HomeMy WebLinkAboutTime Warner Cable Information 35 CENTS
Newsstand
KiNAIL Ithaca, New York
• 12G 9� • ,
!SS. "
ntner,
fessor ity Might
not b Ck
c d
a-ble ea.
....
Says Time Warner must fulfill
4.
} obli ations in Ithaca contract
By WENDY SKINNER sion says has been illegally charged;
and SIMEON MOSS • Comply with contract agree-
Journal Staff ments regarding the maintenance
The Associated Press The City of Ithaca has some of public access equipment;and,
beefs with Time Warner Cable,and • Allow the city to see parts of
video shows a Cornell research it hopes to resolve them by holding the merger contract that guarantee
Wednesday on a mission to out on its consent to a merger there wil be no adverse changes in
weous report that Russian forces involving the company's parent, local service. Whether the city's
horn Northern Euro e ut ov Time Warner Entertainment Com- protest will slow approval of the
p p g pany, and Newhouse Broadcasting Time Warner merger or prompt
alert around the world. refunds is uncertain.
and Advance Publications Inc. "In my opinion, Time Warner
"We feel that Time Warner is needs our consent," said City
not taking care of its contract obli-
'
i
gations and until they do, we will Attorney Charles Guttman, notingthat similarast standoffs between
Russia withhold approval of a transfer of p
e the cable company and the city
e the franchise," Alderman John have ended in negotiations.
- Efrvomson (D-2nd Ward) Ray McCabe, general manager
announced at a non-voting Com-
� of Time Warner, was out of town
mon Council meeting Wednesday. Wednesday on business.
A request to transfer the city's Tom Doheny, marketing manag-
cable franchise with Time Warner er, said he wasn't aware of the res-
n a* -to'the-new company; which will be' olution and added that'Time Warn
known as Time Warner Entertain-
er hadn't received documentation
M ment-Advanced/ Newhouse, is cur- from the cable commission on cus-
rently under consideration by the tomer complaints.Dohenv said.
Rocket: Black Brent XXII New YorkCable Commission. Dohenv also said he knew of no
Payload: scientific instruments Based on reports from the Ithaca problems Time Warner has had liv-
Length:70 feet City Cable Commission, Common ing up to the franchise agreement
Weight: 6 tons Council will be asked next Wednes- with the city and that FCC regula-
Diameter: 30 inch diameter at base; day to vote on a resolution that tions were followed when Cable
to 16 inches at top calls for Time Warner to: Plus service was initiated.
Launched: Wednesday, 7:20 a.m. ! . Refund money to customers "Our company is just asking to
Norway tima who were unfairly charged $1.74 change its name on the franchise
Duration:23 minutes per month for "Cable Plus" service agreement," said Doheny, asserting
Traveled: 1,000 miles, stopped 100
miles short of the North Pole I others received free until the signal that the city's actions would have
Highest point: e N miles was scrambled; no bearing on Time Warner's cor-
•Refund a$1.26 monthly"access porate agreement with Newhouse
Journal Staff franchise fee" the cable commis- and Advance Publications.
44- 11 TTS Inside The Journal
3199 o
CITY OF ITHACA
108 EAST GREEN STREET
ITHACA, NEW YORK 14850
OFFICE OF TELEPHONE
CITY CLERK (607)274-6570
February 3, 1995
Raymond H. McCabe
Area Manager
Time Warner Cable
519 West State Street
Ithaca, New York 14850
Dear Mr. McCabe:
Enclosed please find a certified copy of a resolution which
was passed by Common Council of the City of Ithaca on February 1,
1995 . Please note that the City of Ithaca has determined to
withhold its authorization and consent to the transfer of the
franchise from the Cable Television System operating pursuant to
the franchise with the City of Ithaca from Time Warner
Entertainment-Advance/New House Partnership unless and until issues
described in the resolution have been satisfactorily responded to
by Time Warner Cable.
If you have further questions regarding this matter, you
should contact City Attorney Charles Guttman, 108 East Green
Street, Ithaca, New York 14850, Telephone ( 607 )274-6504 .
Very truly yours,
� �
4(
Julie Conley Holcomb
Deputy City Clerk
Enclosure
cc : Steven Shaye, NYS Commission on Cable Television
Ithaca City Cable Commission
Charles Guttman, City Attorney
JCH/cjh
"An Equal Opportunity Employer with an Affirmative Action Program" tJ Recycled Paper
RESOLUTION: TIME WARNER REQUEST FOR TRANSFER OF FRANCHISE
AGREEMENT
By Alderperson Efroymson: Seconded by Alderperson Gray
WHEREAS, on or about November 1 , 1994, Time Warner Entertainment
Company, L.P. which is the parent of Time Warner Cable, the
franchisee under our Cable Franchise, advised the City of Ithaca
that it intended to enter into an agreement with Advance
Publications and Newhouse Broadcasting Corporation to create a
new joint venture cable operation to be known as Time Warner
Entertainment-Advance/Newhouse. Advance/Newhouse would
contribute all of their cable television systems, serving 1 . 4
million customers, and Time Warner Cable would contribute cable
systems with 2 . 8 million customers for a total of 4 .2 million
customers which would be served by the new adventure, and
WHEREAS, the joint venture would be managed by Time Warner Cable
and be two-thirds owned by Time Warner and one-third owned by
Advance/Newhouse, a partnership of Newhouse Broadcasting and
Advance Publications, Inc. An executive committee with
proportional representation from Time Warner and Advance/Newhouse
will oversee the joint venture. Time Warner Cable further
advised the City that the transfer of the Franchise to the Time
Warner Entertainment-Advance/Newhouse partnership would have no
affect on the ongoing local management of the cable system, that
there- would be no adverse affects on the cable system or its
customers, services, business practices or personnel, and
WHEREAS, Time Warner Cable then forwarded to the City of Ithaca a
detailed summary of the proposed franchise and requested that the
City of Ithaca adopt a resolution authorizing and consenting to
the transfer of the franchise and the cable television system
operation pursuant to the franchise, and
WHEREAS, this issue was referred to the Ithaca City Cable
Commission for its advice and recommendations, and
WHEREAS, the Ithaca City Cable Commission submitted a report to
the Inter-Institutional Committee of Common Council on January
14, 1995, and
WHEREAS, the report of the Ithaca City Cable Commission
specifically stated that on September 12 , 1994, it had
unanimously passed a resolution, a copy of which is attached to
the report alleging that certain subscribers were improperly
charged for Cable Plus at a $1 . 74 per month from the date in
which they ordered the service until the date the service was
actually scrambled on September 12 , 1994 and calling on Time
Warner Cable to immediately refund this $1 . 74 month, pro rated
for partial months, to all customers who were charged for this
service prior to September 12, 1994, and
WHEREAS, the report from the Ithaca City Cable Commission further
states that on October 25, 1994, the Ithaca City Cable Commission
unanimously passed a resolution objecting to Time Warner charging
and itemizing as a separate franchise fee the $1 . 26 per month
charge for access television and calling on Time Warner Cable to
refund this so-called "franchise fee" as being an excess of the
amount of franchise fee allowed by federal law, and
WHEREAS, the report from the Ithaca City Cable Commission further
states that on October 25, 1994, the Ithaca City Cable Commission
passed unanimously another resolution alleging that Time Warner
Cable has charged the 1994 access capital equipment budget (the
2% funds) for certain items marked "refurbishment" which in
actuality represent equipment maintenance procedures; that this
procedure is not in compliance with the requirement of good
operating practice and calling on Time Warner Cable to abide by
its repair responsibilities under the franchise agreement and
refund the amounts charged for the two items of refurbishment to
the 2% capital equipment fund, and
WHEREAS, all of the above three resolutions were forwarded to
Time Warner Cable, and
WHEREAS, the report to the Inter-Institutional Committee further
alleges that the Ithaca City Cable Commission has asked Time
Warner Cable to clarify the date of inception of the current
franchise and to allow a representative of the City to inspect
the undisclosed portions of Time Warner Cable ' s agreement with
Advance/Newhouse to ascertain in private and in confidence
whether those provisions do not relate to the franchise as
alleged by Time Warner Cable, and
WHEREAS, according to the Ithaca City Cable Commission, Time
Warner manager, Raymond McCabe, has orally replied that he does
not agree with the resolutions, but that he has passed them on to
Time Warner Cable' s corporate legal department for reply, and
WHEREAS, to date, neither the City of Ithaca nor the Ithaca City
Cable Commission has received any further response from Time
Warner Cable; now, therefore, be it
RESOLVED, That this Council hereby determines to withhold its
authorization and consent to the transfer of the franchise and
the Cable Television System operating pursuant to the franchise
from Time Warner Entertainment Company/Time Warner Cable to Time
Warner Entertainment-Advance/Newhouse partnership, unless and
until the above issues have been satisfactorily responded to by
Time Warner Cable, and be it further
RESOLVED, That the City Clerk is hereby directed to forward a
copy of this resolution to Time Warner Cable, the Ithaca City
Cable Commission and the New York State Commission on Cable ,
Television.
STATE OF NEW YORK
COUNTY OF TOMPKINS SS:
CITY OF ITHACA
I, Julie Conley Holcomb, Deputy City Clerk of the City of Ithaca,
do hereby certify that the foregoing resolution is a true and
exact copy of a resolution duly adopted by the Common Council of
said City of Ithaca at a regular meeting held on the 1st day of
February, 1995, and that the same is a complete copy of the whole
of such resolution.
IN WITNESS WHEREOF, I have hereunto set my hand and the Corporate
Seal of the City of Ithaca, this 3rd day of February, 1995 .
. . c . . . . . . . . . . . . . . .
Deputy City Clerk of the City of Ithaca, New York
T I M E W A R N E R
C A B L E n
February 6, 1995
Ms. Jean Finley
Ithaca City Cable Commission
108 East Green Street
Ithaca, NY 14850
Re: Pending resolutions
Dear Ms. Finley:
I would like to respond to a number of issues communicated at various times over the past 2 months.
1) Resolutions passed at October 25 Ithaca Cable Commission meeting:
I have attached our response to individual resolutions.
2) Request for clarification of Franchise start date as identified on the FCC Form 394:
iThe date listed, 6/29/92, is the date that the agreement between Time Warner Inc. and Tune
Warner Entertainment closed. I understand that this is not the date that the City of Ithaca
approved the Franchise transfer. If the actual date of the transfer is the preferred date please
feel free to make that change to the document.
3) Your request for further review of the undisclosed portions of the agreement between TWE and
Advance/Newhouse:
A letter from our Counsel is attached.
I trust that your concerns have been addressed and you will agree that Time Warner Cable is in
compliance with the Franchise. I, therefore, respectfully request the City meet it's Franchise
requirement and not unreasonably withhold consent to the transfer of ownership.
I also request all future concerns dealing with Time Warner Cable compliance with the franchise be
communicated in writing and the franchise provision in question be clearly identified.
Sincerely yours,
Raymohd H. McCabe
Area Manager
cc: Ms. Julie Holcomb, City Clerk
The Honorable Benjamin Nichols
Common Council
Ithaca City Cable Commission
519 West State Street Ithaca, New York 14850 272-7875
l%
r ZZ�5
t '
CITY OF ITHACA
108 East Green Street
Ithaca,New York 14850
The Cabe Telephone: 607,272.9081
Commission Fax: 607-272-7348
Resolution Passed Unanimously by the Ithaca City Cable Commission October 25, 1994
Whereas many City of Ithaca subscribers of the Time Warner Cable System elected before Sept.
12, 1994,to subscribe to the new Cable Plus Service(including CNN,the Learning Channel,ESPN,
and Comedy Central), and
` Whereas, these subscribers were changed for Cable Plus at$1.74 per month from the date on which
they ordered the service; and
Whereas all other Time Warner customers received this same Cable Plus Service (including CNN,
the Learning Channel, ESPN, and Comedy Central) free until the date of scrambling on Sept. 12,
1994; and
Whereas legal proceedings in the State of New York have found unacceptable the practice of a
cable operator's charging subscribers who ordered a similar service (events from Madison Square
Garden) for that service while that service remained unscrambled so that other subscribers of the
same system continued to receive the service without charge; and
Whereas legal proceedings in the State of New York required the cable operator to refund to all
customers who had paid for the abovementioned programming from Madison Square Garden all
monies collected for the service during the entire period before the date when the channel was
finally scrambled;
Now therefore, the Ithaca City Cable Commission calls on Time Warner Cable immediately to
refund $1.74 per month, prorated for partial months, to all customers who were charged for this
service prior to Sept. 12, 1994, the date of scrambling.
T I M E W A R N E R
C A B L E
Response to Resolution Passed Unanimously by the Ithaca City Cable
Commission October 5, 1994:
CABLE PLUS
Cable Plus is by FCC definition a cable programming service tier
subject to FCC regulation and not subject to local regulation. No
portion of the franchise was violated in its introduction. We
believe that the Commission is clearly exceeding it's authority in
calling for a refund on this level of service.
As a courtesy I am offering the following:
Time Warner introduced a new tier of service called Cable Plus on
July 20,1994.
The tier is made up of four programming services removed from our
basic line up. As compensation for the loss of the services from
the Basic lineup, we decreased the price of Basic service $1.06 in
addition to the FCC required rollback. The decrease took effect
with the customer's first bill after July 14, 1994.
We introduced Cable Plus at $1.74 per month. The difference
between the reduction in basic service price and the cost of the
new service is due to the increase in fees payable to program
providers as a result of the expected, and realized decrease in
market penetration of the services moving to Cable Plus.
We calculated the price for Cable Plus and the associated Basic
rate reduction according to our understanding of FCC regulations,
and filed all required documentation with the FCC.
As a result of delays in equipment delivery and in an effort to not
further inconvenience our customers, we delayed the signal
scrambling date. This allowed customers wishing to subscribe
additional time to do so without disruption. The delay in securing
our signal is not unlike the offering of "Free Previews", a common
practice in our industry to attract new viewers. It is important to
reheat that all customers benefited from a S1.06 decrease in their
monthly rate, resulting from the introduction of Cable Plus,_
re
befothe first customer was charged for Cable Plus.
Many customers, who are not fans of the programming offered on
Cable Plus continue to benefit from a lower monthly Cable Bill as
a result of the introduction of Cable Plus.
519 West State Street Ithaca, New York 14850 272-7875
f
1
, IZL/gY
1�!
CITY OF ITHACA
108 East Green Street
Ithaca,New York 14850
The Cable Telephone: 607-272081
Commission Far 607-272-7348
Resolution Passed Unanimously by the Ithaca City Cable Commission October 25,, IM
Whereas the Ithaca City Franchise calls for Time Warner Cable to maintain or replace Access and
local origination equipment in a manner consistent with Good Operating Practice; and
Whereas Good Operating Practice has a specific definition in the context of governmental and non-
governmental contracts and is an accepted trade phrase, and
Whereas Good Operating Practice for all equipment includes, at minimum:
1)For each piece of equipment, in accordance with the recommendations of the manufacturer if
available, determining acceptable tolerances for replaceable parts and setting up a regular
maintenance and inspection schedule;
2)Adhering to the regular maintenance and inspection schedule,including preventative maintenance
procedures and regular replacement of replaceable parts that fall outside acceptable tolerances;
3)Setting up a system to check adherence to the regular maintenance schedule, such as posting this
schedule and requiring the inspector or maintenance worker to initial and date it on completion
of each scheduled maintenance procedure or inspection; and
4)Review of the initialed maintenance/inspection schedule or equivalent procedure by management
on a regular basis to assure adherence to the schedule.
5)Replacing equipment that can no longer be brought into acceptable tolerances because of the
unavailibility of standard replacement parts or because advances in equipment design dictate
replacement.
Whereas the two items marked "refurbishment" that TWC has charged to the 1994 access capital
equipment budget (2% funds) represent equipment maintenance procedures involving the
replacement of replaceable parts that have been analyzed and found to be beyond acceptable
tolerances, and
Whereas standard replacement parts were available and used for these replacements; and
Whereas the replacement of worn parts with standard replacement parts on a predetermined
schedule or when they are analyzed and found to deviate from original manufacturer's
specifications beyond acceptable tolerances falls within the normal definition of Good Operating
Practice;
Therefore the Ithaca City Cable Commission calls on Time Warner Cable to abide by its repair
responsibilities under the Franchise agreement and to refund the amounts charged for the two
items of "refurbishment" to the 2% capital equipment fund; and
Furthermore, the Ithaca City Cable Commission calls on Time Warner Cable to refrain from
charging equipment "refurbishments" or this sort to the 2% funds in the future.
'Ile
T I M E W A R N E R
C A B L E
Response to Resolution Passed Unanimously by the Ithaca City
Cable Commission October 25, 1994:
Access Capital
Time Warner Cable did "refurbish" equipment in 1994 and
charged the cost of the refurbishment to the 2% Access Capital
Fund.
It is an option for us to cover the cost of refurbishment
from operating expenses instead of funds from the 2% Capital
Fund. If we were to recover this cost from operating
expenses, the result would be an increase in the monthly fee
charged Ithaca subscribers in support of Public, Educational
and Governmental Access. I have recently shared with the Cable
Commission that the $1.26 currently charged covers less than
80% of the actual operating costs.
Refurbishing an asset extends the life of the asset and is
often a better alternative to replacing the asset at full
cost. The result is increased purchasing power without the
risk of a rate increase.
We will proceed with the City's request to credit the cost of
the refurbishment to 1995 Access Capital Funds adding the
amount to the 2% due from 1995 Gross Receipts. Future
refurbishments will also be charged to Operating Expenses with
a possible result of an increase to the $1.26 P.E.G. Access
Fee.
519 West State Street Ithaca, New York 14850 272-7875
CITY OF ITHACA
108 East Green Street
Ithaca,New York 14850
The Cade Telephone:807-2T -M
Commission Fax. 607-272-7348
Resolution Passed Unanimously by the Ithaca City Cable Commission October 25, 1994
Whereas Franchise Fees in excess of 5% are in violation of the federal Cable
Act of 1984 (622 (b)--unrevised in 1992); and
Whereas, the City of Ithaca charges Time Warner Cable a 5 percent franchise fee on gross city
revenues as allowed under the law, and
Whereas the term'franchise fee' in the case of any franchise in effect on the date of the enactment
of this title [Cable Act of 1992], does not include payments which are required by the franchise to
be incurred by the cable operator for public, educational, or governmental access facilities"'
Whereas Time Warner Cable has been charging City of Ithaca customers $1.26 per month for a
"P.E.G. Access Franchise Fee" since the week of July 11, 1994, and
Whereas the so-called "P.E.G. Access Franchise Fee" is cannot legally be charged as a franchise
fee; and
Whereas Time Warner Cable's General Manager Raymond McCabe was publicly informed that
this charge is not a "Franchise Fee" by Assistant Deputy Director of the New York State
Commission of Cable Television Steven Shaye at the Ithaca public hearing on cable television held
in Common Council Chambers on July 13, 1994, and televised on Channel 53; and
Whereas Time Warner Cable has taken no voluntary action to correct this situation;
Therefore the Ithaca City Cable Commission calls on Time Warner Cable to refund this so-called
"franchise fee" in full to each City of Ithaca subscriber that has been charged this "franchise fee"
in excess of the amount of franchise fee allowed by federal law; and
Be it further resolved that Time Warner Cable will desist from listing P.E.G.Access Franchise Fee
on its bills to city subscribers.
1Pike & Fisher's Cable Act: Law and Legislative History, p484
T I M E W A R N E R
C A B L E
Response to Resolution Passed Unanimously by the Ithaca City Cable
Commission October 25, 1994:
P.E.G. ACCESS FRANCHISE FEE
We believe our practice of itemizing the operating costs of P.E.G.
Access on subscribers' bills and identifying as a franchise fee is
in compliance with applicable Federal law.
We will, however, act on the Commission's suggestion and change the
name to P.E.G. Access Fee.
The call for a refund is unwarranted and not supported by the
franchise or applciable Federal law. The price for Basic service is
below the $15.37 per month ceiling identified in the Franchise even
when The PEG Access franchise fee and the 5% Franchise Fee is
added.
519 West State Street Ithaca, New York 14850 272-7875
Gary R.Mata
Assistant General Counsel
1> T I M E W A R N E R
C A B L E
January 24, 1995
Ms. Jean Finley
Chairperson
Ithaca Cable Commission
City of Ithaca
Ithaca,NY 14850
Dear Ms. Finley:
I am writing at the request of Mr. Ray McCabe the General Manager of our cable
television system serving the Ithaca,New York area.
It is my understanding that representatives of the City have inquired about certain
documents related to the Time Warner Entertainment-Advance,/Newhouse Partnership which
were referenced or identified in our FCC Form 394 filing as being confidential and proprietary.
I would like to assure you and the City of Ithaca that those various documents do not, in
any way, affect the System or the operation of the System serving Ithaca. Those documents
address certain topics such as tax and accounting policies, Advance/Newhouse cable systems
located in the US West service area(i.e. the states of Nebraska and Wyoming), employee benefits
and the accounting treatment to be afforded certain Systems partially owned by Time Warner.
I appreciate the City's interest in this transaction. I trust that we have answered other
questions that you may have and that this letter will satisfactorily address those questions you had
regarding these confidential documents.
Thank you for your continuing cooperation and assistance.
Verm truil o r ,
IMatz
cc: Ray McC
c.,w�vn�6mwrnocsys►,z�rt,.rtaw.vixwc�.noc
Time Warner Cable 300 First Stamford Place Stamford CT 06902-6732 Tel 203.328.4865 Fax 203.328.4840
A IW,44.n nFr—W.—Fnrnrtnimm~rnm— / P
T I M E W A R N E R OCT
C A B L E
L�
October 24, 1994 OCT 2 j1994
Ms. Callista Paolangeli, Clerk CITY CLE 'S OFFICE
City of Ithaca RK
City Hall
108 E. Green Street
Ithaca, NY 14850
Dear Ms. Paolangeli:
With this letter, I want to inform you that federal regulators
released additional rules October 5th related to the pass-through
of franchise fees as well as the itemization of federal regulatory
fees.
The three cent fee is a pass through of the 37 cents per customer
annual fee that is charged for the regulation of cable at the
federal level. In its ruling, the FCC outlined that cable
companies specifically should implement a three cents per month fee
beginning in December, with an additional one cent (total of four
cents) charged, beginning in March of 1995.
Our customers will be provided 30 days' notice of this change in
their next cable bill, and the monthly three cent increase will be
implemented in the following billing statement. In accordance with
FCC guidelines, both the three cent and additional one cent
increase will be provided in a single notice to customers. The
three cent fee will be itemized as a "Federal Government Regulatory
Fee" on customer bills.
If you have any questions about this federal regulatory fee, please
do not hesitate to contact me at 272-7875, extension 3329.
Sincerely, `� 1
RaymtSnd H. McCabe (m to
Area Manager
cc: The Honorable Ben Nichols
Ms. Jean Finley, Chair of the Cable Commission
519 West State Street Ithaca, New York 14850 272-7875
I
c
T I M E W A R N E R
C A B L E
r`
February 6, 1995
�tl ( FtB 1 �It ii
Ms. Jean Finley
Ithaca City Cable Commission '
108 East Green Street
Ithaca, NY 14850
Re: Pending resolutions
Dear Ms. Finley:
I would like to respond to a number of issues communicated at various times over the past 2 months.
1) Resolutions passed at October 25 Ithaca Cable Commission meeting:
I have attached our response to individual resolutions.
2) Request for clarification of Franchise start date as identified on the FCC Form 394:
The date listed, 6/29/92, is the date that the agreement between Tune Warner Inc. and Tune
Warner Entertainment closed. I understand that this is not the date that the City of Ithaca
approved the Franchise transfer. If the actual date of the transfer is the preferred date please
- feel free to make that change to the document.
3) Your request for fiuther review of the undisclosed portions of the agreement between TWE and
Advance/Newhouse:
A letter from our Counsel is attached.
I trust that your concerns have been addressed and you will agree that Time Warner Cable is in
compliance with the Franchise. I, therefore, respectfully request the City meet it's Franchise
requirement and not unreasonably withhold consent to the transfer of ownership.
I also request all future concerns dealing with Time Warner Cable compliance with the franchise be
communicated in writing and the franchise provision in question be clearly identified.
Sincerely yours,
Raymo d H. McCabe
Area Manager
cc: Ms. Julie Holcomb, City Clerk
The Honorable Benjamin Nichols
Common Council
Ithaca City Cable Commission
519 West State Street Ithaca, New York 14850 272-7875
r
a
M+ "' ""!
s
F
CID
CITY OF(THACA
108 East Green Street
Ithaca,New York 14850
The Cable __
Commission IF= 607-M-7348
Resolution Passed Unanimously by the Ithaca City Cable Commission October 25, 1994
Be it resolved that:
1) Under no circumstance shall the pool of capital funds for P.E.G. access equipment be less
than 2% of gross city revenues; and "
2) All equipment shall be available equitably to all residents of the City of Ithaca.
3) In general no equipment is to be installed in any location where the de facto effect is to
exclude equitable access to all residents of the City of Ithaca.
4) Any exceptions to this policy must be specifically authorized by ICCC.
T I M E W A R N E R
C A B L E
Response to Resolution Passed Unanimously By the Ithaca City Cable
Commission October 25, 1994:
P.E.G. Access Equipment
1) This is as stated in Section 14.1 C3 of the Franchise Agreement
between Time Warner and the City of Ithaca.
We believe ourselves to be in compliance with this requirement and
plan to continue our compliance with this section.
2) This issue is also addressed in the Franchise in section 14.1
C3, "All access equipment shall be made available for access se by
the City of Ithaca, local institutions and residents and
surrounding ACC system residents" and in section 14.2 "ACC shall
establish rules to insure that the studio(s) and portable equipment
are available equitably. to the governmental, educational and public
sectors. "
We do not agree with this portion of the ICCC Resolution for the
following reasons:
The . governmental and educational sectors would be denied
availability on an equitable basis.
Time Warners efforts to increase utilization of access equipment
are in compliance with the agreement.
3) We do not agree with this section for the following reasons:
Again, it limits equitable access to equipment to residents of the
City of Ithaca only, ignoring Educational and Governmental users,
as well as residents of surrounding communities served by the
same headend.
Allowing for equitable use by the Educational and Governmental
users requires more flexibility than suggested in the resolution.
Time Warner has made efforts to make access equipment more
available to the Educational and governmental sectors, specifically
the Ithaca School District. At times this may require commitment of
equipment over a long term at their location and may at times
require equipment donation.
4) Whereas we agree that the franchise has requirements as to the
utilization of Access equipment, we do not agree to the additional
limitations placed upon us by this section. The "policy" is in
violation of the agreement and ignores Time Warners ownership of
the equipment as acknowledged in the Agreement.
519 West State Street Ithaca, New York 14850 272.7875
t�
o`
CITY OF ITHACA
108 East Green Street
Ithaca,New York 14850
The Cable Telephone: 607-2723081
Commission Fax: 607-M-7348
Resolution Passed Unanimously by the Ithaca City Cable Commission October 25, 1994
Whereas many City of Ithaca subscribers of the Time Warner Cable System elected before Sept.
12, 1994,to subscribe to the new Cable Plus Service(including CNN,the Learning Channel,ESPN,
and Comedy Central), and
` Whereas, these subscribers were changed for Cable Plus at$1.74 per month from the date on which
they ordered the service; and
Whereas all other Time Warner customers received this same Cable Plus Service (including CNN,
the Learning Channel, ESPN, and Comedy Central) free until the date of scrambling on Sept. 12,
1994; and
Whereas legal proceedings in the State of New York have found unacceptable the practice of a
cable operator's charging subscribers who ordered a similar service (events from Madison Square
Garden) for that service while that service remained unscrambled so that other subscribers of the
same system continued to receive the service without charge; and
Whereas legal proceedings in the State of New York required the cable operator to refund to all
customers who had paid for the abovementioned programming from Madison Square Garden all
monies collected for the service during the entire period before the date when the channel was
finally scrambled;
Now therefore, the Ithaca City Cable Commission calls on Time Warner Cable immediately to
refund $1.74 per month, prorated for partial months, to all customers who were charged for this
service prior to Sept. 12, 1994, the date of scrambling.
T I M E W A R N E R
C A B L E
Response to Resolution Passed Unanimously by the Ithaca City Cable
Commission October 5, 1994:
CABLE PLUS
Cable Plus is by FCC definition a cable programming service tier
subject to FCC regulation and not subject to local regulation. No
portion of the franchise was violated in its introduction. We
believe that the Commission is clearly exceeding it's authority in
calling for a refund on this level of service.
As a courtesy I am offering the following:
Time Warner introduced a new tier of service called Cable Plus on
July 20,1994.
The tier is made up of four programming services removed from our
basic line up. As compensation fur the loss of the services from
the Basic lineup, we decreased the price of Basic service $1.06 in
addition to the FCC required rollback. The decrease took effect
with the customer's first bill after July 14, 1994.
We introduced Cable Plus at $1.74 per month. The difference
between the reduction in basic service price and the cost of the
new service is due to the increase in fees payable to program
providers as a result of the expected, and realized decrease in
market penetration of the services moving to Cable Plus.
We calculated the price for Cable Plus and the associated Basic
rate reduction according to our understanding of FCC regulations,
and filed all required documentation with the FCC.
As a result of delays in equipment delivery and in an effort to not
further inconvenience our customers, we delayed the signal
scrambling date,- This allowed customers wishing to subscribe
additional time to do so without disruption. The delay in securing
our signal is not unlike the offering of "Free Previews", a common
practice in our industry to attract new viewers. It is important to
repeat that all customers benefited from a 51.06 decrease in their
monthly rate, resulting from the introduction of Cable Plus,
before the first customer was charged for Cable Plus.
Many customers, who are not fans of the programming offered on
Cable Plus continue to benefit from a lower monthly Cable Bill as
a result of the introduction of Cable Plus.
519 West State Street Ithaca, New York 14850 272-7875
O�
CITY OF ITHACA
108 East Green Street
Ithaca,New York 14850
The Cable Telephone: 607-272-3081
Commission Fac 607-272-7348
Resolution Passed Unanimously by the Ithaca City Cable Commission October 25, 1994
Whereas the Ithaca City Franchise calls for Time Warner Cable to maintain or replace Access and
local origination equipment in a manner consistent with Good Operating Practice; and
Whereas Good Operating Practice has a specific definition in the context of governmental and non'-
governmental
ongovernmental contracts and is an accepted trade phrase, and
Whereas Good Operating Practice for all equipment includes, at minimum:
1)For each piece of equipment, in accordance with the recommendations of the manufacturer if
available, determining acceptable tolerances for replaceable parts and setting up a regular
maintenance and inspection schedule;
2)Adhering to the regular maintenance and inspection schedule,including preventative maintenance
procedures and regular replacement of replaceable parts that fall outside acceptable tolerances;
3)Setting up a system to check adherence to the regular maintenance schedule, such as posting this
schedule and requiring the inspector or maintenance worker to initial and date it on completion
of each scheduled maintenance procedure or inspection; and
4)Review of the initialed maintenance/inspection schedule or equivalent procedure by management
on a regular basis to assure adherence to the schedule.
5)Replacing equipment that can no longer be brought into acceptable tolerances because of the
unavailibility of standard replacement parts or because advances in equipment design dictate
replacement.
Whereas the two items marked "refurbishment" that TWC has charged to the 1994 access capital
equipment budget (2% funds) represent equipment maintenance procedures involving the
replacement of replaceable parts that have been analyzed and found to be beyond acceptable
tolerances, and
Whereas standard replacement parts were available and used for these replacements; and
Whereas the replacement of worn parts with standard replacement parts on a predetermined
schedule or when they are analyzed and found to deviate from original manufacturer's
specifications beyond acceptable tolerances falls within the normal definition of Good Operating
Practice;
Therefore the Ithaca City Cable Commission calls on Time Warner Cable to abide by its repair
responsibilities under the Franchise agreement and to refund the amounts charged for the two
items of "refurbishment" to the 2% capital equipment fund; and
Furthermore, the Ithaca City Cable Commission calls on Time Warner Cable to refrain from
charging equipment "refurbishments" or this sort to the 2% funds in the future.
T I M E W A R N E R
C A B L E
Response to Resolution Passed Unanimously by the Ithaca City
Cable Commission October 25, 1994:
Access Capital
Time Warner Cable did "refurbish" equipment in 1994 and
charged the cost of the refurbishment to the 2% Access Capital
Fund.
It is an option for us to cover the cost of refurbishment
from operating expenses instead of funds from the 2% Capital
F Fund. If we were to recover this cost from operating
expenses, the result would be an increase in the monthly fee
charged Ithaca subscribers in support of Public, Educational
and Governmental Access. I have recently shared with the Cable
Commission that the $1.26 currently charged covers less than
80% of the actual operating costs.
Refurbishing an asset extends the life of the asset and is
often a better alternative to replacing the asset at full
cost. The result is increased purchasing power without the
risk of a rate increase.
We will proceed with the City's request to credit the cost of
the refurbishment to 1995 Access Capital Funds adding the
amount to the 2% due from 1995 Gross Receipts. Future
refurbishments will also be charged to Operating Expenses with
a possible result of an increase to the $1.26 P.E.G. Access
Fee.
519 West State Street Ithaca, New York 14850 272.7875
0
CITY OF ITHACA
108 East Green Street
Ithaca,New York 14850
The Cable Telephone:6D7-M-3=
Commission Fax: 607-272-734$
Resolution Passed Unanimously by the Ithaca City Cable Commission October 25, 1994
Whereas Franchise Fees in excess of 5% are in violation of the federal Cable
Act of 1984 (622 (b)--unrevised in 1992); and
Whereas, the City of Ithaca. charges Time Warner Cable a 5 percent franchise fee on gross city
revenues as allowed under the law; and
Whereas the term'franchise fee' in the case of any franchise in effect on the date of the enactment
of this title [Cable Act of 1992], does not include payments which are required by the franchise to
be incurred by the cable operator for public, educational, or governmental access facilitiesn'
Whereas Time Warner Cable has been charging City of Ithaca customers $1.26 per month for a
"P.E.G. Access Franchise Fee" since the week of July 11, 1994, and
Whereas the so-called "P.E.G. Access Franchise Fee" is cannot legally be charged as a franchise
fee; and
Whereas Time Warner Cable's General Manager Raymond McCabe was publicly informed that
this charge is not a "Franchise Fee" by Assistant Deputy Director of the New York State
Commission of Cable Television Steven Shaye at the Ithaca public hearing on cable television held
in Common Council Chambers on July 13, 1994, and televised on Channel 53; and
Whereas Time Warner Cable has taken no voluntary action to correct this situation;
Therefore the Ithaca City Cable Commission calls on Time Warner Cable to refund this so-called
"franchise fee" in full to each City of Ithaca subscriber that has been charged this "franchise fee"
in excess of the amount of franchise fee allowed by federal law; and
Be it further resolved that Time Warner Cable will desist from listing P.E.G.Access Franchise Fee
on its bills to city subscribers.
'Pike & Fisher's cable Act: Law and Legislative History, p484
T I M E W A R N E R
C A B L E
Response to Resolution Passed Unanimously by the Ithaca City Cable
Commission October 25, 1994:
P.E.G. ACCESS FRANCHISE FEE
We believe our practice of itemizing the operating costs of P.E.G.
Access on subscribers' bills and identifying as a franchise fee is
in compliance with applicable Federal law.
We will, however, act on the Commission's suggestion and change the
name to P.E.G. Access Fee.
The call for a refund is unwarranted and not supported by the
franchise or applciable Federal law. The price for Basic service is
below the $15.37 per month ceiling identified in the Franchise even
when The PEG Access franchise fee and the 5% Franchise Fee is
added.
519 West State Street Ithaca, New York 14850 272-7875
Gary R.Matz
Assistant General Counsel
T I M E W A R N E R
C A B L E
January 24, 1995
Ms. Jean Finley
Chairperson
Ithaca Cable Commission
City of Ithaca
Ithaca,NY 14850
Dear Ms. Finley:
I am writing at the request of Mr. Ray McCabe the General Manager of our cable
television system serving the Ithaca,New York area.
It is my understanding that representatives of the City have inquired about certain
documents related to the Time Warner Entertainment-Advance/Newhouse Partnership which
were referenced or identified in our FCC Form 394 filing as being confidential and proprietary.
I would like to assure you and the City of Ithaca that those various documents do not, in
any way, affect the System or the operation of the System serving Ithaca. Those documents
address certain topics such as tax and accounting policies, Advance/Newhouse cable systems
located in the US West service area(i.e. the states ofNebraska and Wyoming), employee benefits
and the accounting treatment to be afforded certain Systems partially owned by Time Warner.
I appreciate the City's interest in this transaction. I trust that we have answered other
questions that you may have and that this letter will satisfactorily address those questions you had
regarding these confidential documents.
Thank you for your continuing cooperation and assistance.
Ve t o r ,
Gary Matz
cc: Ray McCa
Time Warner Cable 300 First Stamford Place Stamford CT 06902-6732 Tel 203.328.4865 Fax 203.328.4840
A tlini+rnn n(Timo W--F.t—t+ J...e..+++rn.....,...., t P
CITY OF ITHACA
108 EAST GREEN STREET
ITHACA, NEW YORK 14850
OFFICE OF TELEPHONE: (607)274-6504
CITY ATTORNEY FAX: (607)272-7348
May 16, 1995
Raymond McCabe, Manager
Time Warner
519 West State Street
Ithaca, New York 14850
Dear Mr. McCabe:
I am in receipt of a copy of the letter to you from the New
York State Commission on Cable Television dated May 11, 1995. In
that letter the issues of refunds for persons who subscribed to
Cable Plus prior to September 21, 1994, and the issue of how PEG
access related payments are reflected on subscribers bills were
addressed. I would appreciate it if you would let me know, at
your earliest convenience, what Time Warner's response to this
is, so that I can report that to Council. Of course, if you have
question or wish to discuss the matter in more detail, don't
hesitate to call me.
Very truly yours,
Charles Guttman
City Attorney
CG/cw
n•
"An Equal Opportunity Employer with an Affirmative Action Program" tiM Recycled Paper
L `.•r .i10E{VED MAY i s 1595
�f TRE
NEW YORK STATE
>�f ' COMMISSION ON CABLE TELEVISION
5 EMPIRE STATE PLAZA ALBANY, NEW YORK 12223-1552 (518)474-4992 FAX(518)486-5727
May 11, 1995
Ray McCabe, Manager
American Community Cable
519 W. State St.
Ithaca, NY 14850
Dear Mr. McCabe:
As you know, the City of Ithaca by resolution adopted October 25, 1994 has
expressed reservations concerning your company's introduction of a CablePlus service tier
as well as the treatment of public access commitments on subscriber's bills.
The Commission's Consumer Services Unit has previously inquired about the
facts and circumstances concerning the introduction of a CablePlus tier. From your
response, dated March 2, 1995, it is my understanding that the material facts are as follows:
1. that the CablePlus tier is comprised of four programming services -- CNN,
ESPN, The Learning Channel and Comedy Central -- all of which were
previously available as part of basic cable service but which were removed to
a separate "scrambled" CablePlus tier and marketed as a separate option to
subscribers;
2. that the four CablePlus channels were originally intended to be removed
from basic service on July 15, 1994 at which time basic service was reduced
from $15.37 to $12.29;
3. that on or about June 17, ACC mailed a newsletter to subscribers which
described the changes in basic service and the CablePlus tier as well as the
availability of three new channels -- Encore, ESPN 2 and the Cartoon
Network -- on an a la carte basis;
4. that the newsletter indicated that a subscriber who wished to continue
receiving the four channels comprising the CablePlus tier at $1.34/month plus
an addressable converter "must subscribe before July 20;"
T 1 M E W A R H E R
j' JUN 131995
June 1, 1995
Ms. Anne V. Dalton,Director
Consumer Services Unit
New York State Commission on Cable Television
5 Empire State Plaza
Albany,NY 12223-1552
Re: Cable Plus Service Tier
PEG Access Fees
Dear Ms. Dalton:
This letter is in response to the concerns detailed in your correspondence dated May 11, 1995.
Although we do not agree with the description of the introduction of the Cable Plus package set forth
in your letter of May 11, 1995,we will reluctantly agree to your refund request.
This acquiescence is not an admission of any liability or wrongdoing on our part nor does it reflect
the position we would have taken had this issue been pursued in a legal or administrative proceeding.
We are pleased that overall we have managed to minimize inconvenience to our customers during a
time of significant change. Pursuant to your request, please be advised that we are in the process of
determining the num of customers affected and the amount of refund to be issued. We plan to
complete the process within 10 days in preparation for refiinds in July and August.
Credits will be offered to our existing qualifying customers in the following manner and will appear
on their monthly billing:
Revenue earned between July 21st and August 18th will be divided equally among Cable Plus
customers on record as of August 18, 1994. Revenue earned between August 19th and September
12th will be divided equally among Cable Plus customers on record as of September 12th, 1994.
519 West State Street Ithaca, New York 14850 272-7875
June 1, 1995
Ms. Arne V.Dahoq Director
Page 2
A separate response will be forthcoming regarding the public, educational and governmental access
Mated payments issue. Presently,we are attempting to understand your concerns and contemplating
options. Our cm"has attempted to contact John Grow to further discuss this matter.
Should you have any questions,please feel free to contact me.
ely,
Ra H. McCabe
Area Manager
cc: The Honorable Benjamin Nichols,Mayor, City of Ithaca
Jean Finley, Chairperson, Ithaca Cable Commission
John L. Grow, Counsel
Steven A Shaye,Director Municipal Assistance
AUL 2 7 1996
{ NEW YORK STATE
COMMISSION ON CABLE TELEVISION
Fxceis1oa'
5 EMPIRE STATE PLAZA ALBANY, NEW YORK 12223-1552 (518) 474-2212 FAX (518)473-2965
July 25, 1995
Mr. Ray McCabe
Manager
American Community Cable
519 West State Street
Ithaca, New York 14850
Dear Mr. McCabe:
This is to acknowledge receipt of your June 29, 1995
correspondence, outlining the. amount of credit and number of
qualified Cable Plus subscribers to receive said credit for the
periods, July 31, 1994 - August 31, 1994 and September 1, 1994 -
September 12 , 1994. These credits address the concerns raised by
the Commission relative to the introduction of Cable Plus service
last July.
American Community Cable is directed to process the
appropriate credits as expeditiously as possible and to provide
the Commission with a statement and/or documents indicating
issuance of refunds to all affected subscribers.
Sincerely,
1
U
An * Dalton
Director, Consumer Services
AVD;glr
cc: The Honorable Benjamin Nichols, Mayor, City of Ithaca
Jean Finley, Chairperson, Ithaca Cable Commission
John L. Grow, Counsel, CCTV
Steven A.Shaye, Director Municipal Assistance, CCTV
T I M E W A R N E R
C A B L E 4.
`
gt
�j�,,
�7
r .+
June 29, 1995
Ms. Anne V. Dalton, Director
Consumer Service Unit
New York State Commission on Cable Television
5 Empire State Plaza
Albany, NY 12223-1552
Re: Cable Plus Service Tier
Dear Ms. Dalton:
As requested in your June 8, 1995 correspondence, the following subscriber
numbers and dollar amounts represents total customers and credits that are
being issued to our existing qualifying customers. We have two billing cycles
in which subscribers were charged. Cycle A represents billing from the 1st
through the 31st of each month, while Cycle B subscribers are billed from the
15th to the 15th of each month. We are crediting 3722 Cycle A subscribers
that were billed for CablePlus from 7/31/94 - 9/12/94, each $2.44. The total
for Cycle A credits represents $9081.68 We have credited 5194 Cycle B
subscribers that were billed for CablePlus from 7/15/94 - 9/12/94, each $3.31.
The total for Cycle B represents $17, 192.14.
Total existing subscribers credited is 8916. Total credits amount $26,273.82.
The Cycle A credit of$2.44 was determined by taking the subscribers billed
for the period of 7/31/94 - 8/31/94 and crediting back the full $1.74 per month
charge for CablePlus. The additional $.70 is a prorate for the service from
9/1/94 - 9/12/94.
272-3456
519 West State Street Ithaca, New York 14850 1-800-676-2225
w
A+
The Cycle B credit of$3.31 was determined by taking the subscribers billed
for period of 7/15/94 - 8/15/94 and crediting back the full $1.74 per month
charge for CablePlus. The additional $1.57 is a prorate for the service from
8/16/94 - 9/12/94.
Due to the extensive manual labor involved in determining the start date of
service for each individual subscribers, we have credited all subscribers in
each cycle, the same amounts. We will begin applying the credits upon written
approval from you.
We appreciate your time and patience in this matter.
Sincerely,
AX7--
Doc McQuade
Business Manager
cc: The Honorable Benjamin Nichols, Mayor, City of Ithaca
Jean Finley, Chairperson, Ithaca Cable Commission
John L. Grow, Counsel
Steven A. Shaye, Director Municipal Assistance
i
T I M E W A R N E R
C A B L E t ` '
June 29, 1995
Ms. Anne V. Dalton, Director
Consumer Service Unit
New York State Commission on Cable Television
5 Empire State Plaza
Albany, NY 12223-1552
Re: Cable Plus Service Tier
Dear Ms. Dalton:
As requested in your June 8, 1995 correspondence, the following subscriber
numbers and dollar amounts represents total customers and credits that are
being issued to our existing qualifying customers. We have two billing cycles
in which subscribers were charged. Cycle A represents billing from the 1st
through the 31st of each month, while Cycle B subscribers are billed from the
15th to the 15th of each month. We are crediting 3722 Cycle A subscribers
that were billed for CablePlus from 7/31/94 - 9/12/94, each $2.44. The total
for Cycle A credits represents $9081.68 We have credited 5194 Cycle B
subscribers that were billed for CablePlus from 7/15/94 - 9/12/94, each $3.31.
The total for Cycle B represents $17, 192.14.
Total existing subscribers credited is 8916. Total credits amount to $26,273.82.
The Cycle A credit of$2.44 was determined by taking the subscribers billed
for the period of 7/31/94 - 8/31/94 and crediting back the full $1.74 per month
charge for CablePlus. The additional $.70 is a prorate for the service from
9/1/94 - 9/12/94.
272-3456
519 West State Street Ithaca, New York 14850 1-800-676-2225
The Cycle B credit of$3.31 was determined by taking the subscribers billed
for period of 7/15/94 - 8/15/94 and crediting back the full $1.74 per month
charge for CablePlus. The additional $1.57 is a prorate for the service from
8/16/94 - 9/12/94.
Due to the extensive manual labor involved in determining the start date of
service for each individual subscribers,we have credited all subscribers in
each cycle, the same amounts. We will begin applying the credits upon written
approval from you.
We appreciate your time and patience in this matter.
Sincerely,
`j
Doc McQuade
Business Manager
cc: The Honorable Benjamin Nichols, Mayor, City of Ithaca V'
Jean Finley, Chairperson, Ithaca Cable Commission
John L. Grow, Counsel
Steven A. Shaye, Director Municipal Assistance
T I M E W A R N E R
C A B L E
August 4, 1995 _--
rr
Ms. Julie Holcomb, Clerk
City of Ithaca
S� 8
City Hall
108 E. Green Street �U
Ithaca,NY 14850
Dear Ms.Holcomb:
I am pleased to inform you that Time Warner Cable has negotiated a proposed Social
Contract with the FCC that will provide a number of benefits to our customers and which resolves
all pending FCC rate complaints concerning Time Warner.
The FCC announced the proposed contract August 3, 1995 and placed it on public notice.
Interested parties may submit comments to the FCC within a 30-day period and a 15-day reply
period. The contract provides for the assurance of fair and reasonable rates for all of our cable
customers;the creation of a low-cost "lifeline"basic service; a commitment to upgrade the channel
capacity and technical reliability of our cable systems, and a reduction in the administrative resources
and costs of regulation for local governments, the FCC and Time Warner. The key terms of the
contract include:
► Lower basic rates by an additional 10%with an offsetting increase on CPST and create a low-
cost lifeline basic service that will remain affordable for low and fixed income families;
► Provide annual price "caps" allowing increases only for inflation and external costs on Basic
and an additional$1.00 on the CPST;
► Upgrade its systems to 550/750 I HM fiber-rich architecture at a cost of$4 billion;
► Customers in systems where rates were subject to a refund liability will receive more than$5
million in refunds in the form of bill credits;
► Provide one free drop with basic and CPST service to 100% of the public schools passed by
our cable systems;
► Provide free of charge a connection and necessary equipment to the new TWC/Time Inc. on-
line computer service to public schools in systems that carry the service; and
► Develop educational materials, including instructional notebooks and videos for teachers
explaining how to use the new technologies of TWC's broadband cable system for educational
519 West State Street Ithaca, New York 14850 272-7875
r
applications.
This contract is significant in that, it will give cities an opportunity to lock in many benefits
for consumers such as system upgrades that will enhance reliability, picture quality and channel
capacity,as well as additional cable and on-line services for schools. At the same time, it allows the
FCC to settle a number of cases in a way that efficiently offers benefits to consumers and provides
Time,Aarner with predictable though modest, rate increases that allow us to upgrade our network
'with i feasonable return without creating a "rate shock" scenario for our customers.
.. .T„.�. The FCC is requesting comments on the proposed contract, and I would appreciate it if you
would consider writing in support of the contract. While the benefits of its adoption are obvious,
there is nothing in the contract that would preclude a city from negotiating an enhanced package
during franchise renewal. Comments should be sent to:
Federal Communications Commission
Cable Service Bureau
11919 M Street,N.W.
Washington,DC 20554
Attached are copies of the Time Warner and the FCC press releases, along with a copy of the Dn Ic
Social Contract.I will call you shortly to set up a meeting with you and to answer any questions you >in G��
may have. phi c�
Thank you for your consideration, and we hope that, after reviewing the many benefits of the
proposed contract terms,you will support Time Warner Cable's and the FCC's efforts.
Sincerely,
- d
i�z -- C4,
RaymonMcCabe (,✓�'t tGi L
)
Area Manager /
The Honorable Ben Nichols
Ms. Jean Finley, Chair of the Cable Commission
■ 4T/��
*4p T I M E W A R N E R
C A B L E
FOR IMMEDIATE RELEASE Contact: Michael Luftman
August 3, 1995 (203) 328-0613
TIME WARNER AGREES WITH FCC TO RATE CUTS AND CAPS, REBATES,
UPGRADES AND MAJOR NEW SUPPORT FOR LOCAL SCHOOLS
Time Warner Cable has signed a proposed "social contract" with the Federal
Communications Commission that will provide its customers and the cities where it
operates with a wide range of benefits. These include lower basic rates, rate stability
through price caps for basic cable and the cable programming satellite tier (CPST), more
than $5 million in refunds, upgrade of all its cable systems and substantial support for
public schools.
The contract will also resolve all outstanding rate cases involving Time Warner Cable
before the FCC.
"We are very pleased to have been able to work so productively with the FCC to
resolve these issues in a way that benefits our customers, local schools, the cities where
we do business and our company,' said Joseph J. Collins, chairman and CEO of Time
Warner Cable. "Our customers can be assured of lower basic rates including a 'lifeline'
basic tier that will remain affordable for many low and fixed income families. Many also
will receive a refund. Public schools will benefit from substantial support ensuring them
(more)
Time Warner Cable 300 First Stamford Place Stamford CT 06902-6732 Tel 203.328.0600 Fax 203.328.0690
A Division of Time Warner Entertainment Company,L.P
r
Page 2
access to the latest telecommunications technology. Communities will benefit from our
commitment to upgrade our networks with the latest fiber optic technology, assuring the
most reliable service possible."
The major components of the social contract are:
** Time Warner Cable will reduce the price of basic cable by an additional 10%,
beyond the 17% rollbacks of the past two years with an offsetting increase on CPST.
This price reduction will create a lifeline basic service that will remain even more
affordable for low and fixed income families. The price of this service will be capped,
with adjustments permitted only once a year for changes in external costs and inflation.
** The company will cap prices for the CPST, raising the monthly charge on a
customer's bill by no more than $1.00 each year other than for changes in external
costs and inflation.
** The company will make refunds to all customers in systems where its rates were
subject to refund liability. The refunds will be in the form of bill credits.
** Time Warner will, over the next five years, upgrade its operations with fiber optic
technology at a cost of$4 billion. This will dramatically improve reliability, picture
quality and channel capacity.
** All public schools in the company's service areas will be provided with free cable
service and additional support including free schedules of educational programming as
well as a free training video and brochures for teachers that will help them understand
the latest advances in telecommunications technology and how they can be applied to
education.
(more)
Z
Page 3
Time Warner is developing a high-speed on-line service for personal computers
using cable's high-speed delivery system. When that service is launched in any of the
company's cable systems, each school in the system will receive a free hookup,
including a cable modem, and hands-on training for teachers on the use of the service.
In addition, the FCC and Time Warner said they expect the agreement will reduce
the administrative burden and cost of regulation for local governments, the FCC and
the company.
News media Information 202!418.0500
Recorded listing of release and texts
W`3•u�� 2021418-2222
Federal Communications Commission
1919 - M Street, N.W.
Washington, D. C. 20554
s it nn noun nr-dF C6-dwfilsVon WIon. Ralasse of the TuRof a CommiVelon ordet
constitutes mf:elal salon. See MCI V.FCC.515 F 2d 899(D.C.Circ 1974}
August 3, 1995
COMMISSION AND TIME WARNER CABLE
NEGOTIATE SOCIAL CONTRACT;
COMMISSION REQUESTS PUBLIC COMMENT
The Commission and Time Warner Cable (TWC) have, negotiated a Social Contract
(Contract) that will, if finally adopted by the Commission, provide for the upgrading of
TWC's cable systems. The proposed Contract was negotiated in accordance with the
Commission's authority to consider and adopt "social contracts" as alternatives to other
regulatory approaches applicable to cable television rates. If adopted, the proposed Contract
will assure fair and reasonable rates for TWC's customers, reduce the administrative burden
and costs of regulation for local governments, the CommissioI and TWC, and resolve 946
cable programming services tier rate complaints on file with the Commission. The proposed
Contract is designed to improve TWC's service by substantially upgrading the channel
capacity and technical reliability of its United States cable systems.
i
The Commission requests public comment. Comments on the proposed Contract are
due by September 5, 1995. Reply comments axe due by September 20, 1995. A Public
Notice (FCC 95-336), entitled "Social Contract for Time Warner Cable Available for
Comment" has been released today.
Important elements of the proposed Contract include:
• A commitment by TWC to upgrade its domestic cible systems at a cost of$4
billion over the next 5 years.
• A TWC commitment to establish lifeline basic service tiers priced at 10%b
below TWC's benchmark regulated rates. TWC will be allowed to recoup
reduced basic service tier revenue through price increases on its cable
programming service tiers.
• The total increase for all regulated programming sbrvices provided by TWC
will be capped at $1 per year for each of the next five years, plus external
costs and inflation.
• An estimated $4.7 million plus interest in subscriber refunds, in the form of
subscriber bill credits.
• TWC will provide free service connections at one nutlet in 100% of the
existing public schools (K-12) passed by its cable gystems. Additionally, it
will provide service connections at Bost in secondary private schools that
receive funding under Title I of the elementary and Secondary Education
Act of 1965. TWC will provide the connected schools with a monthly
educational program guide having curriculum support ideas to assist
educators in effectively using the new services. Any internal wiring needed
by the connected schools for additional outlets will be provided by TWC at
cost.
• Upon successful development by TWC and Time Inc. of an on-line
service for personal computers, TWC will, upon request, provide the
cable connected schools (public or private) with one free modem, and
additional modems will be made available to such schools at cost. As
available in each service area, TWC will provide its on-line service free
through each modem during the school year.
• TWC subscribers will have the right to remove, replace, rearrange or
maintain any cable wiring located in the interior space of their dwelling
unit.
• In systems where TWC and its predecessors did not create a la carte
packages, TWC can create migrated product tiers (NPTs) consisting of
up to four services migrated from regulated tiers. The migrated
channels, will be priced at their rate regulated prices.
• In the case of Newhouse systems acquired by TWC that had a la carte
packages, TWC will be able to convert Newhouse's "Superstation" a la
carte packages (typically three supetstations and one satellite channel)
into NPTs, priced at current rates (which in no case exceed 29 cents per
channel). Another MPT can be created on such systems consisting of
satellite channels offered on other, low penetration; a la carte packages.
These NPTs will be priced at their current per channel rates. The
cumulative number of services migrated from the "Superstation" and
other a la carte packages cannot be greater than six. All remaining
channels in Newhouse's a la carte packages will be returned to the
traditionally rate-regulated service tiers.
• Where TWC created a la carte packages that received new product tier
(NPT) treatment on systems that are contiguous with systems where
MPTs will be created, TWC will have the option to lower the prices of
the NPTs and raise the prices of the adjacent MPT,s in a revenue neutral
manner to TWC to provide uniform,rates for the systems. The NPTs
will then be subject to the price cap increases applicable to NPTs.
• TWC may add an unlimited number of channels to an MPT at a price
of 20 cents per channel plus license-fees. After April 1997, TWC may
2
convert the MPTs to NPTs withm et constrained pricing, as
permitted by the Commission's go- forward rulek.
• The resolution of pending rate casesi is without any' finding by the
Commission of any wrongdoing by tVC.
Cable Services Bureau Chief Meredith Jones commented, "This agreement with
Time Warner Cable is another example of an ijinovative solution to regulatory and business
issues of great complexity. The reaction to the earlier Social;Contract with Continental has
been highly positive. This Contract will provide TWC subscribers with upgraded, reliable
service. It provides rate stability for TWC subscribers and resolves nearly one thousand rate
complaints. This Contract also extends free cable service to all public schools in TWC
service areas. Permitting TWC subscribers to ielocate intern4l cable wiring in their home is
an innovative consumer friendly feature."
News Media contact: Morgan Broman at (202)1416-0852; Cable Services Bureau contacts:
Nancy Markowitz, Jerome Powlkes and JoAnn'Lucanik at (202) 416-0800
3
PUBLIC NOTICE
use
FEDERAL COMMUNICATIONS COMMISSION
1919 M STREET, N.W.
WASHINGTON, D.C. 20554
News media information 202/418-0500 Recorded listing of releases and texts 202/632-0002.
FCC 95-336
August 3, 1995
SOCIAL CONTRACT FOR TIME WARNER CABLE
AVAILABLE FOR COMMENT
THE COMMISSION SEEKS COMMENT ON A PROPOSED SOCIAL CONTRACT WITH TIME
WARNER CABLE THAT PROVIDES INCREASED INVESTMENT IN CABLE TV
INFRASTRUCTURE; ASSURES RATE STABILITY; PROVIDES FOR RESOLUTION OF
RATE CASES; AND PROVIDES REFUNDS OF UP TO APPROXIMATELY $4.7 MILLION
PLUS INTEREST TO AFFECTED SUBSCRIBERS
Time Warner Cable (TWC) and the Federal Communications Commission have negotiated a
proposed social contract (Contract). The proposed Contract was negotiated pursuant to the
Commission's authority to regulate cable services under Title VI of the Communications Act and
the Commission's February 22, 1994 decision that it would consider social contracts as an
alternative form of regulation for cable operators. The proposed Contract will be considered for
approval after evaluating public comment on this proposed agreement. This notice and the
proposed Contract are being mailed to each person who has filed a rate complaint with respect to
one of TWC's systems, and to all franchising authorities that have granted a cable franchise to
TWC. This notice contains a summary description of the proposed Contract; the terms of the
proposed Contract, however, will be controlling and interested persons should read the proposed
Contract in its entirety. Copies of the proposed Contract can be obtained in the manner described
below.
The proposed Contract is designed to improve TWC's cable service by substantially
upgrading the channel capacity and technical reliability of its United States cable systems. In
addition, the proposed Contract will assure fair and reasonable rates for TWC's cable service
customers and reduce the administrative burden and costs of regulation for local governments, the
Commission, and TWC.
The five-year proposed Contract covers cable programming service tiers in all of TWC's
cable franchises, including those that are currently unregulated because no complaint has been filed
against the cable programming services tier. Thus, the Contract will provide rate stability and other
benefits for TWC's customers regardless of th,:it regulatory status. It also provides for the creation
of a low-priced basic service tier. TWC serves approximately 9.7 million subscribers.
Under the 1992 Cable Television Consumer Protection and Competition Act, a basic service
tier is the tiet of programming that contains at a minimum local broadcast stations. Cable
programming services tiers are all other cable services, except those sold on a per channel or per
program basis.
Specifically, the proposed Contract provides for the investment of$4 billion to rebuild and
upgrade all of TWC's domestic cable systems during the period from 1995 to 2000, including
deployment of fiber optic technology, increased channel capacity and improved system reliability
and signal quality. At least 60% of the new analog capacity added as a result of the upgrade will
be used for regulated cable programming services tiers, and, on average, regulated cable
programming services offered on the upgraded systems will contain at least 15 additional channels.
The proposed Contract provides for the resolution and termination of TWC's pending cable
programming services cases, including cable programming services cases against the systems TWC
recently acquired from Houston Industries (KBLCOM) and Newhouse Broadcasting Corporation.
To resolve these cases, TWC will make cash refunds in the form of bill credits to affected
customers totalling approximately $4.7 million plus interest. Basic service tier benchmark cases
currently pending before local franchising authorities would not be resolved by the proposed
Contract. Those cases will continue to be resolved by TWC and the local franchising authorities
pursuant to Commission rules.
TWC will provide its subscribers with a low-cost basic service tier. To accomplish this,
TWC will reduce its basic service tier rates on systems serving at least 85% of TWC's total
subscribers to a level 10% below the current rates. TWC will be permitted to offset each of the
10% reductions by increasing the rate for its cable programming services tier. TWC also will
restructure the basic service tier on any remaining systems so as to create a lifeline basic tier. TWC
will not increase the programming on any basic service tier for the term of this Contract, except
where required by applicable law or regulation or contract lawfully entered into pursuant to such
law or regulation, or to provide additional local origination channels. However, local franchising
authorities may elect not to have this low-cost service created within their franchise areas.
In light of the upgrade commitment contained in the proposed Contract, TWC will be
permitted to increase the monthly rates for the cable programming services tier by $1.00 during
each year of the Contract. On each system, the increase will be added to the cable programming
services tier having the greatest number of subscribers. During the life of the proposed Contract,
the only other permitted increases to TWC's cable programming services tier rates will be for
inflation and increases in external costs. During the period of the proposed Contract, TWC will not
avail itself of any additional per-channel adjustment permitted by the Commission's Going Forward
rules for any programming services added to the cable programming services tier after the effective
date of the contract. TWC also will forego its right to use cost of service justifications to support
2
any future rate increases for any systems covered by the proposed Contract during the period that
the proposed Contract is in effect.
If TWC fails to meet the upgrade commitment within the term provided for under the
Contract, subscribers to the cable systems that have not been upgraded will be entitled to
appropriate refunds equal to the cable programming services rate increases provided by the
Contract, with interest, plus a liquidated damages penalty of 15% of such amount.
Under the proposal, in the systems where TWC and its predecessors did not create a la
carte packages, TWC will be permitted to create migrated product tiers consisting of up to 4
services migrated from the regulated tiers. The migrated channels will be priced at the rate
regulated price with increases allowed for inflation and external costs. There will be no limit on
the number of channels that TWC may add to the migrated product tiers at the price of 20 cents per
channel plus license fees. After April 1, 1997, TWC may convert any migrated product tier to a
new product tier with market constrained pricing as permitted by the Going Forward rules.
For the Newhouse systems acquired by TWC that had a la carte packages, TWC will be
permitted to create migrated product tiers. Where the system had a "superstation" a la carte
package (typically three superstations and one satellite channel), the package will become a
migrated product tier, initially priced at their current rates which are less than 29 cents per channel
(exclusive of copyright fees). TWC will also be allowed to create another migrated product tier
consisting of satellite channels located in other a la carte packages as long as the cumulative
number of migrated services is no greater than six. These channels will be priced at the current per
channel rate. (Newhouse's non-superstation a la carte packages were created from tiers that were
affirmatively marketed and had traditionally low penetration rates of basic subscribers). TWC will
be able to add an unlimited number of new channel offerings at the rate of 20 cents per channel
plus license fees to these migrated product tiers.
The remaining Newhouse channels from the a la carte packages will be put back in
benchmark regulated cable programming services tiers. The rates for these tiers will increase due to
the addition of these channels; however, the increases will be limited to not more than 25 cents per
channel (including license fees).
In systems where TWC has created a la carte packages which are being treated as new
product tiers in areas contiguous with franchises where migrated product tiers will be created
pursuant to the proposed Contract, TWC will be permitted to lower the prices of the new product
tiers and raise the prices of the adjacent migrated product tiers in a revenue neutral manner to TWC
to provide uniform rates in those systems. In those circumstances, the new product tiers will be
subject to the price cap increases applicable to migrated product tiers.
TWC will be permitted to establish prices for equipment and various installation functions
based on averaged costs for all its systems on a geographic regional basis.
3
If the Commission adopts rules providing for annual adjustments to rates for basic service
tiers and cable programming service tiers, TWC will comply with those rules and adjust its rates
no more than annually.
TWC will offer a cable connection to 100% of the public schools passed by its cable
systems. Those connections will be provided free of charge to all such schools requesting
connections. TWC also will provide a cable connection at cost to all secondary private schools that
receive funding under Title I of the Elementary and Secondary Education Act of 1965. Further, if
any internal wiring installation is needed at the connected schools, it will be provided at the TWC
system's cost of materials and labor. Such additional internal wiring will be provided to public
schools without charge if TWC is able to coordinate with other comparable electrical wiring
installation in cases of new construction or substantial rehabilitation of existing schools. Basic
service tier and cable programming services tier service will be provided to each outlet in
connected schools at no charge. TWC will provide a free monthly educational program listing to
each connected school. TWC also will develop and provide to connected schools materials for
teachers that explain the educational applications of TWC's broadband cable systems.
Finally, upon successful development by TWC and Time Inc. of an on-line service for
personal computers, TWC will provide each connected public school with a free connection to this
on-line service to the extent it is available on the local cable system. Upon request, each
connecting school will receive one free modem and access to the service for use during the school
year. TWC also has agreed to provide additional modems to the school at cost. TWC will
sponsor a workshop in each franchise area to educate teachers and to provide them with an
opportunity for hands-on training.
Prior to a customer's termination of cable service, TWC systems will not restrict the ability
of customers to remove, replace, rearrange or maintain any cable wiring located within the interior
space of their dwelling units. TWC will provide customers with a notification upon commencement
of service, and annually thereafter, advising them of their rights (i) to remove, replace, rearrange or
maintain the home wiring themselves, (ii) to select a qualified third party contractor, and (iii) to
request the TWC system provide such service at standard hourly installation rates, plus materials at
cost. TWC systems will offer to supply such materials to subscribers at cost.
Parties wishing to comment on the proposed Contract should do so by filing with the
Secretary no later than September 5, 1995 an original and four copies of their comments. Replies
may be filed no later than September 20, 1995. All such pleadings should reference the file
number noted above.
The proposed contract is available for reference in the Cable Services Bureau's public
reference room, Room 333 at 2033 M Street, N.W., Washington, D.C. Copies are available from
the Commission's copy contractor, International Transcription Services, at Room 246, 1919 M
Street, N.W., Washington, D.C. 20554, telephone number (202) 857-1433. The contract is also
available via Internet at FCC.GOV. For further information, contact JoAnn Lucanik, Nancy
Markowitz or Jerome Fowlkes at (202) 416-0800.
4
r
Media contact: Morgan Broman at (202) 416-0852.
--FCC--
5
DRAFT
SOCIAL CONTRACT FOR
TIME WARNER CABLE
TABLE OF CONTENTS
Page
I. BACKGROUND AND SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
III. TERMS AND CONDITIONS OF THE SOCIAL CONTRACT . . . . . . . . . . . 3
A. Basic Service Tier Rate Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1. Creation of a Low-Cost, Lifeline Basic Service Tier . . . . . . . . . 3
2. BST Price Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-3. Additions To Basic Service Tier . . . . . . . . . . . . . . . . . . . . . 5
B. Equipment Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
C. Resolution Of Existing CPST Rate Cases . . . . . . . . . . . . . . . . . . . . 7
D. Migrated Product Tiers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
E. Customer Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
F. Infrastructure Upgrade Requirement . . . . . . . . . . . . . . . . . . . . . . . 11
1. Upgrade Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2. No Impairment Of Local Authority . . . . . . . . . . . . . . . . . . . 12
3. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4. CPST Rates Subject To Price Cap . . . . . . . . . . . . . . . . . . . . 12
5. Failure To Meet Target . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6. Adjustments To Systems Subject To Contract . . . . . . . . . . . . . 13
- G. BST And CPST Rate Stability . . . . . . . . . . . . . . . . . . . . . . 14
H. Additional Consumer Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1. Service To Public Schools . . . . . . . . . . . . . . . . . . . . . . . . . 14
2. Home Wiring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
- ii -
I. Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1. Modification And Termination . . . . . . . . . . . . . . . . . . . . . . 17
2. Authority To Enforce Contract . . . . . . . . . . . . . . . . . . . . . . 18
3. All Necessary Waivers And Preemptions Deemed Granted . . . . . 19
4. Effect On Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . 20
5. No Admission Of Wrongdoing . . . . . . . . . . . . . . . . . . . . . . 21
6. Contract In Public Interest . . . . . . . . . . . . . . . . . . . . . . . . . 22
7. Legal Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8. Effective Date And Term . . . . . . . . . . . . . . . . . . . . . . . . . 23
9. Public Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12. Entire Understanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SOCIAL CONTRACT FOR TIME WARNER CABLE
I. BACKGROUND AND SUMMARY.
The' "Social Contract" set out in this document (the "Contract") relates to certain
services and equipment offered by Time Warner Cable ("TWC") actually or potentially
subject to regulation under the terms of the applicable provisions of Title VI of the
Communications Act of 1934, as amended ("Act").
The Federal Communications Commission ("FCC" or "Commission") finds that this
Contract will advance the public interest by: (i) assuring fair and reasonable rates for
TWC's cable service customers; (ii) facilitating the creation of a low-cost, lifeline basic
service level; (iii) improving TWC's cable service by substantially upgrading the channel
capacity and technical reliability of its cable systems; and (iv) reducing the administrative
burden and cost of regulation for local governments, the FCC and TWC.
The Contract has been negotiated between TWC and the FCC in accordance with the
FCC's authority to consider and adopt "social contracts" as an alternative to other regulatory
approaches applicable to cable television rates,'- and its authority to regulate TWC's cable
services under the Act, particularly in light of the Statement of Policy set forth in Section
2(b) of the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No.
102-385, 106 Stat. 1460 ("1992 Cable Act"). Except as otherwise provided for herein, this
Contract covers all of TWC's cable systems as of the Publication Date (as hereinafter
defined).
'-'Cost of Service Order, 9 FCC Rcd 4527, 11295-304 (1994); Public Notice, FCC 95-137
(April 3, 1995).
- 2 -
IL DEFINITIONS.
The following terms shall have the meanings set forth below. Certain other terms are
defined elsewhere herein.
A. "Basic Service Tier" or "BST" means the cable service level which includes
the signals of any local television broadcast stations and any public, educational or.
governmental access channel required by the relevant franchise to be carried on the BST.
B. "Cable Programming Service Tier" or "CPST" means any tier of video
programming.service, but shall not include (i) video programming carried on BST; (ii) video
programming when offered on a per channel, multiplexed, a la cane or per program basis;
(iii) any Migrated Product Tier; or (iv) any New Product Tier as defined by the Going
Forward Rules.
C. "Cost" means that the prices so designated have been designed to recover
actual costs, including a reasonable rate of return as defined in the FCC Cost of Service
Order, supra, at 1207.
D. "Current Rates" means those TWC system rates that are in effect as of the
Publication Date, or rates that will become effective after the Publication Date and for which
notice was given to subscribers on or before the Publication Date.
E. "CVI" means Cablevision Industries Inc., its subsidiaries and affiliates.
F. "Effective Date" means the date on which the FCC releases an order
approving_this Contract.
G.- "Eligible Subscribers" means those CPST subscribers to any of TWC's cable
systems listed on Appendix A to this Contract at the time Refunds are issued.
- 3 -
H. "Going Forward Rules" means the FCC's rules adopted in the Sixth Order on
Reconsideration, 76 RR 2d 859 (1994), including all subsequent clarifications and
amendments.
I. "Migrated Product Tier" or "MPT" means (a) a tier consisting of up to four
services moved from a system's existing BST or CPST(s) as described in Section III.D.5. or
(b) any Superstation Tier or any tier consisting of those services remaining on a Preferred
Tier, as defined in Section III.D.1., after any excess channels have been shifted to CPST as
described in Section III.D.3.
J. "Publication Date" means the date on which the Commission releases its initial
Public Notice relating to this Contract.
K. "Refund" means a prospective bill credit issued to Eligible Subscribers.
L. "Time Warner Cable" or "TWC" means the collective reference to Time
Warner Entertainment Company, L.P. ("TWE"), TWI Cable Inc. ("TWI Cable") and Time
Warner Entertainment-Advance/Newhouse Partnership ("TWE-A/N"), or any subsidiary,
division or affiliate thereof, or, where consistent with the context, any cable system owned or
managed by TWE, TWI Cable or TWE-A/N, except where particular provisions of this
Contract specify a more limited scope.
III. TERMS AND CONDITIONS OF THE SOCIAL CONTRACT.
A. Basic Service Tier Rate Relief.
1. Creation of a Low-Cost. Lifeline Basic Service Tier.
a. In order to provide its subscribers with the option to purchase a
low-cost BST, no later than six months after the Effective Date, TWC will reduce its BST
r
- 4 -
rates on systems serving at least 85% of TWC's total subscribers to a level 10% below the
Current RAtes. In any system where the BST rates are initially reduced by 10% as described
above, but where BST rates are pending review on the Publication Date, TWC will reduce
its BST rates further by 10% from the level ultimately determined to be reasonable, after
such determination is no longer subject to review or appeal. TWC may increase its CPST
rate(s) in any system by an amount necessary to recoup the reduction in revenues due to the
10% adjustment in the BST rate in that system. A local franchising authority ("LFA") may
elect not to have TWC implement the BST rate reduction described in this paragraph in its
franchise area by providing notice to TWC and the Commission no later than 45 days
following the Effective Date. Such notice shall (a) be in writing, (b) be addressed to the
Office of the Secretary, Federal Communications Commission, 1919 M Street, N.W.,
Washington, D.C. 20554, with a copy to Time Warner Cable, 300 First Stamford Place,
Stamford, CT 06902-6732, attention: General Counsel, (c) identify the local franchising
authority, the community unit identification number for the franchise area, and (d) reflect the
clear intent to not have TWC implement the BST rate reduction described in Section
III.A.La of this Contract. However, such notice need not meet any other requirements and
may be in letter form.
b. In order to achieve its goal of creating low-cost BSTs, TWC
will restructure the BST on the remaining systems where the BST has not been reduced by
10% as described above so as to create a lifeline-type service. Such restructuring will
involve shifting channels from the BST to an existing or newly created CPST and will not be
deemed by the FCC to be a "fundamental change" of any affected service tier. At the time
of such restructuring, the BST rate will be reduced by an amount equal to the percentage of
- 5 -
the BST channels shifted to CPST. Where the BST channels are shifted to a newly created
CPST, the"rate for the CPST will be equal to the amount of the reduction in the BST rate.
Where the BST channels are shifted to an existing CPST, the rate of the existing CPST will
be increased by an amount necessary to recoup the reduction in revenues resulting from the
reduction in the BST rate as described above. The 10% BST rate reduction, with CPST
offset, will be implemented upon restructuring of such remaining systems. Nothing herein
shall be deemed to affect any otherwise enforceable franchise provision relating to
programming services to be provided by TWC.
2. BST Price Can.
After implementation of the 10% BST rate reduction described above, all such
reduced BST rates will be subject to a price cap, even in currently unregulated TWC
systems. TWC will continue to be permitted to adjust BST rates for changes in external
costs and inflation, subject to any necessary LFA approval. The BST rate reduction referred
to above will have no adverse effect on any Form 1210 BST rate adjustment request which
may be pending before an LFA as of the Publication Date or thereafter. Nothing herein shall
authorize review of the reasonableness of any BST rate adjustments in communities where
the LFA has not elected to certify in accordance with Section 76.910 of the Commission's
rules.
3. Additions To Basic Service Tier.
TWC shall not add any additional channels to any BST for the term of this
Contract, except where required by applicable law, regulation or contract lawfully entered
into pursuant to such law or regulation, or to provide additional local origination channels or
other non-satellite delivered channels. In the event that the FCC's must-carry rules are
Y
- 6 -
repealed or rendered invalid or inapplicable to TWC by a court of competent jurisdiction,
TWC will have the right to substitute any programming service not then carried by such
system for up to an average (weighted by BST subscribers) of three local television broadcast
stations deleted from carriage per system covered by this Contract, but no more than five
such substitutions on any given system, even if more than five television broadcast stations
are deleted. Such substitutions shall have no impact on BST rates other than due to the net
change in programming costs. In the absence of must-carry requirements, however, any
local television broadcast stations which TWC continues to carry will be carried on the BST.
Any such changes to BST will be made only upon provision of thirty days advance notice to
the Commission and to affected LFAs and subscribers. Upon receipt of any necessary LFA
approval, TWC will be permitted to implement appropriate BST rate adjustments to reflect
any such added or substituted channels. Such adjustments (other than adjustments to BST
required by any retransmission consent agreement) shall not be subject to the annual BST
adjustment limitation set forth in Section III.G.
B. Equipment Rates.
TWC will be permitted to establish a blended rate, averaged for each of the
following equipment basket categories: (1) hourly service charge, (2) installations, (3)
remote control devices, (4) converters, (5) other leased equipment, and (6) customer tier
changes by geographic region as reflected on Appendix B to this Contract (and any
reasonable modifications to such regions). Equipment rates will be adjusted annually to
reflect changes in regional equipment Costs in each category. At least thirty days prior to
implementation of the first CPST adjustment authorized pursuant to Section III.F.4., but not
sooner than December 1, 1995, TWC will submit a single Form 1205, or equivalent
- T -
reasonably acceptable to the Commission, for each region to the FCC, and will submit
annual updates to such filings thereafter for Commission review. Any data required to
support such annual equipment rate adjustments may be based on the four most recent
available quarterly financial figures. TWC may begin charging revised equipment and
installation rates to customers based upon the updated filing upon thirty days' notice. These
revised equipment and installation rates will be subject to refund if the Commission later
concludes that lower region-wide rates are called for by such filings and applicable rules.
Such region-wide equipment and installation charges as TWC establishes and the Commission
approves pursuant to this Contract shall be subject to enforcement by local franchising
authorities. Should any LFA find that TWC's equipment and installation rates charged
exceed those permitted by the Commission, the LFA may order TWC to make refunds of
any excess charges as necessary to comply with the equipment and installation charges
permitted by the Commission.
C. Resolution Of Existing CPST Rate Cases.
1. All CPST cases or complaints currently pending before the Commission
are resolved pursuant to and as a result of the adoption of this Contract, as set forth in
Appendix A to this Contract.
2. The Commission has reviewed TWC's pending CPST filings. In light
of its review, the covenants and representations contained in this Contract, and in express
reliance-thereon, and in order to conserve Commission resources, avoid litigation costs, and
achieve the other benefits to the public contained in this Contract, the Commission agrees to
resolve all CPST cases and complaints involving TWC currently pending before it.
- 8 -
3. In addition to those CPST rates which are subject to proceedings that
are being fettled as set forth in Appendix A to this Contract, all other Current Rates, as
adjusted for inflation and changes in external costs as of the Publication Date, charged by
TWC for CPSTs are deemed reasonable under the Act and the Commission's rules.
4. BST rate disputes will continue to be resolved in the ordinary course,
pursuant to applicable FCC rules.
D. Migrated Product Tiers.
1. The Commission and TWC acknowledge (i) that certain TWE-A/N
systems (the "Migration Systems") have been providing collective offerings of a la cane
channels which were created between April 1, 1993 and September 30, 1994 and which
consist of one or more (a) low-priced collective offerings, containing primarily superstations,
at an average price of less than $0.29 per channel, excluding copyright fees (a "Superstation
Tier"), and (b) low-penetrated collective offerings predominantly containing channels which
had been affirmatively marketed as a separate tier before being offered on an a la cane basis
(a "Preferred Tier") and (ii) that such offerings provided by such Migration Systems
cumulatively contain in excess of six channels migrated from BST and/or CPST.
2. Any Superstation Tier offered by a Migration System shall be treated as
a separate MPT. The initial price of such MPT will be based on the Current Rate of the
Superstation Tier. Where neighboring TWC systems each offer an NPT or MPT consisting
primarily-of superstations and such NPT or MPT would be priced differently under the
Commission's regulations and this Contract, an adjustment may be made between or among
such Current Rates on a revenue neutral basis so that a uniform rate for such NPTs/MPTs
a
- 9 -
may be established. In selecting services to be returned to a CPST in accordance with paragraph 3
below, the,'Migration System serving Charlotte, North Carolina and surrounding areas may move
services from a Superstation Tier in an effort to achieve a more uniform line-up among such adjacent
NPT's and MPT's. All such uniformly priced NPTs/MPTs shall be subject to the price cap set forth
in paragraph 7 below.
3. Any Migration System shall select services from the Preferred Tier(s)
to return to a CPST so that the cumulative number of migrated services remaining on any
Preferred Tier(s) and any Superstation Tier is no greater than six. The subscriber's bill shall
be adjusted by no more than 25 cents per such channel returned to the CPST. The services
not returned to a CPST from the Preferred Tier(s) shall be offered as a single MPT, separate
from any Superstation Tier. The initial price of any such MPT will be based on the Current
Rate of the Preferred Tier(s), reduced by an amount equal to the percentage of channels
shifted to a CPST. Eligible Subscribers shall be issued a CPST Refund as reflected in
Appendix A.
4. On its own motion, the Cable Services Bureau, consistent with the
terms set forth herein, hereby reconsiders any Letter of Inquiry ("LOI") rulings involving
any Migration System (LOI-93-24; LOI-93-32; LOI-93-47; LOI-93-48), and TWE-A/N
hereby petitions to withdraw its Applications for Review of such LOI rulings and such
petitions are hereby granted by the Commission. The principles in this Section III.D.
relating to the unregulated treatment, for benchmark calculation purposes, of up to six
migrated channels, as incorporated in such reconsidered LOI rulings, shall be binding on any
LFA decision relating to BST rates charged by any Migration System.
r
- 10 -
5. On each of its systems which does not, as of the Publication Date, offer
a collective offering of a la cane channels created between April 1, 1993 and September 30,
1994, TWC may move a maximum of four existing BST or CPST services to a single MPT.
TWC will set the initial rate for any new MPT created pursuant to this paragraph at the same
level, on a per channel basis, that is set for that franchise's CPSTs under the Contract.
6. TWC may not require the subscription to any tier, other than the BST,
as a condition for subscribing to an MPT, and may not require subscription to an MPT as a
condition for subscribing to a CPST. Because the restructuring involved in the creation of
MPT(s) as described herein does not fundamentally change the service provided to
subscribers, TWC will not be required to re-market any of the affected services to existing
subscribers. Any services migrated may be offered on an a la cane basis as well as in a
package.
7. For the period prior to April 1, 1997, the price of any MPT established
pursuant to this Section III.D. may be adjusted solely to reflect unrecovered inflation and
external cost increases, including that currently accrued but uncharged, in the manner
permitted by the Commission's rules for CPSTs. There will be no limitation on the number
of new services TWC may add to an MPT. The price of any such MPT may be increased to
reflect new services added to the MPT by an amount not to exceed $.20 per added channel,
plus the actual license fee(s) for the added channel(s).
8. On or after April 1, 1997, TWC may convert any MPT into an NPT,
as defined in 47 C.F.R. § 76.987, including subsequent clarifications or amendments.
Because customers will be able to subscribe to CPST(s) and an MPT on a stand-alone basis,
as of April 1, 1997 the Commission will regulate MPT rates in the same manner in which
the Commission currently regulates NPT prices. Such NPTs will be treated as all other
NPTs under the Commission's rules, provided such NPT is offered without a buy-through
requirement of any tier other than the BST.
E. Customer Refunds. Pursuant to the settlement of TWC's existing CPST rate
cases as described in this section, TWC will provide Refunds, which in the aggregate total in
excess of $4.7 Million, plus interest computed .in accordance with FCC requirements for
subscriber refunds, on the terms and conditions, and in the manner, set forth below.
1. In settlement of all CPST complaints involving the review of an FCC
Form 393 and/or FCC Form 1200 submitted by TWC which are pending as of the
Publication Date, TWC will provide a Refund to each Eligible Subscriber as set forth in
Appendix A to this Contract.
2. TWC agrees to waive its right to a credit for the franchise fee paid to
the LFA on the CPST Refund amount.
F. Infrastructure Upgrade Requirement.
1. Upgrade Requirement.
TWC will upgrade all its cable systems, at a cost of $4 Billion, so as to meet
the following technical standards: each TWC cable system with a present capacity of at least
550 MHz will have a bandwidth capacity of at least 750 MHz within five years after the
Effective Date; all other TWC cable systems will have a bandwidth capacity of at least 550
MHz within five years after the Effective Date. At least 50% of all TWC subscribers will
be served'by a system with a capacity of at least 750 MHz, of which at least 200 MHz is
expected to be allocated to digital distribution. Fiber-to-the-node architecture will be
deployed to improve signal quality and reliability of such systems. At least 60% of the new
- 12 -
analog services added during the term of the Contract will be added to the CPST and not to
BST, NPT or MPT. On average (weighted by CPST subscribers), CPST service offered on
the upgraded systems will contain at least 15 additional channels by the end of the Contract.
TWC has selected, and will select, its systems to be upgraded without discrimination based
on socio-economic status.
2. No Impairment Of Local Authority.
Nothing herein shall restrict the legal authority of LFAs to negotiate upgrades
for their particular franchise areas which exceed the scope of this Contract.
3. Reporting Requirements.
No later than 90 days following the end of each calendar year during all of
which the Contract is in effect, and within 90 days following the end of the last month
following expiration of this Contract other than calendar year end, TWC will provide a
progress report to the FCC, for the year or such shorter period then ended during which this
Contract was in effect, setting forth the extent of progress TWC has made to upgrade
systems in compliance with Section III.F.L; the number of BST and CPST subscribers
benefitting from such upgrades; system reliability and service improvements resulting from
such upgrades completed during the previous calendar year; and TWC's projected system
upgrade activities during the following year of the Contract. Such report will be served on
each LFA. The FCC reserves the right to inspect the books and records of TWC and
interview corporate employees for the purpose of determining compliance with this Contract.
- 13 -
4. CPST Rates Subject To Price Can.
Beginning January 1, 1996, TWC will be permitted to increase the monthly
rates for the most highly penetrated CPST on each of its systems by $1.00 during each year
of this Contract. During the life of this Contract, the only other permitted increases to CPST
rates will be for inflation and increases in external costs. In particular, during the term of
this Contract, TWC will not avail itself of any additional per-channel adjustment permitted
by the Going Forward Rules for any programming services added to the CPST after the
Effective Date hereof. Nothing herein shall affect the ability of TWC to implement any New
Product Tier ("NPT"), add channels to any such NPT, or establish rates for any such NPT,
subject to the FCC Going Forward Rules, or to implement any MPT permitted by the terms
of this Contract.
5. Failure To Meet Target.
If TWC fails to meet the upgrade requirement so as to provide the bandwidth
capacities described in Section III.F.1. of this Contract within the term provided for therein,
the then existing CPST subscribers to the cable systems as to which such commitment has
not been met will be entitled to refunds (in the form of prospective bill credits) of the
increases (net of inflation and external cost adjustments) in CPST rates taken under this
Contract, plus interest computed in accordance with FCC requirements for subscriber
refunds, and a liquidated damages penalty of 15% of such refund amount.
6. Adjustments To Systems Subject To Contract.
a. TWC may,.at its option, include any cable systems acquired
from CVI within the provisions of this Contract, provided that the CPST settlement
provisions of this Contract shall not apply until any applicable settlements are mutually
- 14 -
agreed upon between TWC and the Commission. Addition of any other TWC systems
within the provisions of this Contract shall be subject to FCC approval, which will be
expeditiously decided and not be unreasonably withheld. The provisions of this Contract will
extend as to any such additional system for a period of five years from the date such system
is added within the provisions of this Contract.
b. In the event of a sale of any system during the period of
applicability of this Contract, the purchaser may elect, with the concurrence of the FCC, for
the provisions-of this Contract to continue to apply to such system. Such FCC concurrence
shall be expeditiously decided and not be unreasonably withheld. In the event the purchaser
elects not to have the provisions of this Contract apply to any such system, the CPST
subscribers to such system shall be eligible for the refunds calculated pursuant to Section
III.F.5. in the event the upgrade commitment described in Section III.F.1. has not been
completed prior to the consummation of such sale.
G. BST And CPST Rate Stability.
1. In the event the FCC establishes regulations allowing annual
adjustments to BST and CPST rates, with procedures designed to reduce regulatory lag,
TWC agrees to be bound by such regulations and to elect to adjust BST and CPST rates on
an annual basis pursuant to such regulations, provided, however, TWC shall not be delayed
in implementing its annual adjustments to CPST rates as set forth in Section III.F.4. due to
regulatory lag related to the BST rate approval process.
2. TWC will not elect to file cost-of-service showings to justify BST or
CPST rate levels above the level authorized by this Contract for any system subject to this
Contract for the term hereof.
- 15 -
H. Additional Consumer Benefits.
1. Service To Public Schools.
a. TWC shall offer service connections at one outlet in 100% of
the public schools (Grades K-12) passed by its cable systems. Such connections will be
made free of charge and as promptly as possible to all such schools requesting connections.
If any internal wiring installation is requested to serve additional outlets in such schools, it
will be provided at TWC's Cost of materials and labor at the applicable Hourly Service
Charge; provided, however, that such internal wiring will be provided without charge if
TWC is able to coordinate with other comparable electrical wiring installation in cases of
new construction or substantial rehabilitation of existing schools. BST and CPST service
will be provided to each outlet in such schools free of any charges.
b. TWC shall offer service connections, including any requested
internal wiring for additional outlets, at Cost to any private Secondary School, as defined by,
and which receives funding pursuant to, Title 1 of the Elementary and Secondary Education
Act of 1965, 20 U.S.C. § 241a et seq., and which is passed by its cable systems. BST and
CPST service will be provided to each outlet in such schools free of any charges.
C. TWC will provide a free monthly educational program listing to
each connected school. Additional copies of such program listings will be provided, if
requested by a school, at Cost. Such educational program listing will identify and describe
programming on the TWC system that is appropriate for use in the classroom and will
provide suggested curriculum support ideas.
d. TWC will develop and provide to connected schools materials
for teachers that explain the educational applications of TWC's broadband cable systems.
- 16 -
The materials will include a self-explanatory notebook and video. One copy of such
materials will be provided at no charge to all school districts with connected schools in
franchise areas served by TWC. Additional copies of such materials will be provided, upon
request, at Cost.
e. Upon successful development by TWC and Time Inc. of an on-
line service for personal computers, TWC will provide each connected school with a free
connection to this on-line service to the extent it is available on the local TWC cable system.
Upon request,. each connected school will receive one free modem and free access to the
TWC/Time Inc. on-line service for use during the school year. Additional modems will be
made available, upon request, at Cost. Free access to the TWC/Time Inc. on-line service
will be provided through each such modem for use during the school year. In addition,
TWC will sponsor a workshop in each franchise area to educate teachers about the
TWC/Time Inc. on-line service and to provide them with an opportunity for hands-on
training.
f. To the extent a local franchise agreement contains an obligation
to provide the connections to schools as agreed to herein, TWC agrees not to seek to recover
any such costs for these connections as external or other costs.
2. Home Wiring.
a. Prior to a customer's termination of cable service, TWC will
not restrict the ability of a customer to remove, replace, rearrange or maintain any cable
wiring located within the interior space pf the customer's dwelling unit, so long as such
actions do not interfere with the ability of such TWC system to meet FCC technical
- 17 -
standards or to provide services to, and collect associated revenues from, that customer or
any neighboring customer in a multiple dwelling context.
b. TWC will provide customers with a notification upon
commencement of service, and annually thereafter, advising them of their rights relating to
home wiring. Such notice will advise customers that they may either (i) remove, replace,
rearrange or maintain the home wiring themselves, (ii) select a qualified third party
contractor, or (iii) request the TWC system provide such service at standard hourly
installation rates, plus materials at Cost.
C. Such notice will inform customers that if any home wiring is
improperly installed or rearranged by anyone other than TWC, and any harmful or improper
signal leakage occurs as a result, the customer may be held responsible for the Cost of
rectifying the problem. Pursuant to FCC rules, TWC recognizes that it is required to
terminate service to any location where signal leakage problems are not corrected.
d. TWC customers will be encouraged to use high quality home
wiring materials to avoid signal leakage and to maintain signal quality. Such notice will
offer to supply such materials to subscribers at Cost.
e. TWC will provide a model of this notice to the FCC for
approval prior to its dissemination to its customers, such approval not to be unreasonably
withheld.
I. Miscellaneous Provisions.
1. Modification And Termination.
a. Except as otherwise provided herein, this Contract may not be
terminated or modified without the mutual agreement of TWC and the Commission.
- 18 -
b. TWC may petition the Commission to modify or terminate this
Contract based on any relevant change in applicable laws, regulations or circumstances.
TWC will serve a copy of any such modification or termination petition, and the FCC Public
Notice relating thereto, on the LFAs for the affected systems. In no event shall TWC be
required to make more than one mailing to each LFA for any given modification or
termination request. Interested persons will have 30 days after the FCC releases an
appropriate Public Notice to comment and 15 days for reply comments before the FCC acts
on any such TWC petition. The FCC's consent to any such termination or modification
petition shall be demonstrated by an order issued by the FCC's Cable Services Bureau or at
the FCC's option by the Commission itself. The FCC shall act expeditiously on such
petition and grant of the petition shall not be unreasonably withheld.
C. In the event of any changes to the provisions of the Act or any
material changes to the FCC rules thereunder relating to rates (BST, CPST or equipment)
that are favorable to TWC, any TWC system may elect to be relieved from the relevant rate
provisions (Sections III.A.2., III.A.3., III.B., III.D., and III.F.4.) of this Contract
accordingly, but shall remain bound by all other provisions of this Contract. In the event
any such system elects to be relieved from such contract provisions in favor of such
favorable regulatory provisions such system will only be allowed to recover any incremental
amount that results under such favorable regulatory provisions in excess of any amount
already recovered pursuant to Section III.F.4. of this Contract. Nothing herein shall restrict
the ability of any TWC system to adjust.CPST rates in the event CPST rates are not
regulated based upon changes to the Act or FCC regulations.
- 19 -
d. The Commission expressly recognizes that TWC has relied on
the current federal law and FCC regulations governing cable television programming and
rates in entering into this Contract, and that the Contract represents an accommodation
between the FCC and TWC that generates substantial public interest benefits. Consequently,
the Commission agrees not to find any CPST or equipment rate adjustments implemented in
accordance with this Contract to be "unreasonable" under any subsequently-modified FCC
regulations or under any subsequently-modified applicable statute, to the extent the
Commission has discretion under such statute in determining whether any such rate
adjustments are unreasonable.
2. Authority To Enforce Contract.
a. Nothing in this Contract shall restrict the ability of LFAs to
enforce the provisions of otherwise valid local franchise agreements and ordinances that are
not the subject of or affected by the terms of this Contract. It is not the intent of either the
FCC or TWC that this Contract create any judicially enforceable rights in any other parties.
This Contract shall be enforceable against TWC by the FCC exclusively and no other party
may seek to enforce this Contract as a third party beneficiary or otherwise, except that
subscribers to TWC systems which increase their CPST rates will still have the right to file
complaints with the FCC to the extent permitted under applicable FCC rules.
b. For purposes of the Commission's authority to enforce any
provision-of this Contract against TWC, including enforcement actions brought in U.S.
District Court, TWC agrees that any breach of this Contract by TWC shall be considered the
equivalent of a violation of an order of the FCC, entitling the Commission to exercise any
rights and remedies attendant to the enforcement of a Commission order. However, aside
f
- 20 -
from this limited purpose, TWC and the FCC agree that a breach of this Contract by TWC is
not to be considered by any other party as the equivalent of a violation of an otherwise-valid
FCC regulation or FCC order. In particular, any failure to comply with this Contract shall
not be a basis for any denial of a franchise renewal by, or other enforcement action of, any
LFA.
3. All Necessary Waivers And Preemptions Deemed Granted.
a. In addition to the specific waivers of the Commission's rules
identified in the Contract, the Commission order adopting this Contract shall affirmatively
state that any and all waivers of the Commission's rules, and any and all modifications to
Commission forms, necessary to effectuate the terms of this Contract are deemed to be
granted thereby. The Commission finds that the concurrent exercise.of non-federal
regulatory authority over the subject matter of this Contract is an impermissible interference
with the FCC's regulatory authority and with its ability to accomplish its objectives in
entering into this Contract. Accordingly, the Commission hereby expressly preempts any
state or local law, regulation, ordinance or franchise that is inconsistent or conflicts with this
Contract. The Commission will not assert in any proceeding that TWC's compliance with
the terms of the Contract violates any Commission rule or order and, in any proceeding
before the Commission brought by a third party, a showing by TWC that it has complied
with the terms of the Contract shall constitute a defense to any claim that TWC's actions in
meeting the terms of the Contract constitute a violation of any applicable Commission rule or
order.
b. CPST rate increases referenced in Section III.F.4. of this
Contract will not be subject to prior FCC approval pursuant to Section 76.960 of the FCC
- 21 -
rules or otherwise, even if an adverse decision has been issued by the FCC as to any TWC
CPST rate in the year prior to the Publication Date. Subscribers to TWC systems which
increase their CPST rates still have the right to file complaints with the FCC to the extent
permitted under applicable FCC rules.
4. Effect On Other Proceedings.
a. The Commission agrees that it will not institute, on its own
motion, any proceedings against TWC based upon the information obtained during the
consideration of the Contract. In addition, in the absence of additional facts, the
Commission agrees that any allegations and other circumstances involved in consideration of
this Contract or settlement of the pending rate cases will not be used against TWC with
respect to any future proceedings at the Commission. Nor may they be used against TWC as
evidence of any .refund liability due subscribers in any proceeding conducted by any LFA.
b. This Contract is intended to resolve the CPST complaints being
settled in accordance with Section III.C.; to provide certainty regarding the CPST rate
adjustments determined to be reasonable in accordance with Section III.F.4., and to
otherwise cover those matters expressly set forth herein. The Commission and TWC
acknowledge the existence of various lawsuits to which they are both parties. The
Commission and TWC agree that this Contract shall have no effect on any pending lawsuit to
which TWC is a party or, subject to Section III.I.7., on any future challenges to the
Commission's regulatory authority that TWC may elect to initiate, other than a challenge to
the Commission's regulatory authority to.enter into and enforce this Contract.
C. The Commission expressly recognizes that this Contract is of
limited duration and scope, and may be modified or terminated before its term has ended as
- 22 -
provided for in Section 111.1.1. of this Contract. Accordingly, the Commission and TWC
agree that this Contract does not moot any legal challenge or defense relating to any
provision of the Act or to the Commission's regulatory authority that TWC has brought or
may bring in the future, other than a challenge to the Commission's regulatory authority to
enter into and enforce this Contract. The Commission will not seek to dismiss any such
legal challenge on grounds that this Contract renders such challenge moot and will actively
oppose any assertion in court that this Contract moots any such challenge.
5. No Admission Of Wrongdoing.
This settlement is without a finding by the Commission of any wrongdoing by
TWC or any of its systems, subsidiaries or affiliates. Neither this Contract nor any aspect of
the settlement contained herein constitutes an admission by TWC of any violation of, or
failure to conform to or comply with, any law, rule or policy applicable to TWC or any of
its systems, subsidiaries or affiliates.
6. Contract In Public Interest.
In consideration of the Commission entering into this Contract, and resolving
and terminating pending CPST cases and complaints in accordance with the terms of this
Contract, TWC hereby agrees to the terms, conditions and procedures contained in this
Contract. TWC and the Commission each acknowledge that it believes this Contract, and the
terms, conditions and procedures hereof, provide for and will facilitate a fair and expeditious
resolution of the cases and complaints that are the subject hereof in a manner that serves the
public interest.
7. Legal Challenges.
- 23 -
a. TWC waives any right it may have to any judicial review or
appeal, or any other right to otherwise challenge or contest the validity of any order by the
Commission adopting this Contract, or to use this Contract as evidence in any such
proceeding. TWC agrees that the provisions of this Contract shall be incorporated by
reference in the Commission's order formally approving this Contract. TWC and the
Commission agree that they will each actively defend, before any forum, any Commission
order adopting the provisions of this Contract against any appeal of or other legal challenge
by any third party to any such order. TWC and the Commission each agree that they will
reasonably cooperate with the other in any such defense of the Contract and any such order.
b. If the Commission, or the United States on behalf of the
Commission, brings an action in any United States District Court to enforce the terms of any
Commission order adopting this Contract, TWC agrees, subject to the terms of the
immediately preceding paragraph, that it will not contest the validity of such Commission
order, or the Commission's authority to enter into the Contract. TWC reserves the right, in
defense of such an enforcement action, to demonstrate that it has complied with the
provisions of the Contract or to assert its own interpretation regarding any performance
obligations imposed by the Contract which may be subject to dispute.
8. Effective Date And Term.
a. The term of this Contract shall commence on the Effective Date
and, subject to Section III.I.1. above regarding modification and termination and Section
III.E.6. above regarding adjustments to systems covered, shall continue in effect for five (5)
years.
c
- 24 -
b. TWC and the Commission agree to execute this Contract as of
the Effective Date promptly upon issuance by the Commission of an order approving this
Contract.
C. The Commission and TWC expressly acknowledge and agree
that the effectiveness of this Contract is contingent upon resolution and termination of TWC's
CPST proceedings; issuance by the Commission of an order approving the Contract, and
TWC's compliance with the terms, conditions, and procedures set forth in the Contract. If
this Contract is not approved by Commission order and accepted by TWC, or if the Contract
is otherwise rendered invalid, in whole or in part, by final order of any court of competent
jurisdiction, the Contract or such part may not be used in any fashion by the FCC in any
legal proceeding.
d. TWC may commence any necessary or appropriate actions to
initiate the rate adjustment processes embodied in this Contract at any time after the Effective
Date, provided, however, as to any system listed on Appendix A, TWC shall not implement
any rate adjustment pursuant to Section III.F.4. of this Contract unless the Refund provided
for in Section III.E. has been issued as to such system, or the issuance of such Refund begins
simultaneously with such rate adjustment. All Refunds will be issued within six months of
the first rate adjustment implemented pursuant to Section III.F.4.
9. Public Notice.
The Commission will issue promptly a Public Notice in which the Commission
proposes to adopt the Contract as a final.order, and shall provide interested parties with
thirty (30) days to comment on the Contract and an additional fifteen (15) days in which to
file reply comments.
- 25 -
10. Force Majeure.
TWC shall not be deemed in breach of its commitments under this Contract in
the event of any delay or failure in performance by any TWC system from any cause beyond
its reasonable control and without its fault or negligence, including, but not limited to, acts
of God, acts of civil or military authority, government regulations, embargoes, epidemics,
war, terrorist acts, riots, insurrections, fires, explosions, earthquakes, nuclear accidents,
floods, strikes, power blackouts, unusually severe weather conditions, or inability to secure
local permits after all diligent efforts by TWC to secure such permits.
11. Severability.
If any provision, clause or part of this Contract is invalidated by order of any
court having proper jurisdiction over the subject matter of this Contract, the remainder of
this Contract shall not be affected thereby and shall remain in full force and effect; provided,
however, that, if either party reasonably determines that such invalidation is material to this
Contract, the parties shall negotiate in good faith to reconstitute the Contract in a form that
.is, to the maximum extent possible, consistent with both the original intent of both parties in
entering into this Contract and the rationale of such invalidation order.
12. Entire Understanding.
This Contract and its appendices, as either or both may be amended in
accordance with the terms herein, constitute the entire agreement between TWC and the
Commission with respect to the subject matter of this Contract and supersede all prior
agreements and understandings, whether oral or written, between TWC and the Commission
with respect to the subject matter of this Contract. No representation, warranty, promise,
f
- 26 -
inducement, or statement of intention has been made by TWC or the Commission which is
not embodi6d in this Contract, and neither party shall be bound by, or be liable for, any
alleged representation, warranty, promise, inducement, or statement of intention not
embodied in this Contract or its appendices.
- 27 -
IN WITNESS WHEREOF, this Social Contract has been duly executed and delivered
by or on behalf of the parties hereto as of the Effective Date as defined herein.
TIME WARNER ENTERTAINMENT
COMPANY, L.P.
By:
Name:
Title:
TWI CABLE INC.
By:
Name:
Title:
TIME WARNER ENTERTAINMENT-
ADVANCE/NEWHOUSE PARTNERSHIP
By: Time Warner Entertainment Company, L.P.
Managing Partner
By:
Name:
Title:
FEDERAL COMMUNICATIONS COMMISSION
By:
Name:
Title:
28381.20
APPENDIX A
QUID CONTN4T NTTY BES
FL0007 Rockledge $5,171
FL0009 Indian Harbor Beach 22384
FL0013 Melbourne 14,362
FL0014 Melbourne 303,759
FL0015 Volusia County 12,505
FL0017 Palm Bay 89,135
FL0021 West Melbourne 23,198
FL0163 Cape Canaveral 1,557
FL0165 Melbourne 717
FL0181 Orlando 189770
FL0196 St Petersburg 633,508
FL0240 Brooksville 32,270
FL0252 Orlando 343,089
FL0290 Lakeland 6,200
FL0312 Brooksville 63,500
FL0314 Brooksville 81)217
FL0322 Sandford 14,787
FL0597 Brooksville 32107
FL0622 Belleview 7,763
MA0063 Salem 111)274
MA0097 Melrose 5,080
MA0101 Stoneham 322
MO0198 Kansas City 78,801
MS0080 Jackson 164,400
MS0128 Clinton 54,208
NC0015 Salisbury 222981
NC0016 Wilmington 106,115
NC0027 Shelby 203,516
NC0167 Wilmington - Southport 292732
NC0168 Morehead 392706
NC0193 Metrolina 411)358
NCO286 Albemarle 15,990
NC0405 Mecklenburg 1211,204
NC0408 Wilmington - Burgaw 8,719
t
APPENDIX A
cum COMMUNITY REEIM
NC0720 Weddington 3,042
NE0032 Lincoln 233,263
NH0034 Nashua 60,935
NJO082 Bergen 129,719
NY0104 Upper Manhattan 599,837
NY0133 Binghamton 2197198
NY0234 Lower Manhattan 1803,360
NY0336 Colonie 4,219
NY0338 Albany 63-141
NY0346 Syracuse 300,822
NY0352 Troy 182,844
NY0414 Penfield 6,662
NY0415 Gates 51P089
NY0416 Greece 2131079
NY0769 Rochester 42,908
NY1062 Ogden 2,704
NY134031 1280, 1281, 1402 Brooklyn/Queens 1,2102552
OH0239 Columbus 32,330
OH0517 Westerville 33,727
OH0532 Columbus 13-703
PA0006 Reading 343,753
PA0011 Shillington 13,821
PA1775 Monroeville 25,324
SCO015 Florence 97,072
SCO017 Sumter 58,020
TX0029 Austin 111,633
TX0483 Wichita Falls 162033
TX1422 Leander 72533
VA0046 Reston 172421
VA0074 Williamsburg 233,940
WI0234 Green Bay 37,857
WI0323 Greenfield 41)903
WI0420 Hale's Corner 12823
WV0104 Charleston 5,762
---------------
$4,736,434
APPENDIX B
REGIONAL EQUIPMENT AREAS
Apoleton/Green Bay, WI Milwaukee, WI
Bakersfield, CA Minneapolis, MN
Birmingham, AL National Division - East
Boston, MA National Division - West
Eastern Pennsylvania Division Maine Division
Florida Divisions New York Divisions
Hawaii Division North Carolina Divisions
Illinois/Indiana Division Ohio Divisions
Indianapolis, IN Portland, OR
Jackson/Monroe, MS San Diego, CA
Kansas City, MO Shreveport, LA
Lincoln, NE Texas Divisions
Los Angeles, CA Western Pennsylvania Division
Memphis, TN
T 1 M E W A R N E R ^+
C A B L E
FOR IMMEDIATE RELEASE Contact: Michael Luftman
August 3, 1995 (203) 328-0613
low
TIME WARNER AGREES WITH FCC TO RATE CUTS AND CAPS, REBATES,
UPGRADES AND MAJOR NEW SUPPORT FOR LOCAL SCHOOLS
Time Warner Cable has signed a proposed "social contract" with the Federal
Communications Commission that will provide its customers and the cities where it
operates with a wide range of benefits. These include lower basic rates, rate stability
through price caps for basic cable and the cable programming satellite tier (CPST), more
than $5 million in refunds, upgrade of all its cable systems and substantial support for
.. public schools.
The contract will also resolve all outstanding rate cases involving Time Warner Cable
before the FCC.
"We are very pleased to have been able to work so productively with the FCC to
resolve these issues in a way that benefits our customers, local schools, the cities where
we do business and our company," said Joseph J. Collins, chairman and CEO of Time
Warner Cable. "Our customers can be assured of lower basic rates including a 'lifeline'
basic tier that will remain affordable for many low and fixed income families. Many also
will receive a refund. Public schools will benefit from substantial support ensuring them
.. (more)
Tune Warner Cable 300 First Stamford Place Stamford CT 06902-6732 Tel 203.328.0600 Fax 203.328.0690
a• A Division of Time Warner Entertainment Company,L.P.
i
Page 2
access to the latest telecommunications technology. Communities will benefit from our
commitment to upgrade our networks with the latest fiber optic technology, assuring the
most reliable service possible!
The major components of the social contract are:
*" Time Warner Cable will reduce the price of basic cable by an additional 10%,
beyond the 17% rollbacks of the past two years with an offsetting increase on CPST.
This price reduction will create a lifeline basic service that will remain even more
affordable for low and fixed income families. The price of this service will be capped,
with adjustments permitted only once a year for changes in external costs and inflation.
The company will cap prices for the CPST, raising the monthly charge on a
customer's bill by no more than $1.00 each year other than for changes in external
costs and inflation.
" The company will make refunds to all customers in systems where its rates were
subject to refund liability. The refunds will be in the form of bill credits.
*" Time Warner will, over the next five years, upgrade its operations with fiber optic
technology at a cost of$4 billion. This will dramatically improve reliability, picture
quality and channel capacity.
*" All public schools in the company's service areas will be provided with free cable
service and additional support including free schedules of educational programming as
well as a free training video and brochures for teachers that will help them understand
the latest advances in telecommunications technology and how they can be applied to
education.
(more)
Page 3
Time Warner is developing a high-speed on-line service for personal computers
law using cable's high-speed delivery system. When that service is launched in any of the
company's cable systems, each school in the system will receive a free hookup,
including a cable modem, and hands-on training for teachers on the use of the service.
In addition, the FCC and Time Warner said they expect the agreement will reduce
the administrative burden and cost of regulation for local governments, the FCC and
the company.
..
a
News media Information 2021418-0500
PC. WRecorded listing of release and texts
202 418-2222
Federal Communications Commission
1919 - M Street, N.W.
Washington, D. C. 20554
TK6 rat qnnoun Or w1an. N of 1he lum Idit ofaGamn"Nalun
coneGlutes ov clo actor. See MQ v.FCC 515 F 2d 21H(D.C.Circ 1974
August 3, 1995
COMMISSION AND TIME WARNER CABLE
NEGOTIATE SOCIAL CONTRACT;
�- COMMISSION REQUESTS PUBLIC COMMENT
The Commission and Time Warner Cable (TWC) have negotiated a Social Contract
(Contract)that will, if finally adopted by the Commission, provide for the upgrading of
TWC's cable systems. The proposed Contract was negotiated in accordance with the
Commission's authority to consider and adopt "social contrac;s" as alternatives to other
regulatory approaches applicable to cable television rates. If adopted, the proposed Contract
will assure fair and reasonable rates for TWC's customers, reduce the administrative burden
and costs of regulation for local governments, the Commission and TWC, and resolve 946
cable programming services tier rate complaints on file with the Commission. The proposed
Contract is designed to improve TWC's service by substantially upgrading the channel
capacity and technical reliability of its United States cable systems.
The Commission requests public comment. Comments on the proposed Contract are
due by September 5, 1995. Reply comments are due by September 20, 1995. A Public
Notice (FCC 95-336), entitled "Social Contract for Time Warner Cable Available for
Comment" has been released today.
Important elements of the proposed Contract include:
• A commitment by TWC to upgrade its domestic cable systems at a cost of$4
billion over the next 5 years.
• A TWC commitment to establish lifeline basic service tiers priced at 10%
below TWC's benchmark regulated sates. TWC will be allowed to recoup
reduced basic service tier revenue through price increases on its cable
programming service tiers.
• The total increase for all regulated programming services provided by TWC
will be capped at $1 per year for each of the next five years, plus external
-- costs and inflation.
• An estimated $4.7 million plus interest in subscriber refunds, in the form of
subscriber bill credits.
w
...�
r
.e+
a�
w.�
v..
• TWC will provide free service connections at one outlet in 100% of the
existing public schools (K-12) passed by its cable systems. Additionally, it
will provide service connections at Bost in secondary private schools that
receive funding under Title I of the Elementary anis Secondary Education
Act of 1965. TWC will provide the connected schools with a monthly
educational program guide having curriculum support ideas to assist
educators in effectively using the new services. Any internal wiring needed
by the connected schools for additional outlets will be provided by TWC at
cost.
4- Upon successful development by TWC and Time Inc. of an on-line
service for personal computers, TWC will, upon request, provide the
cable connected schools (public or private) with one free modem, and
additional modems will be made available to such schools at cost. As
available in each service area, TWC will provide its on-line service free
through each modem during the school year.
• TWC subscribers will have the right to remove, replace, rearrange or
maintain any cable wiring located in the interior space of their dwelling
unit.
In systems where TWC and its predecessors did not create a la carte
packages, TWC can create migrated product tiers (MPTs) consisting of
up to four services migrated from regulated tiers. The migrated
.. channels will be priced at their rate regulated prices.
• In the case of Newhouse systems acquired by TWC that had a la carte
packages, TWC will be able to convert Newhouse's "Superstation" a la
carte packages (typically three supetstations and one satellite channel)
into NPTs, priced at current rates (which in no case exceed 29 cents per
channel). Another MPT can be created on such systems consisting of
satellite channels offered on other, low penetration; a la carte packages.
These MPTs will be priced at their current per channel rates. The
cumulative number of services migrated from the '.Superstation" and
other a la carte packages cannot be greater than six. All remaining
channels in Newhouse's a la carte packages will be returned to the
traditionally rate-regulated service tiers.
.. Where TWC created a la carte packages that received new product tier
(NPT) treatment on systems that are contiguous with systems where
MPTs will be created, TWC will have the option to lower the prices of
the NPTs and raise the prices of the adjacent NPTs in a revenue neutral
manner to TWC to provide uniform rates for the systems. The NPTs
will then be subject to the price cap increases applicable to MPTs.
• TWC may add an unlimited number of channels to an MPT at a price
of 20 cents per channel plus license-fees. After April 1997, TWC may
2
i
c
j
convert the MPTs to NPTs with n
et constraine4 pricing, as
permitted by the Commission'sgo' forward ruleb.
• The resolution of pending rate cases;is without any' finding by the
Commission of any wrongdoing by TWC.
Cable Services Bureau Chief Meredith #. Jones commented, "This agreement with
Time Warner Cable is another example of an innovative solution to regulatory and business
issues of great complexity. The reaction to thei earlier Social.-Contract with Continental has
low been highly positive. This Contract will provi4e TWC subscribers with upgraded, reliable
service. It provides rate stability for TWC subscribers and re4olves nearly one thousand rate
complaints. This Contract also extends free cable service to all public schools in TWC
tow service areas. Permitting TWC subscribers to ftlocate intem4l cable wiring in their home is
an innovative consumer friendly feature."
•.. News Media contact: Morgan Broman at (202)1416-0852; Cable Services Bureau contacts:
Nancy Markowitz, Jerome Powlkes and JoAnn'Lucanik at (242) 416-0800
r..
3
..r
..
PUBLIC NOTICE
FEDERAL COMMUNICATIONS COMMISSION
1919 M STREET, N.W.
WASHINGTON, D.C. 20554
News media information 202/418-0500 Recorded listing of releases and texts 202/632-0002.
..
FCC 95-336
August 3, 1995
SOCIAL CONTRACT FOR TIME WARNER CABLE
AVAILABLE FOR COMMENT
THE COMMISSION SEEKS COMMENT ON A PROPOSED SOCIAL CONTRACT WITH TIME
WARNER CABLE THAT PROVIDES INCREASED INVESTMENT IN CABLE TV
INFRASTRUCTURE; ASSURES RATE STABILITY; PROVIDES FOR RESOLUTION OF
RATE CASES; AND PROVIDES REFUNDS OF UP TO APPROXIMATELY $4.7 MILLION
PLUS INTEREST TO AFFECTED SUBSCRIBERS
Time Warner Cable (TWC) and the Federal Communications Commission have negotiated a
proposed social contract (Contract). The proposed Contract was negotiated pursuant to the
Commission's authority to regulate cable services under Title VI of the Communications Act and
the Commission's February 22, 1994 decision that it would consider social contracts as an
alternative form of regulation for cable operators. The proposed Contract will be considered for
approval after evaluating public comment on this proposed agreement. This notice and the
proposed Contract are being mailed to each person who has filed a rate complaint with respect to
one of TWC's systems, and to all franchising authorities that have granted a cable franchise to
TWC. This notice contains a summary description of the proposed Contract; the terms of the
proposed Contract, however, will be controlling and interested persons should read the proposed
Contract in its entirety. Copies of the proposed Contract can be obtained in the manner described
below.
The proposed Contract is designed to improve TWC's cable service by substantially
upgrading the channel capacity and technical reliability of its United States cable systems. In
addition, the proposed Contract will assure fair and reasonable rates for TWC's cable service
customers and reduce the administrative burden and costs of regulation for local governments, the
Commission, and TWC.
•-- The five-year proposed Contract covers cable programming service tiers in all of TWC's
cable franchises, including those that are currently unregulated because no complaint has been filed
against the cable programming services tier. Thus, the Contract will provide rate stability and other
benefits for TWC's customers regardless of th, it regulatory status. It also provides for the creation
of a low-priced basic service tier. TWC serves approximately 9.7 million subscribers.
Under the 1992 Cable Television Consumer Protection and Competition Act, a basic service
tier is the tier' of programming that contains at a minimum local broadcast stations. Cable
programming services tiers are all other cable services, except those sold on a per channel or per
program basis.
•- Specifically, the proposed Contract provides for the investment of$4 billion to rebuild and
upgrade all of TWC's domestic cable systems during the period from 1995 to 2000, including
deployment of fiber optic technology, increased channel capacity and improved system reliability
and signal quality. At least 60% of the new analog capacity added as a result of the upgrade will
be used for regulated cable programming services tiers, and, on average, regulated cable
programming services offered on the upgraded systems will contain at least 15 additional channels.
The proposed Contract provides for the resolution and termination of TWC's pending cable
programming services cases, including cable programming services cases against the systems TWC
recently acquired from Houston Industries (KBLCOM) and Newhouse Broadcasting Corporation.
To resolve these cases, TWC will make cash refunds in the form of bill credits to affected
customers totalling approximately $4.7 million plus interest. Basic service tier benchmark cases
currently pending before local franchising authorities would not be resolved by the proposed
Contract. Those cases will continue to be resolved by TWC and the local franchising authorities
pursuant to Commission rules.
TWC will provide its subscribers with a low-cost basic service tier. To accomplish this,
TWC will reduce its basic service tier rates on systems serving at least 85% of TWC's total
subscribers to a level 10% below the current rates. TWC will be permitted to offset each of the
10% reductions by increasing the rate for its cable programming services tier. TWC also will
restructure the basic service tier on any remaining systems so as to create a lifeline basic tier. TWC
will not increase the programming on any basic service tier for the term of this Contract, except
where required by applicable law or regulation or contract lawfully entered into pursuant to such
•• law or regulation, or to provide additional local origination channels. However, local franchising
authorities may elect not to have this low-cost service created within their franchise areas.
•- In light of the upgrade commitment contained in the proposed Contract, TWC will be
permitted to increase the monthly rates for the cable programming services tier by $1.00 during
each year of the Contract. On each system, the increase will be added to the cable programming
services tier having the greatest number of subscribers. During the life of the proposed Contract,
the only other permitted increases to TWC's cable programming services tier rates will be for
inflation and increases in external costs. During the period of the proposed Contract, TWC will not
avail itself of any additional per-channel adjustment permitted by the Commission's Going Forward
rules for any programming services added to the cable programming services tier after the effective
date of the contract. TWC also will forego its right to use cost of service justifications to support
2
any future rate increases for any systems covered by the proposed Contract during the period that
the proposed Contract is in effect.
If TWC fails to meet the upgrade commitment within the term provided for under the
Contract, subscribers to the cable systems that have not been upgraded will be entitled to
appropriate refunds equal to the cable programming services rate increases provided by the
Contract, with interest, plus a liquidated damages penalty of 15% of such amount.
Under the proposal, in the systems where TWC and its predecessors did not create a la
carte packages, TWC will be permitted to create migrated product tiers consisting of up to 4
services migrated from the regulated tiers. The migrated channels will be priced at the rate
regulated price with increases allowed for inflation and external costs. There will be no limit on
�- the number of channels that TWC may add to the migrated product tiers at the price of 20 cents per
channel plus license fees. After April 1, 1997, TWC may convert any migrated product tier to a
new product tier with market constrained pricing as permitted by the Going Forward rules.
For the Newhouse systems acquired by TWC that had a la carte packages, TWC will be
permitted to create migrated product tiers. Where the system had a "superstation" a la carte
package (typically three superstitions and one satellite channel), the package will become a
migrated product tier, initially priced at their current rates which are less than 29 cents per channel
(exclusive of copyright fees). TWC will also be allowed to create another migrated product tier
consisting of satellite channels located in other a la carte packages as long as the cumulative
number of migrated services is no greater than six. These channels will be priced at the current per
channel rate. (Newhouse's non-superstation a la carte packages were created from tiers that were
affirmatively marketed and had traditionally low penetration rates of basic subscribers). TWC will
be able to add an unlimited number of new channel offerings at the rate of 20 cents per channel
plus license fees to these migrated product tiers.
The remaining Newhouse channels from the a la carte packages will be put back in
benchmark regulated cable programming services tiers. The rates for these tiers will increase due to
the addition of these channels; however, the increases will be limited to not more than 25 cents per
channel (including license fees).
In systems where TWC has created a la carte packages which are being treated as new
product tiers in areas contiguous with franchises where migrated product tiers will be created
pursuant to the proposed Contract, TWC will be permitted to lower the prices of the new product
tiers and raise the prices of the adjacent migrated product tiers in a revenue neutral manner to TWC
to provide uniform rates in those systems. In those circumstances, the new product tiers will be
subject to the price cap increases applicable to migrated product tiers.
TWC will be permitted to establish prices for equipment and various installation functions
based on averaged costs for all its systems on a geographic regional basis.
3
If the Commission adopts rules providing for annual adjustments to rates for basic service
.. tiers and cable programming service tiers, TWC will comply with those rules and adjust its rates
no more than annually.
TWC will offer a cable connection to 100% of the public schools passed by its cable
systems. Those connections will be provided free of charge to all such schools requesting
connections. TWC also will provide a cable connection at cost to all secondary private schools that
receive funding under Title I of the Elementary and Secondary Education Act of 1965. Further, if
any internal wiring installation is needed at the connected schools, it will be provided at the TWC
.. system's cost of materials and labor. Such additional internal wiring will be provided to public
schools without charge if TWC is able to coordinate with other comparable electrical wiring
installation in cases of new construction or substantial rehabilitation of existing schools. Basic
•� service tier and cable programming services tier service will be provided to each outlet in
connected schools at no charge. TWC will provide a free monthly educational program listing to
each connected school. TWC also will develop and provide to connected schools materials for
teachers that explain the educational applications of TWC's broadband cable systems.
Finally, upon successful development by TWC and Time Inc. of an on-line service for
Now personal computers, TWC will provide each connected public school with a free connection to this
on-line service to the extent it is available on the local cable system. Upon request, each
connecting school will receive one free modem and access to the service for use during the school
year. TWC also has agreed to provide additional modems to the school at cost. TWC will
sponsor a workshop in each franchise area to educate teachers and to provide them with an
opportunity for hands-on training.
Prior to a customer's termination of cable service, TWC systems will not restrict the ability
of customers to remove, replace, rearrange or maintain any cable wiring located within the interior
space of their dwelling units. TWC will provide customers with a notification upon commencement
of service, and annually thereafter, advising them of their rights (i) to remove, replace, rearrange or
maintain the home wiring themselves, (ii) to select a qualified third party contractor, and (iii) to
request the TWC system provide such service at standard hourly installation rates, plus materials at
cost. TWC systems will offer to supply such materials to subscribers at cost.
Parties wishing to comment on the proposed Contract should do so by filing with the
Secretary no later than September 5, 1995 an original and four copies of their comments. Replies
•.. may be filed no later than September 20, 1995. All such pleadings should reference the file
number noted above.
The proposed contract is available for reference in the Cable Services Bureau's public
reference room, Room 333 at 2033 M Street, N.W., Washington, D.C. Copies are available from
the Commission's copy contractor, International Transcription Services, at Room 246, 1919 M
Street, N.W., Washington, D.C. 20554, telephone number (202) 857-1433. The contract is also
available via Internet at FCC.GOV. For further information, contact JoAnn Lucanik, Nancy
Markowitz or Jerome Fowlkes at (202) 416-0800:
4
Media contact: Morgan Broman at (202) 416-0852.
--FCC--
v
a.r
�.r
�.r
r..
5
DRAFT
SOCIAL CONTRACT FOR
TIME WARNER CABLE
TABLE OF CONTENTS
Page
I. BACKGROUND AND SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
III. TERMS AND CONDITIONS OF THE SOCIAL CONTRACT . . . . . . . . . . . 3
A. Basic Service Tier Rate Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1. Creation of a Low-Cost, Lifeline Basic Service Tier . . . . . . . . . 3
2. BST Price Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Additions To Basic Service Tier . . . . . . . . . . . . . . . . . . . . . 5
r. B. Equipment Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
C. Resolution Of Existing CPST Rate Cases . . . . . . . . . . . . . . . . . . . . 7
D. Migrated Product Tiers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
E. Customer Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
F. Infrastructure Upgrade Requirement . . . . . . . . . . . . . . . . . . . . . . . 11
1. Upgrade Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2. No Impairment Of Local Authority . . . . . . . . . . . . . . . . . . . 12
3. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4. CPST Rates Subject To Price Cap . . . . . . . . . . . . . . . . . . . . 12
5. Failure To Meet Target . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6. Adjustments To Systems Subject To Contract . . . . . . . . . . . . . 13
G. BST And CPST Rate Stability . . . . . . . . . . . . . . . . . . . . . . 14
H. Additional Consumer Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1. Service To Public Schools . . . . . . . . . . . . . . . . . . . . . . . . . 14
2. Home Wiring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
lo. I. Miscellaneous Provisions . . . 17
1. Modification And Termination . . . . . . . . . . . . . . . . . . . . . . 17
2. Authority To Enforce Contract . . . . . . . . . . . . . . . . . . . . . . 18
3. All Necessary Waivers And Preemptions Deemed Granted . . . . . 19
4. Effect On Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . 20
5. No Admission Of Wrongdoing . . . . . . . . . . . . . . . . . . . . . . 21
6. Contract In Public Interest . . . . . . . . . . . . . . . . . . . . . . . . . 22
7. Legal Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8. Effective Date And Term . . . . . . . . . . . . . . . . . . . . . . . . . 23
9. Public Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12. Entire Understanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SOCIAL CONTRACT FOR TIME WARNER CABLE
•- 1. BACKGROUND AND SUMMARY.
The' "Social Contract" set out in this document (the "Contract") relates to certain
services and equipment offered by Time Warner Cable ("TWC") actually or potentially
,. subject to regulation under the terms of the applicable provisions of Title VI of the
Communications Act of 1934, as amended ("Act").
The Federal Communications Commission ("FCC" or "Commission") finds that this
Contract will advance the public interest by: (i) assuring fair and reasonable rates for
TWC's cable service customers; (ii) facilitating the creation of a low-cost, lifeline basic
service level; (iii) improving TWC's cable service by substantially upgrading the channel
capacity and technical reliability of its cable systems; and (iv) reducing the administrative
burden and cost of regulation for local governments, the FCC and TWC.
The Contract has been negotiated between TWC and the FCC in accordance with the
FCC's authority to consider and adopt "social contracts" as an alternative to other regulatory
approaches applicable to cable television rates,''-' and its authority to regulate TWC's cable
services under the Act, particularly in light of the Statement of Policy set forth in Section
2(b) of the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No.
102-385, 106 Stat. 1460 ("1992 Cable Act"). Except as otherwise provided for herein, this
Contract covers all of TWC's cable systems as of the Publication Date (as hereinafter
defined).
'-'Cost of Service Order, 9 FCC Rcd 4527, 11295-304 (1994); Public Notice, FCC 95-137
(April 3, 1995).
- 2 -
11. DEFINITIONS.
The following terms shall have the meanings set forth below. Certain other terms are
two defined elsewhere herein.
A. "Basic Service Tier" or "BST" means the cable service level which includes
the signals of any local television broadcast stations and any public, educational or.
governmental access channel required by the relevant franchise to be carried on the BST.
B. "Cable Programming Service Tier" or "CPST" means any tier of video
programming service, but shall not include (i) video programming carried on BST; (ii) video
�- programming when offered on a per channel, multiplexed, a la carte or per program basis;
(iii) any Migrated Product Tier; or (iv) any New Product Tier as defined by the Going
Forward Rules.
C. "Cost" means that the prices so designated have been designed to recover
actual costs, including a reasonable rate of return as defined in the FCC Cost of Service
Order, supra, at 1207.
D. "Current Rates" means those TWC system rates that are in effect as of the
Publication Date, or rates that will become effective after the Publication Date and for which
notice was given to subscribers on or before the Publication Date.
E. "CVI" means Cablevision Industries Inc., its subsidiaries and affiliates.
F. "Effective Date" means the date on which the FCC releases an order
approving this Contract.
G. "Eligible Subscribers" means those CPST subscribers to any of TWC's cable
systems listed on Appendix A to this Contract at the time Refunds are issued.
- 3 -
H. "Going Forward Rules" means the FCC's rules adopted in the Sixth Order on
Reconsideration, 76 RR 2d 859 (1994), including all subsequent clarifications and
amendments.
•- I. "Migrated Product Tier" or "MPT" means (a) a tier consisting of up to four
services moved from a system's existing BST or CPST(s) as described in Section III.D.S. or
(b) any Superstation Tier or any tier consisting of those services remaining on a Preferred
Tier, as defined in Section III.D.1., after any excess channels have been shifted to CPST as
described in Section III.D.3.
J. "Publication Date" means the date on which the Commission releases its initial
Public Notice relating to this Contract.
K. "Refund" means a prospective bill credit issued to Eligible Subscribers.
L. "Time Warner Cable" or "TWC" means the collective reference to Time
Warner Entertainment Company, L.P. ("TWE"), TWI Cable Inc. ("TWI Cable") and Time
Warner Entertainment-Advance/Newhouse Partnership ("TWE-A/N"), or any subsidiary,
division or affiliate thereof, or, where consistent with the context, any cable system owned or
managed by TWE, TWI Cable or TWE-A/N, except where particular provisions of this
Contract specify a more limited scope.
III. TERMS AND CONDITIONS OF THE SOCIAL CONTRACT.
A. Basic Service Tier Rate Relief.
1. Creation of a Low-Cost, Lifeline Basic Service Tier.
a. In order to provide its subscribers with the option to purchase a
low-cost BST, no later than six months after the Effective Date, TWC will reduce its BST
- 4 -
rates on systems serving at least 85% of TWC's total subscribers to a level 10% below the
Current RAtes. In any system where the BST rates are initially reduced by 10% as described
above, but where BST rates are pending review on the Publication Date, TWC will reduce
its BST rates further by 10% from the level ultimately determined to be reasonable, after
such determination is no longer subject to review or appeal. TWC may increase its CPST
rate(s) in any system by an amount necessary to recoup the reduction in revenues due to the
10% adjustment in the BST rate in that system. A local franchising authority ("LFA") may
elect not to have TWC implement the BST rate reduction described in this paragraph in its
franchise area by providing notice to TWC and the Commission no later than 45 days
following the Effective Date. Such notice shall (a) be in writing, (b) be addressed to the
Office of the Secretary, Federal Communications Commission, 1919 M Street, N.W.,
Washington, D.C. 20554, with a copy to Time Warner Cable, 300 First Stamford Place,
Stamford, CT 06902-6732, attention: General Counsel, (c) identify the local franchising
authority, the community unit identification number for the franchise area, and (d) reflect the
clear intent to not have TWC implement the BST rate reduction described in Section
III.A.La of this Contract. However, such notice need not meet any other requirements and
may be in letter form.
b. In order to achieve its goal of creating low-cost BSTs, TWC
will restructure the BST on the remaining systems where the BST has not been reduced by
10% as described above so as to create a lifeline-type service. Such restructuring will
involve shifting channels from the BST to an existing or newly created CPST and will not be
deemed by the FCC to be a "fundamental change" of any affected service tier. At the time
of such restructuring, the BST rate will be reduced by an amount equal to the percentage of
5 -
the BST channels shifted to CPST. Where the BST channels are shifted to a newly created
CPST, the/rate for the CPST will be equal to the amount of the reduction in the BST rate.
Where the BST channels are shifted to an existing CPST, the rate of the existing CPST will
be increased by an amount necessary to recoup the reduction in revenues resulting from the
reduction in the BST rate as described above. The 10% BST rate reduction, with CPST
offset, will be implemented upon restructuring of such remaining systems. Nothing herein
shall be deemed to affect any otherwise enforceable franchise provision relating to
programming services to be provided by TWC.
2. BST Price Cap.
After implementation of the 10% BST rate reduction described above, all such
reduced BST rates will be subject to a price cap, even in currently unregulated TWC
systems. TWC will continue to be permitted to adjust BST rates for changes in external
costs and inflation, subject to any necessary LFA approval. The BST rate reduction referred
to above will have no adverse effect on any Form 1210 BST rate adjustment request which
may be pending before an LFA as of the Publication Date or thereafter. Nothing herein shall
authorize review of the reasonableness of any BST rate adjustments in communities where
the LFA has not elected to certify in accordance with Section 76.910 of the Commission's
rules.
3. Additions To Basic Service Tier.
TWC shall not add any additional channels to any BST for the term of this
Contract, except where required by applicable law, regulation or contract lawfully entered
into pursuant to such law or regulation, or to provide additional local origination channels or
other non-satellite delivered channels. In the event that the FCC's must-carry rules are
- 6 -
repealed or rendered invalid or inapplicable to TWC by a court of competent jurisdiction,
TWC will have the right to substitute any programming service not then carried by such
system for up to an average (weighted by BST subscribers) of three local television broadcast
stations deleted from carriage per system covered by this Contract, but no more than five
such substitutions on any given system, even if more than five television broadcast stations
are deleted. Such substitutions shall have no impact on BST rates other than due to the net
change in programming costs. In the absence of must-carry requirements, however, any
local television broadcast stations which TWC continues to carry will be carried on the BST.
Any such changes to BST will be made only upon provision of thirty days advance notice to
the Commission and to affected LFAs and subscribers. Upon receipt of any necessary LFA
approval, TWC will be permitted to implement appropriate BST rate adjustments to reflect
any such added or substituted channels. Such adjustments (other than adjustments to BST
required by any retransmission consent agreement) shall not be subject to the annual BST
adjustment limitation set forth in Section III.G.
B. Equipment Rates.
TWC will be permitted to establish a blended rate, averaged for each of the
following equipment basket categories: (1) hourly service charge, (2) installations, (3)
remote control devices, (4) converters, (5) other leased equipment, and (6) customer tier
changes by geographic region as reflected on Appendix B to this Contract (and any
reasonable modifications to such regions). Equipment rates will be adjusted annually to
reflect changes in regional equipment Costs in each category. At least thirty days prior to
.r
implementation of the first CPST adjustment authorized pursuant to Section III.F.4., but not
sooner than December 1, 1995, TWC will submit a single Form 1205, or equivalent
..
7 -
reasonably acceptable to the Commission, for each region to the FCC, and will submit
annual updates to such filings thereafter for Commission review. Any data required to
support such annual equipment rate adjustments may be based on the four most recent
available quarterly financial figures. TWC may begin charging revised equipment and
installation rates to customers based upon the updated filing upon thirty days' notice. These
revised equipment and installation rates will be subject to refund if the Commission later
concludes that lower region-wide rates are called for by such filings and applicable rules.
Such region-wide equipment and installation charges as TWC establishes and the Commission
approves pursuant to this Contract shall be subject to enforcement by local franchising
authorities. Should any LFA find that TWC's equipment and installation rates charged
exceed those permitted by the Commission, the LFA may order TWC to make refunds of
any excess charges as necessary to comply with the equipment and installation charges
permitted by the Commission.
C. Resolution Of Existing CPST Rate Cases.
1. All CPST cases or complaints currently pending before the Commission
are resolved pursuant to and as a result of the adoption of this Contract, as set forth in
Appendix A to this Contract.
2. The Commission has reviewed TWC's pending CPST filings. In light
r.
of its review, the covenants and representations contained in this Contract, and in express
reliance thereon, and in order to conserve Commission resources, avoid litigation costs, and
achieve the other benefits to the public contained in this Contract, the Commission agrees to
resolve all CPST cases and complaints involving TWC currently pending before it.
- 8 -
3. In addition to those CPST rates which are subject to proceedings that
are being fettled as set forth in Appendix A to this Contract, all other Current Rates, as
adjusted for inflation and changes in external costs as of the Publication Date, charged by
TWC for CPSTs are deemed reasonable under the Act and the Commission's rules.
4. BST rate disputes will continue to be resolved in the ordinary course,
pursuant to applicable FCC rules.
D. Migrated Product Tiers.
1. The Commission and TWC acknowledge (i) that certain TWE-A/N
systems (the "Migration Systems") have been providing collective offerings of a la carte
channels which were created between April 1, 1993 and September 30, 1994 and which
consist of one or more (a) low-priced collective offerings, containing primarily superstations,
at an average price of less than $0.29 per channel, excluding copyright fees (a "Superstation
Tier"), and (b) low-penetrated collective offerings predominantly containing channels which
had been affirmatively marketed as a separate tier before being offered on an a la carte basis
(a "Preferred Tier") and (ii) that such offerings provided by such Migration Systems
cumulatively contain in excess of six channels migrated from BST and/or CPST.
2. Any Superstation Tier offered by a Migration System shall be treated as
a separate MPT. The initial price of such MPT will be based on the Current Rate of the
Superstation Tier. Where neighboring TWC systems each offer an NPT or MPT consisting
primarily of superstations and such NPT or. MPT would be priced differently under the
Commission's regulations and this Contract, an adjustment may be made between or among
such Current Rates on a revenue neutral basis so that a uniform rate for such NPTs/MPTs
- 9 -
may be established. In selecting services to be returned to a CPST in accordance with paragraph 3
below, the/Migration System serving Charlotte, North Carolina and surrounding areas may move
services from a Superstation Tier in an effort to achieve a more uniform line-up among such adjacent
NPT's and MPT's. All such uniformly priced NPTs/MPTs shall be subject to the price cap set forth
in paragraph 7 below.
3. Any Migration System shall select services from the Preferred Tier(s)
to return to a CPST so that the cumulative number of migrated services remaining on any
Preferred Tier(s) and any Superstation Tier is no greater than six. The subscriber's bill shall
be adjusted by no more than 25 cents per such channel returned to the CPST. The services
not returned to a CPST from the Preferred Tier(s) shall be offered as a single MPT, separate
from any Superstation Tier. The initial price of any such MPT will be based on the Current
Rate of the Preferred Tier(s), reduced by an amount equal to the percentage of channels
shifted to a CPST. Eligible Subscribers shall be issued a CPST Refund as reflected in
Appendix A.
4. On its own motion, the Cable Services Bureau, consistent with the
terms set forth herein, hereby reconsiders any Letter of Inquiry ("LOI") rulings involving
any Migration System (LOI-93-24; LOI-93-32; LOI-93-47; LOI-93-48), and TWE-A/N
.. hereby petitions to withdraw its Applications for Review of such LOI rulings and such
petitions are hereby granted by the Commission. The principles in this Section IIID.
relating to the unregulated treatment, for benchmark calculation purposes, of up to six
migrated channels, as incorporated in such reconsidered LOI rulings, shall be binding on any
LFA decision relating to BST rates charged by any Migration System.
- 10 -
5. On each of its systems which does not, as of the Publication Date, offer
a collective offering of a la carte channels created between April 1, 1993 and September 30,
1994, TWC may move a maximum of four existing BST or CPST services to a single MPT.
TWC will set the initial rate for any new MPT created pursuant to this paragraph at the same
level, on a per channel basis, that is set for that franchise's CPSTs under the Contract.
6. TWC may not require the subscription to any tier, other than the BST,
as a condition for subscribing to an MPT, and may not require subscription to an MPT as a
condition for subscribing to a CPST. Because the restructuring involved in the creation of
MPT(s) as described herein does not fundamertally change the service provided to
subscribers, TWC will not be required to re-market any of the affected services to existing
subscribers. Any services migrated may be offered on an a la cane basis as well as in a
package.
7. For the period prior to April 1, 1997, the price of any MPT established
pursuant to this Section III.D. may be adjusted solely to reflect unrecovered inflation and
external cost increases, including that currently accrued but uncharged, in the manner
permitted by the Commission's rules for CPSTs. There will be no limitation on the number
of new services TWC may add to an MPT. The price of any such MPT may be increased to
reflect new services added to the MPT by an amount not to exceed $.20 per added channel,
plus the actual license fee(s) for the added channel(s).
8. On or after April 1, 1997, TWC may convert any MPT into an NPT,
as defined in 47 C.F.R. § 76.987, including subsequent clarifications or amendments.
Because customers will be able to subscribe to CPST(s) and an MPT on a stand-alone basis,
as of April 1, 1997 the Commission will regulate MPT rates in the same manner in which
the Commission currently regulates NPT prices. Such NPTs will be treated as all other
NPTs under the Commission's rules, provided such NPT is offered without a buy-through
requirement of any tier other than the BST.
E. Customer Refunds. Pursuant to the settlement of TWC's existing CPST rate
cases as described in this section, TWC will provide Refunds, which in the aggregate total in
excess of $4.7 Million, plus interest computed in accordance with FCC requirements for
subscriber refunds, on the terms and conditions, and in the manner, set forth below.
1. In settlement of all CPST complaints involving the review of an FCC
Form 393 and/or FCC Form 1200 submitted by TWC which are pending as of the
Publication Date, TWC will provide a Refund to each Eligible Subscriber as set forth in
Appendix A to this Contract.
2. TWC agrees to waive its right to a credit for the franchise fee paid to
the LFA on the CPST Refund amount.
F. Infrastructure Upgrade Requirement.
1. Upgrade Requirement.
TWC will upgrade all its cable systems, at a cost of $4 Billion, so as to meet
the following technical standards: each TWC cable system with a present capacity of at least
550 MHz will have a bandwidth capacity of at least 750 MHz within five years after the
Effective Date; all other TWC cable systems will have a bandwidth capacity of at least 550
MHz within five years after the Effective Date. At least 50% of all TWC subscribers will
•. be served by a system with a capacity of.at least 750 MHz, of which at least 200 MHz is
expected to be allocated to digital distribution. Fiber-to-the-node architecture will be
deployed to improve signal quality and reliability of such systems. At least 60% of the new
- 12 -
analog services added during the term of the Contract will be added to the CPST and not to
BST, NPT or MPT. On average (weighted by CPST subscribers), CPST service offered on
the upgraded systems will contain at least 15 additional channels by the end of the Contract.
TWC has selected, and will select, its systems to be upgraded without discrimination based
on socio-economic status.
2. No Impairment Of Local Authority.
Nothing herein shall restrict the legal authority of LFAs to negotiate upgrades
for their particular franchise areas which exceed the scope of this Contract.
3. Reporting Requirements.
Now
No later than 90 days following the end of each calendar year during all of
which the Contract is in effect, and within 90 days following the end of the last month
following expiration of this Contract other than calendar year end, TWC will provide a
progress report to the FCC, for the year or such shorter period then ended during which this
Contract was in effect, setting forth the extent of progress TWC has made to upgrade
systems in compliance with Section III.F.1.; the number of BST and CPST subscribers
benefitting from such upgrades; system reliability and service improvements resulting from
such upgrades completed during the previous calendar year; and TWC's projected system
upgrade activities during the following year of the Contract. Such report will be served on
each LFA. The FCC reserves the right to inspect the books and records of TWC and
interview corporate employees for the purpose of determining compliance with this Contract.
- 13 -
4. CPST Rates Subject To Price Cap.
Beginning January 1, 1996, TWC will be permitted to increase the monthly
rates for the most highly penetrated CPST on each of its systems by $1.00 during each year
of this Contract. During the life of this Contract, the only other permitted increases to CPST
rates will be for inflation and increases in external costs. In particular, during the term of
this Contract, TWC will not avail itself of any additional per-channel adjustment permitted
by the Going Forward Rules for any programming services added to the CPST after the
Effective Date hereof. Nothing herein shall affect the ability of TWC to implement any New
Product Tier ("NPT"), add channels to any such NPT, or establish rates for any such NPT,
subject to the FCC Going Forward Rules, or to implement any MPT permitted by the terms
of this Contract.
5. Failure To Meet Target.
If TWC fails to meet the upgrade requirement so as to provide the bandwidth
capacities described in Section III.F.1. of this Contract within the term provided for therein,
the then existing CPST subscribers to the cable systems as to which such commitment has
not been met will be entitled to refunds (in the form of prospective bill credits) of the
increases (net of inflation and external cost adjustments) in CPST rates taken under this
Contract, plus interest computed in accordance with FCC requirements for subscriber
refunds, and a liquidated damages penalty of 15% of such refund amount.
6. Adjustments To Systems Subject To Contract.
a. TWC may,.at its option, include any cable systems acquired
from CVI within the provisions of this Contract, provided that the CPST settlement
provisions of this Contract shall not apply until any applicable settlements are mutually
14 -
agreed
4 -agreed upon between TWC and the Commission. Addition of any other TWC systems
within the provisions of this Contract shall be subject to FCC approval, which will be
expeditiously decided and not be unreasonably withheld. The provisions of this Contract will
extend as to any such additional system for a period of five years from the date such system
is added within the provisions of this Contract.
b. In the event of a sale of any system during the period of
applicability of this Contract, the purchaser may elect, with the concurrence of the FCC, for
the provisions of this Contract to continue to apply to such system. Such FCC concurrence
shall be expeditiously decided and not be unreasonably withheld. In the event the purchaser
elects not to have the provisions of this Contract apply to any such system, the CPST
subscribers to such system shall be eligible for the refunds calculated pursuant to Section
III.F.5. in the event the upgrade commitment described in Section III.F.1. has not been
completed prior to the consummation of such sale.
G. BST And CPST Rate Stability.
1. In the event the FCC establishes regulations allowing annual
adjustments to BST and CPST rates, with procedures designed to reduce regulatory lag,
TWC agrees to be bound by such regulations and to elect to adjust BST and CPST rates on
an annual basis pursuant to such regulations, provided, however, TWC shall not be delayed
in implementing its annual adjustments to CPST rates as set forth in Section III.F.4. due to
regulatory lag related to the BST rate approval process.
2. TWC will not elect to file cost-of-service showings to justify BST or
CPST rate levels above the level authorized by this Contract for any system subject to this
Contract for the term hereof.
- 15 -
H. Additional Consumer Benefits.
1. Service To Public Schools.
a. TWC shall offer service connections at one outlet in 100% of
the public schools (Grades K-12) passed by its cable systems. Such connections will be
made free of charge and as promptly as possible to all such schools requesting connections.
If any internal wiring installation is requested to serve additional outlets in such schools, it
will be provided at TWC's Cost of materials and labor at the applicable Hourly Service
Charge; provided, however, that such internal wiring will be provided without charge if
TWC is able to coordinate with other comparable electrical wiring installation in cases of
new construction or substantial rehabilitation of existing schools. BST and CPST service
will be provided to each outlet in such schools free of any charges.
•.. b. TWC shall offer service connections, including any requested
internal wiring for additional outlets, at Cost to any private Secondary School, as defined by,
and which receives funding pursuant to, Title 1 of the Elementary and Secondary Education
.. Act of 1965, 20 U.S.C. § 241a et seg., and which is passed by its cable systems. BST and
CPST service will be provided to each outlet in such schools free of any charges.
C. TWC will provide a free monthly educational program listing to
each connected school. Additional copies of such program listings will be provided, if
requested by a school, at Cost. Such educational program listing will identify and describe
programming on the TWC system that is appropriate for use in the classroom and will
". provide suggested curriculum support ideas.
d. TWC will develop and provide to connected schools materials
for teachers that explain the educational applications of TWC's broadband cable systems.
16 -
The materials will include a self-explanatory notebook and video. One copy of such
materials will be provided at no charge to all school districts with connected schools in
franchise areas served by TWC. Additional copies of such materials will be provided, upon
request, at Cost.
e. Upon successful development by TWC and Time Inc. of an on-
line service for personal computers, TWC will provide each connected school with a free
connection to this on-line service to the extent it is available on the local TWC cable system.
Upon request, each connected school will receive one free modem and free access to the
TWC/Time Inc. on-line service for use during the school year. Additional modems will be
made available, upon request, at Cost. Free access to the TWC/Time Inc. on-line service
will be provided through each such modem for use during the school year. In addition,
.. TWC will sponsor a workshop in each franchise area to educate teachers about the
TWC/Time Inc. on-line service and to provide them with an opportunity for hands-on
training.
f. To the extent a local franchise agreement contains an obligation
to provide the connections to schools as agreed to herein, TWC agrees not to seek to recover
any such costs for these connections as external or other costs.
2. Home Wiring.
a. Prior to a customer's termination of cable service, TWC will
not restrict the ability of a customer to remove, replace, rearrange or maintain any cable
wiring located within the interior space of the customer's dwelling unit, so long as such
actions do not interfere with the ability of sucti TWC system to meet FCC technical
17 -
standards or to provide services to, and collect associated revenues from, that customer or
any neighboring customer in a multiple dwelling context.
b. TWC will provide customers with a notification upon
commencement of service, and annually thereafter, advising them of their rights relating to
home wiring. Such notice will advise customers that they may either (i) remove, replace,
rearrange or maintain the home wiring themselves, (ii) select a qualified third party
contractor, or (iii) request the TWC system provide such service at standard hourly
installation rates, plus materials at Cost.
�—
C. Such notice will inform customers that if any home wiring is
improperly installed or rearranged by anyone other than TWC, and any harmful or improper
signal leakage occurs as a result, the customer may be held responsible for the Cost of
rectifying the problem. Pursuant to FCC rules, TWC recognizes that it is required to
terminate service to any location where signal leakage problems are not corrected.
d. TWC customers will be encouraged to use high quality home
wiring materials to avoid signal leakage and to maintain signal quality. Such notice will
offer to supply such materials to subscribers at Cost.
e. TWC will provide a model of this notice to the FCC for
approval prior to its dissemination to its customers, such approval not to be unreasonably
withheld.
I. Miscellaneous Provisions.
1. Modification And Termination.
a. Except as otherwise provided herein, this Contract may not be
terminated or modified without the mutual agreement of TWC and the Commission.
- 18 -
b. TWC may petition the Commission to modify or terminate this
Contract based on any relevant change in applicable laws, regulations or circumstances.
TWC will serve a copy of any such modification or termination petition, and the FCC Public
Notice relating thereto, on the LFAs for the affected systems. In no event shall TWC be
required to make more than one mailing to each LFA for any given modification or
termination request. Interested persons will have 30 days after the FCC releases an
appropriate Public Notice to comment and 15 days for reply comments before the FCC acts
on any such TWC petition. The FCC's consent to any such termination or modification
petition shall be demonstrated by an order issued by the FCC's Cable Services Bureau or at
the FCC's option by the Commission itself. The FCC shall act expeditiously on such
petition and grant of the petition shall not be unreasonably withheld.
C. In the event of any changes to the provisions of the Act or any
material changes to the FCC rules thereunder relating to rates (BST, CPST or equipment)
that are favorable to TWC, any TWC system may elect to be relieved from the relevant rate
provisions (Sections III.A.2., III.A.3., III.B., III.D., and III.F.4.) of this Contract
accordingly, but shall remain bound by all other provisions of this Contract. In the event
any such system elects to be relieved from such contract provisions in favor of such
favorable regulatory provisions such system will only be allowed to recover any incremental
amount that results under such favorable regulatory provisions in excess of any amount
already recovered pursuant to Section III.F.4. of this Contract. Nothing herein shall restrict
the ability of any TWC system to adjust.CPST rates in the event CPST rates are not
regulated based upon changes to the Act or FCC regulations.
19 -
d. The Commission expressly recognizes that TWC has relied on
the current federal law and FCC regulations governing cable television programming and
�. rates in entering into this Contract, and that the Contract represents an accommodation
between the FCC and TWC that generates substantial public interest benefits. Consequently,
the Commission agrees not to find any CPST or equipment rate adjustments implemented in
accordance with this Contract to be "unreasonable" under any subsequently-modified FCC
regulations or under any subsequently-modified applicable statute, to the extent the
Commission has discretion under such statute in determining whether any such rate
adjustments are unreasonable.
2. Authority To Enforce Contract.
a. Nothing in this Contract shall restrict the ability of LFAs to
enforce the provisions of otherwise valid local franchise agreements and ordinances that are
not the subject of or affected by the terms of this Contract. It is not the intent of either the
FCC or TWC that this Contract create any judicially enforceable rights in any other parties.
This Contract shall be enforceable against TWC by the FCC exclusively and no other party
may seek to enforce this Contract as a third party beneficiary or otherwise, except that
subscribers to TWC systems which increase their CPST rates will still have the right to file
complaints with the FCC to the extent permitted under applicable FCC rules.
b. For purposes of the Commission's authority to enforce any
provision of this Contract against TWC, including enforcement actions brought in U.S.
District Court, TWC agrees that any breach of this Contract by TWC shall be considered the
equivalent of a violation of an order of the FCC, entitling the Commission to exercise any
rights and remedies attendant to the enforcement of a Commission order. However, aside
- 20 -
from this limited purpose, TWC and the FCC agree that a breach of this Contract by TWC is
not to be considered by any other party as the equivalent of a violation of an otherwise-valid
FCC regulation or FCC order. In particular, any failure to comply with this Contract shall
not be a basis for any denial of a franchise renewal by, or other enforcement action of, any
LFA.
3. All Necessary Waivers And Preemptions Deemed Granted.
a. In addition to the specific waivers of the Commission's rules
identified in the Contract, the Commission order adopting this Contract shall affirmatively
state that any and all waivers of the Commission's rules, and any and all modifications to
Commission forms, necessary to effectuate the terms of this Contract are deemed to be
granted thereby. The Commission finds that the concurrent exercise of non-federal
regulatory authority over the subject matter of this Contract is an impermissible interference
with the FCC's regulatory authority and with its ability to accomplish its objectives in
entering into this Contract. Accordingly, the Commission hereby expressly preempts any
state or local law, regulation, ordinance or franchise that is inconsistent or conflicts with this
Contract. The Commission will not assert in any proceeding that TWC's compliance with
the terms of the Contract violates any Commission rule or order and, in any proceeding
before the Commission brought by a third party, a showing by TWC that it has complied
with the terms of the Contract shall constitute a defense to any claim that TWC's actions in
meeting the terms of the Contract constitute a violation of any applicable Commission rule or
order.
b. CPST rate increases referenced in Section III.F.4. of this
Contract will not be subject to prior FCC approval pursuant to Section 76.960 of the FCC
mw
"0
- 21 -
rules or otherwise, even if an adverse decision has been issued by the FCC as to any TWC
CPST rate in the year prior to the Publication Date. Subscribers to TWC systems which
increase their CPST rates still have the right to file complaints with the FCC to the extent
permitted under applicable FCC rules.
4. Effect On Other Proceedings.
.e a. The Commission agrees that it will not institute, on its own
motion, any proceedings against TWC based upon the information obtained during the
consideration of the Contract. In addition, in the absence of additional facts, the
Commission agrees that any allegations and other circumstances involved in consideration of
this Contract or settlement of the pending rate cases will not be used against TWC with
respect to any future proceedings at the Commission. Nor may they be used against TWC as
evidence of any refund liability due subscribers in any proceeding conducted by any LFA.
b. This Contract is intended to resolve the CPST complaints being
settled in accordance with Section III.C.; to provide certainty regarding the CPST rate
adjustments determined to be reasonable in accordance with Section III.F.4., and to
otherwise cover those matters expressly set forth herein. The Commission and TWC
acknowledge the existence of various lawsuits to which they are both parties. The
... Commission and TWC agree that this Contract shall have no effect on any pending lawsuit to
which TWC is a party or, subject to Section 111.1.7., on any future challenges to the
Commission's regulatory authority that TWC may elect to initiate, other than a challenge to
the Commission's regulatory authority to_enter into and enforce this Contract.
C. The Commission expressly recognizes that this Contract is of
limited duration and scope, and may be modified or terminated before its term has ended as
..
�,..
w
- 22 -
provided for in Section I11.1.1. of this Contract. Accordingly, the Commission and TWC
agree that this Contract does not moot any legal challenge or defense relating to any
provision of the Act or to the Commission's regulatory authority that TWC has brought or
may bring in the future, other than a challenge to the Commission's regulatory authority to
enter into and enforce this Contract. The Commission will not seek to dismiss any such
legal challenge on grounds that this Contract renders such challenge moot and will actively
oppose any assertion in court that this Contract moots any such challenge.
5. No Admission Of Wrongdoing.
This settlement is without a finding by the Commission of any wrongdoing by
TWC or any of its systems, subsidiaries or affiliates. Neither this Contract nor any aspect of
the settlement contained herein constitutes an admission by TWC of any violation of, or
failure to conform to or comply with, any law, rule or policy applicable to TWC or any of
its systems, subsidiaries or affiliates.
6. Contract In Public Interest.
In consideration of the Commission entering into this Contract, and resolving
and terminating pending CPST cases and complaints in accordance with the terms of this
Contract, TWC hereby agrees to the terms, conditions and procedures contained in this
Contract. TWC and the Commission each acknowledge that it believes this Contract, and the
terms, conditions and procedures hereof, provide for and will facilitate a fair and expeditious
resolution of the cases and complaints that are the subject hereof in a manner that serves the
public interest.
7. Legal Challenges.
- 23 -
a. TWC waives any right it may have to any judicial review or
appeal, or any other right to otherwise challenge or contest the validity of any order by the
Commission adopting this Contract, or to use this Contract as evidence in any such
proceeding. TWC agrees that the provisions of this Contract shall be incorporated by
reference in the Commission's order formally approving this Contract. TWC and the
Commission agree that they will each actively defend, before any forum, any Commission
order adopting the provisions of this Contract against any appeal of or other legal challenge
by any third party to any such order. TWC and the Commission each agree that they will
reasonably cooperate with the other in any such defense of the Contract and any such order.
b. If the Commission, or the United States on behalf of the
Commission, brings an action in any United States District Court to enforce the terms of any
Commission order adopting this Contract, TWC agrees, subject to the terms of the
immediately preceding paragraph, that it will not contest the validity of such Commission
order, or the Commission's authority to enter into the Contract. TWC reserves the right, in
•.. defense of such an enforcement action, to demonstrate that it has complied with the
provisions of the Contract or to assert its own interpretation regarding any performance
obligations imposed by the Contract which may be subject to dispute.
8. Effective Date And Term.
a. The term of this Contract shall commence on the Effective Date
and, subject to Section 111.1.1. above regarding modification and termination and Section
III.E.6. above regarding adjustments to systems covered, shall continue in effect for five (5)
years.
- 24 -
b. TWC and the Commission agree to execute this Contract as of
v
the Effective Date promptly upon issuance by the Commission of an order approving this
Contract.
C. The Commission and TWC expressly acknowledge and agree
V
that the effectiveness of this Contract is contingent upon resolution and termination of TWC's
CPST proceedings; issuance by the Commission of an order approving the Contract, and
TWC's compliance with the terms, conditions, and procedures set forth in the Contract. If
this Contract is not approved by Commission order and accepted by TWC, or if the Contract
is otherwise rendered invalid, in whole or in part, by final order of any court of competent
jurisdiction, the Contract or such part may not be used in any fashion by the FCC in any
legal proceeding.
d. TWC may commence any necessary or appropriate actions to
initiate the rate adjustment processes embodied in this Contract at any time after the Effective
Date, provided, however, as to any system listed on Appendix A, TWC shall not implement
•. any rate adjustment pursuant to Section III.F.4. of this Contract unless the Refund provided
for in Section III.E. has been issued as to such system, or the issuance of such Refund begins
simultaneously with such rate adjustment. All Refunds will be issued within six months of
the first rate adjustment implemented pursuant to Section III.F.4.
9. Public Notice.
The Commission will issue promptly a Public Notice in which the Commission
proposes to adopt the Contract as a final-order, and shall provide interested parties with
thirty (30) days to comment on the Contract and an additional fifteen (15) days in which to
file reply comments.
- 25 -
10. Force Majeure.
TWC shall not be deemed in breach of its commitments under this Contract in
r.
the event of any delay or failure in performance by any TWC system from any cause beyond
its reasonable control and without its fault or negligence, including, but not limited to, acts
of God, acts of civil or military authority, government regulations, embargoes, epidemics,
war, terrorist acts, riots, insurrections, fires, explosions, earthquakes, nuclear accidents,
floods, strikes, power blackouts, unusually severe weather conditions, or inability to secure
local permits after all diligent efforts by TWC to secure such permits.
11. Severability.
If any provision, clause or part of this Contract is invalidated by order of any
court having proper jurisdiction over the subject matter of this Contract, the remainder of
this Contract shall not be affected thereby and shall remain in full force and effect; provided,
however, that, if either party reasonably determines that such invalidation is material to this
Contract, the parties shall negotiate in good faith to reconstitute the Contract in a form that
is, to the maximum extent possible, consistent with both the original intent of both parties in
entering into this Contract and the rationale of such invalidation order.
12. Entire Understandine.
This Contract and its appendices, as either or both may be amended in
accordance with the terms herein, constitute the entire agreement between TWC and the
Commission with respect to the subject matter of this Contract and supersede all prior
agreements and understandings, whether oral or written, between TWC and the Commission
with respect to the subject matter of this Contract. No representation, warranty, promise,
- 26 -
inducement, or statement of intention has been made by TWC or the Commission which is
not embodi6d in this Contract, and neither party shall be bound by, or be liable for, any
alleged representation, warranty, promise, inducement, or statement of intention not
�,, embodied in this Contract or its appendices.
- 27 -
IN WITNESS WHEREOF, this Social Contract has been duly executed and delivered
by or on behalf of the parties hereto as of the Effective Date as defined herein.
TIME WARNER ENTERTAINMENT
COMPANY, L.P.
By:
Name:
Title:
TWI CABLE INC.
By:
Name:
Title:
TIME WARNER ENTERTAINMENT-
ADVANCE/NEWHOUSE PARTNERSHIP
By: Time Warner Entertainment Company, L.P.
Managing Partner
By:
Name:
Title:
-- FEDERAL COMMUNICATIONS COMMISSION
-- By:
Name:
Title:
28381.20
r
r.
APPENDIX A
CID CO M=Y REFUND
FL0007 Rockledge $5,171
FL0009 Indian Harbor Beach 2,384
FL0013 Melbourne 14,362
ww
FL0014 Melbourne 301759
FL0015 Volusia County 12,505
FL0017 Palm Bay 89,135
FL0021 West Melbourne 2,198
FL0163 Cape Canaveral 1,557
FL0165 Melbourne 717
FL0181 Orlando 18,770
FL0196 St Petersburg 63$ 08
FL0240 Brooksville 3,270
FL0252 Orlando 34,089
FL0290 Lakeland 6,200
FL0312 Brooksville 6,500
FL0314 Brooksville 8,217
FL0322 Sandford 14,787
FL0597 Brooksville 31,107
FL0622 Belleview 7,763
MA0063 Salem 11,274
MA0097 Melrose 5,080
MA0101 Stoneham 322
MO0198 Kansas City 78,801
MS0080 Jackson 164,400
MS0128 Clinton 54,208
NC0015 Salisbury 22,981
NC0016 Wilmington 106,115
NC0027 Shelby 20,516
NC0167 Wilmington - Southport 29,732
NC0168 Morehead 39,706
NC0193 Metrolina 41$358
NCO286 Albemarle 15,990
NC0405 Mecklenburg 121,204
NC0408 Wilmington - Burgaw 8,719
APPENDIX A
CUIID CO UVRMTY REQ
NC0720 Weddington 3,042
NE0032 Lincoln 2331263
NH0034 Nashua 603,935
NT0082 Bergen 129,719
NY0104 Upper Manhattan 599,837
NY0133 Binghamton 219,198
NY0234 Lower Manhattan 180,360
NY0336 Colonie 4,219
NY0338 Albany 6,141
NY0346 Syracuse 3001822
` NY0352 Troy 182,844
NY0414 Penfield 6,662
., NY0415 Gates 5,089
NY0416 Greece 212079
NY0769 Rochester 423,908
4 NY1062 Ogden 2,704
NY1340, 1280, 1281, 1402 Brooklyn/Queens 1,2102552
-- OH0239 Columbus 32,330
OH0517 Westerville 3,727
OH0532 Columbus 1,703
PA0006 Reading 343,753
PA0011 Shillington 12821
PA1775 Monroeville 25,324
SCO015 Florence 97,072
SCO017 Sumter 58,020
TX0029 Austin 111,633
TX0483 Wichita Falls 16,033
TX1422 Leander 7,533
VA0046 Reston 173,421
VA0074 Williamsburg 23,940
W10234 Green Bay 37,857
WI0323 Greenfield 41903
WI0420 Hale's Corner 1,823
WV0104 Charleston 5,762
---------------
$4,736,434
APPENDIX B
REGIONAL EQUIPMENT AREAS
Appleton/Green Bay, WI Milwaukee, WI
Bakersfield, CA Minneapolis, MN
Birmingham, AL National Division - East
Boston, MA National Division - West
Eastern Pennsylvania Division Maine Division
Florida Divisions New York Divisions
Hawaii Division North Carolina Divisions
Illinois/Indiana Division Ohio Divisions
Indianapolis, IN Portland, OR
Jackson/Monroe, MS San Diego, CA
Kansas City, MO Shreveport, LA
Lincoln, NE Texas Divisions
Los Angeles, CA Western Pennsylvania Division
Memphis, TN
v
•r
rr