in greater or different regulatory obligations than competing services would result in increased costs, lower revenues or an impeded ability to effectively compete or otherwise adversely affect our ability to successfully conduct our phone business. See “Business — Legislation and Regulation —Voice-over-Internet-Protocol Phone Service —Federal Law.”

Changes in pole attachment regulations or actions by pole owners could significantly increase our pole attachment costs.

Our cable facilities are often attached to, or use, public utility poles, ducts or conduits. Although changes in 2011 to the FCC’s long-standing pole attachment rate formulas and attachment requirements may be beneficial to us, the effective and significant lowering of the rate attachment costs to our telecommunications competitors through the FCC’s 2015 Open Internet Order coupled with increasing their ease of attachment may significantly benefit those that provide services that compete with ours. Our business, financial condition and results of operations could suffer a material adverse impact from changes that make it both easier and less costly for those who compete with us to attach to poles. See “Business — Legislation and Regulation —General—Pole Attachment Regulation.”

Changes in compulsory copyright regulations could significantly increase our license fees.

If Congress either eliminates the current cable compulsory license or enacts the proposed revisions to the Copyright Act, the elimination could impose increased costs and transactional burdens or the revisions could impose oversight and conditions that could adversely affect our business. Additionally, the Copyright Office’s implementation of any such legislative changes could impose requirements on us or permit overly intrusive access to financial and operational records. Any future decision by Congress to eliminate the cable compulsory license, which would require us to obtain copyright licensing of all broadcast material at the source, would impose significant administrative burdens and additional costs that could adversely affect our business. See “Business — Legislation and Regulation —Cable System Operations and Video Services —Federal Regulation —Copyright.”

Increased consolidation of broadcast television station ownership may increase leverage of those owners when negotiating retransmission consent rates and to impose additional carriage obligations on us.

If the FCC permits through changes in regulations or by approvingcase-by-case acquisitions of additional broadcast television stations by existing group owners, such owners could control an increasing number of broadcast television stations in DMAs in which our systems operate. This could give them increased leverage to extract higher retransmission consent fees and other consideration, including carriage of additionalnon-broadcast television programming, all of which could increase our costs that could adversely affect our business.

Risks Related to MCC’s Chairman and Chief Executive Officer’s Controlling Position

MCC’s Chairman and Chief Executive Officer has the ability to control all major corporate decisions, and a sale of his ownership interest could result in a change of control that would have unpredictable effects.

An entity wholly-owned by Rocco B. Commisso and related parties is the sole shareholder of MCC. Mr. Commisso is MCC’s founder, Chairman and Chief Executive Officer. Our debt arrangements provide that a default may result upon certain change of control events, including if Mr. Commisso were to sell a significant stake in us or MCC to a third party. Our debt agreements provide, however, that a change of control will not be deemed to have occurred so long as MCC continues to be our manager and/or Mr. Commisso continues to be MCC’s, or our, Chairman or Chief Executive Officer.

A change in control could result in a default under our debt arrangements, which require us to offer to repurchase our senior notes at 101% of their principal amount and trigger a variety of federal, state and local regulatory consent requirements and potentially limit MCC’s further utilization of net operating losses for income tax purposes.requirements. Any of the foregoing results could adversely affect our results of operations and financial condition.

None.

Our principal physical assets consist of fiber-optic networks, including signal receiving, encoding and decoding devices, headend facilities and distribution systems and equipment at, or near, customers’ homes.homes and businesses. The signal receiving apparatus typically includes a tower, antenna, ancillary electronic equipment and earth stations for reception of satellite signals. Headend facilities are located near the receiving devices. Our distribution system consists primarily of coaxial and fiber-optic cables and related electronic equipment. Customer premise equipment consists ofset-top devices, cable modems and related equipment. Our distribution systems and related equipment generally are attached to utility poles under pole rental agreements with local public utilities, although in some areas the distribution cable is buried in underground ducts or trenches. The physical components of the cable systems require maintenance and periodic upgrading to improve performance and capacity. In addition, we maintain a network operations center with equipment necessary to monitor and manage the status of our network.

We own and lease the real property housing our regional call centers, business offices and warehouses throughout our operating regions. Our headend facilities, signal reception sites and microwave facilities are located on owned and leased parcels of land, and we generally own the towers on which certain of our equipment is located. We own most of our service vehicles. We believe that our properties, both owned and leased, are in good condition and are suitable and adequate for our operations.

We are involved in various legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations, cash flows or business.

ITEM 4.

MINE SAFETYSAFETY DISCLOSURES

Not applicable.

PART II

There is no public trading market for our equity, all of which is held by MCC.

In the table below, we provide selected historical consolidated statement of operations data, cash flow data and other data for the years ended December 31, 20122014 through 20162018 and balance sheet data and operating data as of December 31, 20122014 through 2016,2018, which are derived from our consolidated financial statements (except other data and operating data). Dollars are in thousands, except operating data. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

(1)

“Adjusted OIBDA” is not a financial measure calculated in accordance with generally accepted accounting principles (“GAAP”) in the United States. We define Adjusted OIBDA as operating income before depreciation and amortization.amortization and deferred compensation. Adjusted OIBDA has inherent limitations as discussed below.

Reference is made to the “Risk Factors” in Item 1A for a discussion of important factors that could cause actual results to differ from expectations and any of our forward-looking statements contained herein. The following discussion should be read in conjunction with our audited consolidated financial statements as of, and for the years ended, December 31, 2016, 20152018, 2017 and 2014.2016.

Overview

We are a wholly-owned subsidiary of Mediacom Communications Corporation (“MCC”), the nation’s fifth largest cable company based on the number of customers who purchase one or more video services, or video customers. As of December 31, 2016,2018, we served approximately 463,000428,000 video customers, 643,000699,000 high-speed data (“HSD”) customers and 264,000339,000 phone customers, aggregating 1.37 million1,466,000 primary service units (“PSUs”). As of the same date, we served 754,000had 753,000 residential and business customer relationships.

We offer video, HSD and phone services individually and in bundled packages to residential and small- tomedium-sized business (“SMB”) customers over our hybrid fiber and coaxial cable (“HFC”) network, and provide fiber-based network and transport services to medium- andlarge-sized businesses, governments and educational institutions. We also sell advertising to local, regional and national advertisers on televisionvideo and digital platforms, andplatforms. We also offer home security and automation services to residential customers. Our services are typically offered on a subscription basis, withand installation fees, monthly rates and related charges associated withvary according to the services, equipment and features customers choose. We offer discounted packages for new customers and those who take multiple services, and ourprimarily market bundled packages under the Xtream marketing brand offers bundled packages that include video with digital video recorder (“DVR”) service andset-tops with the TiVo guide, HSD with a wireless gateway, and phone service. We believe the simplified pricing and value proposition of our Xtream bundles has positively influenced the market’s perception of our products and services, and has driven higher levels of sales activity.

Over the past several years, revenues from residential services have increased mainly due to residential HSD customer growth. We expect to continue to grow such revenues from residential services through HSD customer growth and increased revenue per customer relationship as more customers take faster HSD tiers and advanced video services, including our next-generationset-top and DVR service.DVR. Our business services revenues have grown at a meaningfully faster rate than our residential revenues as we have rapidly expandedgrown our SMB and,business customer relationships. Through significant capital investments, we continue to a lesser extent, enterprise customer base. Inextend our network to new commercial locations that contain multiple businesses representing potential customers, in an effort to sustain or accelerate our rate of growth in business services revenues, we have recently commenced “Project Open Road,” where we plan to extend our network to a meaningful number of new commercial locations that contain multiple businesses that represent potential customers.revenues.

Our residential video service principally competes with direct broadcast satellite (“DBS”) providers that offer video programming substantially similar to ours.ours and a variety ofover-the-top (“OTT”) video services. Over the past several years, we have experienced meaningful video customer losses, aslargely to DBS competitorscompetitors. The introduction of more OTT video services and offerings have deployed aggressive marketing campaigns, including deeply discounted promotional packages, more advanced customer premise equipment and exclusive sports programming.increasingly represented additional competition for our video service. We have placed a greater emphasis on higher quality residential customer relationships, asand we have generally eliminated or reduced tactical discounts for video customers that do not likely to purchase two or more services or to stay with us for an extended period, which may further contribute to video customer declines.services. To appeal to such higher-quality residential consumers, we have deployed a next-generation Internet Protocol (“IP”)set-top that offers a cloud-based, graphically-rich TiVo guide with access and integrated search functionality to certain third-party Internet-basedOTT video applications (“video apps”), suchservices, including as Netflix, Hulu, and YouTube, along with a multi-room DVR service and the ability to download certain content to personal devices. In 2017, weWe also plan to introduceoffer a new, lower-cost IPset-top that offers the TiVo guide and OTT video apps,services, but without the required equipment for DVR service. We believeOur voice-controlled remote allows our video strategy has enabled uscustomers to reduce the rate of video customer lossesuse voice commands to change channels, search for shows and regain market share of new video connects.discover content through recommendations. If we are unsuccessful with this strategy and cannot offset video customer losses through higher average unit pricing and greater penetration of our advanced video services, we may experience future declines in annual video revenues.

Our residential HSD service competes primarily with digital subscriber line (“DSL”) services offered by local phone companies and wewireless services offered by cellular phone companies. We have continued to grow our HSD customer base at a meaningful rate over the last several years. We believe our HSD service is generally superior tooffers greater capacity and reliability than DSL and wireless offerings in our service areas, asand our minimum downstream speed of up to 60 megabits per second (“Mbps”) is faster than the highest speed offered by substantially all our DSL competition.competitors. As consumers’ bandwidth requirements haveconsumption has dramatically risen in recent years, we have dedicated increasing levels of capital expenditures to allow for faster speeds and greater levels of consumption. Through “Project Gigabit,”recent capital investment initiatives, we have installedcompleted the necessary equipmenttransition of our network to transitionDOCSIS 3.1 technology and offer 1 Gbps downstream HSD service throughout substantially all our homes passed to the DOCSIS 3.1 platform, which will allow us to introduce packages offering speeds of up to 1 gigabit per second (“Gbps”) across most of our marketsfootprint. We offer modems that function as a phone adapter and wireless gateway, ensuring performance of multiple personal devices used at the same time. Our WiFi360 service provides additional access points and extends the range of the wireless network in 2017.the customer’s home. We expect to continue to grow HSD revenues as we further take market sharegrow our customer base and our HSD customers choose higher speed tiers.

Our residential phone service mainly competes with substantially comparable phone services offered by local phone companies and cellular phone services offered by national wireless providers. We believe we will continue to grow residential phone customers, but may experience modest declines in phone revenues due to unit pricing pressure.

Our business services primarily compete for SMB customers with local phone companies, many of which have had a historical advantage given long-term relationships with such customers, a nation-wide footprint that allows them to more effectively serve multiple locations, and existing networks built in certain commercial areas that we do not currently serve. Our cell tower backhaul and enterprise-level services also face competition from these local phone companies as well as other carriers, including metro and regional fiber-based carriers. In recent years, we have aggressively marketed our business services and have expanded our network into additional commercial areas which hasthrough certain capital investment initiatives. We believe these tactics have allowed us to gain meaningful market share, and led to strongresulting in growth rates ofin our business services revenues inover the past several years, which we believe will continue.

We compete forsell advertising and production services to local, regional and national customers under our OnMedia brand. These revenues principally againstare determined, in part, by the number of video customers served and are impacted by overall advertising competition in our markets, including local broadcast stations, national cable and broadcast networks, radio, newspapers, magazines, outdoor display and Internet companies. Competition has, and likely will, likelycontinue to elevate as new formats forof advertising are introduced into our markets. In recent years, we have generally experienced lower advertising revenues due to digital marketing taking a greater share of advertising spend in our markets and an overall reduction of our video customer base. These secular declines have been periodically offset by increased levels of political advertising during national elections and other significant political events.

Historically, videoVideo programming has been our single largest expense and, we have experienced substantialon aper-video customer basis, continually increased at a higher rate than our ability to offset such increases inwith rate increases to our customers, particularly due to sports programming costs per video customer, particularly for sports and local broadcast programming, well in excess of the inflation rate or the changeretransmission consent. Media industry consolidation has resulted in the consumer price index. We believe these expenses will continue to grow at a high single- to low double-digit rate because of the demandsformation of large media conglomerates or other owners of most of the popular cable networks and major market local broadcast stations, and of large independent television broadcast groups, who own or control a family of popular cable networks and a significant number of local broadcast stations across the country and, in some cases, own, control or otherwise represent multiple stations in the same market. Moreover, manyMany of those powerful owners of programming require us to purchase their networks and stations in bundles and effectively dictate how we offer them to our customers, given the contractual economic penalties if we fail to comply. Consequently, we have little or nowhich has materially diminished our ability to individually or selectively negotiate for the carriage or tier placement of individual networks or stations and to forego purchasing networks or stations that generate low customer interest, to offer sportsslow the rate of growth of our programming services, such as ESPNcosts and regional sports networks, on one or more separate tiers, or to offer networks or stations on an a la carte basis to givethe video rates our customers more choiceultimately pay. Our inability to fully recover the programming cost increases has adversely impacted, and potentially lower their costs. In many instances,continues to adversely impact, our video service margins and related cash flows.

2018 Developments

2018 Financing Activity

On March 2, 2018, we called for the redemption of the entire $300.0 million principal amount outstanding of our 6³⁄₈% senior notes due April 2023 (the “6³⁄₈% Notes”). On March 30, 2018, we received $158.0 million of cash contributions from our parent, MCC, which, in turn, received such programmers have created additional networkscontributions from Mediacom LLC on the same date. On April 2, 2018, such cash contributions, along with $151.6 million of borrowings under our revolving credit commitments, were used to fund the redemption of the 6³⁄₈% Notes.

See “Liquidity and migrated popular programming, particularly sports programming, to these new networks, which has contributed to the increasesCapital Resources— Capital Structure— 2018 Financing Activity” and Note 6 in our programming costs. Additionally,Notes to Consolidated Financial Statements.

Tower Asset Sale

On March 15, 2018 and September 25, 2018, we believecontributed certain programmers may also demand higher fees from ustower assets to MCC which, in an effortturn, sold such tower assets to partially offset declinesCTI.

See Note 13 in their advertising revenue as more advertisers allocate a greater portion of their spendingour Notes to Internet advertising. While such growth in programming expenses can be offset, in whole or in part, by rate increases, we expect our video gross margins will continue to decline if increases in programming costs outpace any growth in video revenues.

Recent DevelopmentsConsolidated Financial Statements.

MCC’s Capital PlanHurricane Michael

In 2016, MCC announced a plan for approximately $1 billionOn October 10, 2018, Hurricane Michael made landfall in the Panhandle region of totalFlorida. Hurricane Michael caused property damage to our cable plant, as well as to our customers’ homes and businesses, in Georgia. As of December 31, 2018, the damage caused by Hurricane Michael required an additional $7.9 million of capital expenditures in order to be made by usrepair our network and Mediacom LLC duringservices.

See Note 14 in our Notes to Consolidated Financial Statements.

Revenues

Changes in Accounting Standards

As of January 1, 2018, we have adopted certain accounting standards and related guidance (collectively, “revenue recognition”) that affects both the three years ending December 2018 (“MCC’s Capital Plan”timing of revenue recognition (the “timing change”) and the allocation of revenues among video, HSD and phone within our multi-product offerings, in which we offer product bundles at a discount (the “allocation change”). AmongWe adopted this accounting standard using a modified retrospective transition, and accordingly, the planned initiatives under MCC’s Capital Plan include:

Duringimpact was reflected in our financial results only for the full year ended December 31, 2016, MCC made an aggregate $335.2 million of capital expenditures, of which $179.9 million was invested by us. We expect similar levels of capital investments by us2018 and MCC over eachreported results for prior periods were not restated. The adoption of the next two years, withnew standard did not have a material impact on our portionresults of the initiatives outlined above approximating a level that is commensurate with our capital expenditures as a percentage of MCC’s total capital expenditures. We have already made meaningful progress under MCC’s Capital Plan, including the recent announcement that MCC has become the first major U.S. cable company to have fully installed the necessary equipment to transition to the DOCSIS 3.1 platform. We believe these initiatives will allow us to continue to improve our competitive positionoperations for both residential and business services customers in our markets, with additional future revenue and cash flow growth driven by incremental gains in market share than we would have experienced otherwise.

Revenuesthis period.

Video

Video revenues primarily represent monthly subscription fees charged to residential customers, which vary according to the level of service and the type and amount of equipment taken, and revenue fromtaken. Video revenues also include the sale of VOD content andpay-per-view events. Video revenues also includeevents, installation, reconnection and wire maintenance fees, franchise and late payment fees, and other ancillary revenues.revenue.

HSD

HSD revenues primarily represent monthly subscription fees charged to residential customers, which vary according to the level of service and type of equipment taken.

Phone

Phone revenues primarily represent monthly subscription and equipment fees charged to residential customers for our phone service.

Business Services

Business services revenues primarily represent monthly fees charged to SMBs for video, HSD and phone services, which vary according to the level of service taken, and fees charged to large businesses, including revenues from cell tower backhaul and enterprise class services.

Advertising

Advertising revenues primarily represent revenues received from selling advertising time we receive under programming license agreements to local, regional and national advertisers for the placement of commercials on channels offered on our video services.

Costs and Expenses

Service Costs

Service costs consist of the costs related to providing and maintaining services to our customers. Significant service costs comprise: video programming; HSD service, including bandwidth connectivity; phone service, including leased circuits and long distance; our enterprise networks business, including leased access; technical personnel who maintain the cable network, perform customer installation activities and provide customer support; network operations center; utilities, including pole rental; and field operations, including outside contractors, vehicle fuel and maintenance and leased fiber for regional connectivity.

Video programming costs, which are generally paid on aper-video customer basis, have historically represented our single largest expense. In recent years, we have experienced substantial increases in theper-unit cost of programming, which we believe will continue to grow due to the increasing contractual rates and retransmission consent fees demanded by large programmers and independent broadcasters. Our HSD costs fluctuate depending on customers’ bandwidth consumption and customer growth. Phone service costs are mainly determined by network configuration, customers’ long distance usage and net termination payments to other carriers. Our other service costs generally rise as a result of customer growth and inflationary cost increases for personnel, outside vendors and other expenses. Personnel and related support costs may increase as the percentage of expenses that we capitalize declines due to lower levels of new service installations. We anticipate that service costs, with the exception of programming expenses, will remain fairly consistent as a percentage of our revenues.

Selling, General and Administrative Expenses

Significant selling, general and administrative expenses comprise: call center, customer service, marketing, business services, support and administrative personnel; franchise fees and other taxes; bad debt; billing; marketing; advertising; and general office administration. These expenses generally rise due to customer growth and inflationary cost increases for personnel, outside vendors and other expenses. We anticipate that selling, general and administrative expenses will remain fairly consistent as a percentage of our revenues.

Service costs and selling, general and administrative expenses exclude depreciation and amortization, which we present separately.

Management Fee Expense

Management fee expense reflects compensation paid to MCC for the performance of services it provides our operating subsidiaries in accordance with management agreements between MCC and our operating subsidiaries.

Capital Expenditures

Capital expenditures are categorized in accordance with the National Cable and Telecommunications Association (“NCTA”) disclosure guidelines, which are intended to provide more consistency in the reporting of capital expenditures among peer companies in the cable industry. These disclosure guidelines are not required under GAAP, nor do they impact our accounting for capital expenditures under GAAP. Our capital expenditures comprise:

Use ofNon-GAAP Financial Measures

“Adjusted OIBDA” is not a financial measure calculated in accordance with generally accepted accounting principles (“GAAP”) in the United States. We define Adjusted OIBDA as operating income before depreciation and amortization.amortization and deferred compensation. Adjusted OIBDA has inherent limitations as discussed below.

Adjusted OIBDA is one of the primary measures used by management to evaluate our performance and to forecast future results. We believe Adjusted OIBDA is useful for investors because it enables them to assess our performance in a manner similar to the methods used by management, and provides a measure that can be used to analyze our value and evaluate our performance compared to other companies in the cable industry. A limitation of Adjusted OIBDA, however, is that it excludes depreciation and amortization, which represents the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business.business, and it excludes deferred compensation. Management uses a separate process to budget, measure and evaluate capital expenditures. In addition,Adjusted OIBDA may not be comparable to similarly titled measures used by other companies, which may have different depreciation and amortization policies. Adjusted OIBDA is a key component to our covenant calculations.

Adjusted OIBDA should not be regarded as an alternative to operating income or net income as an indicator of operating performance, or to the statement of cash flows as a measure of liquidity, nor should it be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. We believe that operating income is the most directly comparable GAAP financial measure to Adjusted OIBDA.

Year Ended December 31, 20162018 Compared to Year Ended December 31, 20152017 Compared to Year Ended December 31, 20142016

The table below sets forth our consolidated statements of operations and Adjusted OIBDA for the years ended December 31, 2016, 20152018, 2017 and 20142016 (dollars in thousands and percentage changes that are not meaningful are marked NM):

The table below represents a reconciliation of Adjusted OIBDA to operating income, which we believe is the most directly comparable GAAP measure (dollars in thousands):

Revenues

The tables below set forth revenue and selected customer and average monthly revenue statistics as of, and for the years ended, December 31, 2016, 20152018, 2017 and 20142016 (dollars in thousands, except per unit data):

Revenues increased 5.2%3.9% for the year ended December 31, 2016,2018, primarily due to greater HSD and, to a lesser extent, business services, advertising and phone revenues, offset in part by a decline in video revenues. Revenues were substantially unaffected for the year ended December 31, 2018 by the timing change to revenue recognition as noted in “Revenues –Changes in Accounting Standards.”

Revenues increased 2.5% for the year ended December 31, 2017, primarily due to greater HSD and, to a much lesser extent, business services and advertising revenues, slightly offset by declines in phone and, to a lesser extent, video revenues.

Revenues increased 3.6% for the year ended December 31, 2015, due to greater HSD and, to a lesser extent, business services and video revenues, offset in part by declines in video and advertising and,revenues.

We lost 2,000 customer relationships during the year ended December 31, 2018, compared to a lesser extent, phone revenues.gain of 1,000 and 22,000 customer relationships during the years ended December 31, 2017 and 2016, respectively. Our net changes in customer relationships continue to reflect an ongoing reduction in customers that only take our video service, mostly offset by greater numbers of customers in our bundled packages. Average total monthly revenue per customer relationship was $121.65 and $116.97 for the years ended December 31, 2018 and 2017, respectively, representing increases of 4.0% and 0.9% over the prior years.

Video

Video revenues declined 0.2%decreased 3.9% for the year ended December 31, 2016, mainly2018, primarily due to the timing and allocation changes to revenue recognition noted in “Revenues –Changes in Accounting Standards,” and, to a lowerlesser extent, a smaller residential video customer base compared to the prior year, mostly offset in part by rate adjustments associated with the pass-through of higher programming costs for retransmission consent fees, and to a much lesser extent, for regional sports networks and more customers taking our advanced video services. Excluding the impact of the timing and allocation changes, video revenues would have decreased 1.3%.

Video revenues increased 0.5%declined 2.4% for the year ended December 31, 2015, largely2017, mainly due to a smaller residential video customer base compared to the prior year, offset in part by more customers taking advanced video services and rate adjustments associated with the pass-through of higher programming costs for retransmission consent fees and, to a lesser extent, for regional sports networks, mostly offset by a lower residential video customer base compared to the prior year.fees.

We lost 17,000, 20,00027,000, 8,000 and 28,00017,000 video customers during the years ended December 31, 2016, 20152018, 2017 and 2014,2016, respectively. As of December 31, 2016,2018, we served 463,000428,000 video customers, or 30.8%28.2% of our estimated homes passed, and 42.0%42.6% of our residential video customers took our DVR service, which represents a largethe largest component of revenues from advanced video services.service revenues.

HSD

HSD revenues grew 12.4% and 11.1%11.2% for the yearsyear ended December 31, 20162018, mainly as a result of more customers paying higher rates for faster speed tiers, a larger residential HSD customer base compared to the prior year, and 2015, respectively, primarily duethe timing and allocation changes to revenue recognition. Excluding the impact of the timing and allocation changes, HSD revenues would have grown 8.8%.

HSD revenues grew 10.3% for the year ended December 31, 2017, largely as a result of rate adjustments, more customers paying higher rates for faster speed tiers and a greaterlarger residential HSD customer base compared to the prior years.year.

We gained 38,000, 41,00031,000, 25,000 and 30,00038,000 HSD customers during the years ended December 31, 2016, 20152018, 2017 and 2014,2016, respectively. As of December 31, 2016,2018, we served 643,000699,000 HSD customers, or 42.8%46.1% of our estimated homes passed, and 49.3% of our residential HSD customers took our wireless home gateway service.passed.

Phone

Phone revenues decreased 3.5% and 4.8%increased 3.9% for the yearsyear ended December 31, 2016 and 2015, respectively, principally2018, primarily due to higher levels of discounted pricing, offset in part bythe timing and allocation changes to revenue recognition and a greaterlarger residential phone customer base compared to the prior years.year, offset in part by by greater levels of discounting within the bundled packaging of our services. Excluding the impact of the timing and allocation changes, phone revenues would have decreased 0.8%.

Phone revenues increased 2.3% for the year ended December 31, 2017, mainly due to a larger residential phone customer base compared to the prior year, mostly offset by greater levels of discounting within the bundled packaging of our services.

We gained 25,000, 21,00027,000, 48,000 and 11,00025,000 phone customers during the years ended December 31, 2016, 20152018, 2017 and 2014,2016, respectively. As of December 31, 2016,2018, we served 264,000339,000 phone customers, or 17.6%22.4% of our estimated homes passed.

Business Services

Business services revenues rose 9.6%8.6% and 11.6%8.1% for the yearsyear ended December 31, 20162018 and 2015,2017, respectively, mainlyprincipally due to a larger SMB customer bases compared to the respective prior years. Business services revenues were minimally affected by the timing change to revenue recognition for the year ended December 31, 2018 and, excluding the impact of the timing change, business services revenues would have grown 8.4%.

Advertising

Advertising revenues increased 5.9% for the year ended December 31, 2018, substantially due to greater SMBpolitical advertising revenue associated with an election year, offset in part by declines in local automotive advertising and a smaller video customer base compared to the prior years.

Advertisingyear.

Advertising revenues grew 9.9%fell 19.8% for the year ended December 31, 2016,2017, predominantly due to higher levels of political advertising comparedan unfavorable comparison to the prior year. Advertisingyear, which benefitted from advertising revenues fell 14.8% forassociated with the year ended December 31, 2015, substantially due to lower levels of political advertising compared to the prior year.national election in 2016.

Costs and Expenses

Service Costs

Service costs increased 4.4%3.8% and 5.4%4.9% for the years ended December 31, 20162018 and 2015,2017, respectively, primarily due to greater video programming charges and, to a lesser extent, for the year ended December 31, 2016, employee costs. Programming costs grew 4.4%4.1% and 7.8%6.6% for the years ended December 31, 20162018 and 2015,2017, respectively, principally due to higher fees associated with the renewal of programming contracts and contractual increases under existing agreements, with certain local broadcast stations and cable networks, offset in part by a lowersmaller video customer basebases compared to the respective prior years. Employee costs were 4.7% and 6.0% higher for the yearyears ended December 31, 2016,2018 and 2017, respectively, largely due to increased technical, maintenance and other operating employee staff and compensation levels.

Service costs as a percentage of revenues were 40.6%41.5%, 40.9%41.5% and 40.2%40.6% for the years ended December 31, 2016, 20152018, 2017 and 2014,2016, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 6.3%1.5% for the year ended December 31, 2016, largely as a result of greater marketing, employee and, to a lesser extent, bad debt and advertising expenses. Marketing expenses rose 11.3%, principally due to expenses related to marketing of our Xtream bundled services and, to a lesser extent, the marketing of our business services and a greater use of third-party sales services. Employee expenses increased 3.6%, mainly2018, primarily due to greater customer serviceemployee, marketing and other administrative employee staff and compensation levels. Bad debt grew 14.0%, substantially due to the aging of business customer accounts. Advertisingbilling expenses, rose 16.5%, predominantly due to new promotional activity for our advertising sales group.

Selling, general and administrative expenses increased 1.1% for the year ended December 31, 2015, largely as a result of greater marketing costs, offset in part by lower bad debt expense and taxes and fees. Employee expenses increased 2.3%, mainly due to greater administrative, marketing and advertising staffing levels, and to a lesser extent, the introduction of a new deferred compensation, offset by lower customer service employee staffing and compensation levels. Marketing costs were 3.1% higher, principally due to greater spending on digital and television advertising and on marketing our business services, offset in part by lower spending on radio and print advertising. Billing expenses grew 5.6%, substantially due to greater fees associated with customers’ bank and credit card payments. Bad debt expense decreased 6.5%, largely as a result of lower write-offs associated with certain accounts. Taxes and fees declined 2.4%, mainly due to lower franchise fees.

Selling, general and administrative expenses.expenses increased 0.5% for the year ended December 31, 2017, primarily due to greater marketing and, to a lesser extent, office expenses, mostly offset by lower employee costs and taxes and fees. Marketing costs grew 11.7%7.7%, principally due to expenses related to the marketing of our Xtream bundled services, the marketing of our business services and, greater use ofthird-party sales services. Bad debt declined 8.0%to a lesser extent, our Xtream bundles. Office expenses rose 12.8%, substantiallymainly due to a lower number of written off accounts. Administrative expenses fell 20.8%higher equipment maintenance, software and utilities costs. Employee costs declined 2.6%, mainly as a result ofchiefly due to lower customer service software expensesstaffing levels. Taxes and a declinefees decreased 5.0%, mainly due to lower franchise fees, offset in legal and other professional fees.part by higher property taxes.

Selling, general and administrative expenses as a percentage of revenues were 18.7%18.0% 18.4%, 18.5% and 19.0%18.7% for the years ended December 31, 2016, 20152018, 2017 and 2014,2016, respectively.

Management Fee Expense

Management fee expense grew 9.5%10.8% and 7.6%4.2% for the years ended December 31, 20162018 and 2015,2017, respectively, reflecting higher fees charged by MCC.

Management fee expense as a percentage of revenues were 2.0%2.2%, 1.9%2.0% and 1.9%2.0% for the years ended December 31, 2018, 2017 and 2016, 2015 and 2014, respectively.

Depreciation and Amortization

Depreciation and amortization was 2.0% higher for the year ended December 31, 2016, as greater depreciation of investments in customer premise equipment, HSD bandwidth expansion and business support were offset in part by long-lived network assets having been fully depreciated in the prior year.

Depreciation and amortization was 6.0%11.4% lower for the year ended December 31, 2015,2018, mainly due a favorable comparison to long-lived networks assets having been fully depreciated in the prior year, which contained awrite-off of certain network equipment that was replaced under certain capital investment initiatives and, to a lesser extent, older investments and network assets becoming fully depreciated, offset in part by greater depreciation of investments in customer premise equipment, HSD bandwidth expansion and business support.customer support equipment software.

Depreciation and amortization was 17.1% higher for the year ended December 31, 2017, largely as a result of thewrite-off of certain network equipment that was replaced under certain capital investment initiatives and, to a much lesser extent, greater depreciation of investments in customer premise equipment, HSD bandwidth expansion and business support equipment and software.

Operating Income

Operating income rose 7.2% and 8.8%grew 17.1% for the yearsyear ended December 31, 2016 and 2015, respectively, as2018, primarily due to the increase in revenues wasand, to a lesser extent, lower depreciation and amortization, offset in part by higher service costs and, to a much lesser extent, selling, general and administrative expenses.expenses and management fees.