1996-27
BILL NO. 1996-27
AN ORDINANCE AMENDING APPENDIX E OF THE RICHFIELD
CITY CODE BY REPEALING SECTION E2, THE CABLE
COMMUNICATIONS FRANCHISE ORDINANCE, AND
SUBSTITUTING THEREFORE A CABLE TELEVISION FRANCHISE
AGREEMENT ORDINANCE BETWEEN THE CITY OF RICHFIELD
AND KBL CABLE SYSTEMS OF THE SOUTHWEST, INC.
THE CITY OF RICHFIELD DOES ORDAIN:
1
Section 1. Appendix E of the Richfield City Code is amended by repealing
Section E2, entitled "Minnesota Cablesytems-Southwest" and by substituting therefore
the Cable Television Franchise Agreement Ordinance by and between the City of
Richfield and KBL Cable Systems of the Southwest, Inc., a copy of which is attached
hereto and is incorporated herein as though fully set forth at this point.
Sec. 2 The effective date of this ordinance shall be the date specified in Section
13.2.E of the attached Cable Television Franchise Agreement Ordinance, except that
this ordinance shall be null and void if it has not become effective by 11:59 p.m. on
January 1, 1997.
Adopted by the City Council of the City of Richfield this 25th day of November,
1996.
f.
~ ~ ~ ~ t
~ '; ,f
Martin J Kirsch ,~' M Dray
ATTEST:
,.
J1 ~1
Thomas P. Ferber City Clerk
Cable Television
Franchise Agreement Ordinance
CITY of
RICNF7F..D ,MINNESOTA
u
Prepared by:
Adrian E. Herbst, Esq.
Theresa M. Harris, Esq.
Fredrikson & Byron, P.A.
1100 Interaatioaal Centre
900 Second Avenue South
Minneapolis, MN 55402
Telephone: (612}347-7000
Fax: (612) 347-7077
With the assistance of:
The Southwest Suburban
Cable Commission
TABLE OF CONTENTS
Page
SECTION 1. 13:ENEWAL OF GRANT OF FRANCHISE ................... 2
SECTION 2. SHORT TITI..E .................................... 3
SECTION 3. DES;INI'ITONS .....................................
SECTION 4. EFFECTIVE DATE AND TERM OF RENEWAL .............. 2
SECTION 5. Q~:RITTEN NOTICE ................................. 2
SECTION 6. DESIGN PROVISIONS ............................... 3
6.1 Svstem Design ..................................... 3
6.2 Cable Nodes Svstem Connect ............................ 3
6.3 Service to the Schools and Government Buildings ................ 3
6.4 Parental Control Lock . 4
6
5 ...............................
Standby Power
. ..................................... 4
6.6 Periodic Review Provisions .... 4
.........................
SECTION 7. PUBLIC, IDUCATIONAL AND GO AL ACCESS
PROGRANIl~~1G ................................... 5
7.1 Access Channels ... 5
.................................
7.2 Studio/FaciIities 6
7
3 ....................................
Funding for PEG Access
.
7
4 ...............................
Regional Channel Six 7
.
7.5 .................................
Override of the Government Access Channel .................. ?
7
SECTION 8. PERIODIC CUSTOMER SURVEYS ....................... 8
SECTION 9. LINE EXTENSION POLICY ............................ 8
SECTION 10. GENERAL FII~'ANCIAL AND INSURANCE PROVISIONS ....... 9
10.1 Payment to Citv .... .. ............................. 9
10.2 Bonds .......................................... 9
10.3 Security Fund ...... ............................... 10
SECTION 11. SOCIAL CONTRACT ..................... . ......... 13
SECTIO?~' 12. COMPETITION ADJUS'I'1\~NT ......................... 13
0
SECTION I3. ACCEPTANCE ................................... I7
13.1 Other Franchises .................................... 17
13.2 Time of Acceptance: Incorporation of
Offering: Exhibits. ........................ ..... .. ... 18
EX~~ITS
Exhibit A -Franchise Fee Payment Worksheet .......................... 20
Exhibit B -Time Warner Social Contract ............................. 21
Exhibit C -Paragon Cable Initial Programming ......................... 22
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FRANCHISE AGREEME>\T ORDINA>\'CE
This Agreement, made and entered into this 2 5th day of November , 19 9 6 , by
and between the Ciry of Richfield , a municipal corporation of the State
of Minnesota, and KBL Cable Systems of the Southwest Inc., a wholly-owned subsidiary of
Time Warner Inc.
wITNESSETH
WHEREAS, KBL Cable Systems of the Southwest Inc. has operated a Cable System in
the Ciry of Richfield pursuant to Ordinance Bi 11 No . 1980-33 ,also known as the
Cable Communications Ordinance, which expires on December 31, 1999; and
WHEREAS, KBL Cable Systems of the Southwest Inc. has requested an early renewal
of its Franchise because KBL Cable Systems of the Southwest Inc. intends to rebuild its System
to a modern state of the an design as described herein and at substantial cost; and
WI~REAS, ILL Cable Systems of the Southwest Inc. and the City of
Richfield ,based on Ciry's understanding the rebuilt System will provide
constderable new service capabilities and economic benefit opportunities to its institutions,
residents and businesses, have agreed to enter into an early renewal of the Franchise; and
WHEREAS, the Ciry of Richfield ,will repeal Ordinance B i 11 No .
1980-33, also known as the Cable Communications Ordinance, including amendments and
agreements relating to it beginning with the effective date of this AQre.°ment Ordinance, and
enact Bi 11 No . 1996-26 ,also known as the Cable Regulatory Ordinance, through which the
City is authorized to grant and renew one or more nonexclusive revocable Franchises to operate,
construct, maintain and reconstruct a Cable Television System within the City; and
WHEREAS, the City, reviewed the legal, technical and fmancial qualifications of KBL
Cable Systems of the Southwest Inc. and after a properly noticed public hearing, has determined
that it is in the best interest of the City and its residents to renew its Franchise with KBL Cable
Systems of the Southwest Inc..
NOW , THEREFORE, the City of Richfield ~ (hereinafrer also
known as the "City" or "Grantor") hereby grants to KBL Cable Systems of the Southwest Inc.
(hereinafter the "Grantee") renewal of its cable television Franchise in accordance with the
provisions of Ordinance
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L
SECTION 1. RE.~IEWAL OF GRANT OF FRANCHISE
The cable television Franchise granted through Ordinance Bill No . 1996-27 on the 25th :day
of November 19 96 and now held by Granter is renewed. Ordinance Bill No. 1980-33
that granted the original franchise is repealed and replac°.d by the Cable Teievisio : Fr-.ncluse
pr~an~, Ordinance B i 11 No .19 9 6 - 2 7 and this Franchuse Ab~:nent Ordinance. This
Franchise shall be subje.^t to the tezms and conditions of taus Franchise A~ment Ordinance
and shall be subordinate to the Cable Television Franchise Ordinance and all applicable federal,
state and local law.
SECTION 2. SHORT TITLE
This Agreement shall be la~own and cited as the "City of R i c h f i e 1 d Cable
Television Franchise A~mem Ordinance. " Within this document it shall also be refezed to
as "this Franchise" or "the Franchise. "
SECTION 3. DE:I?~1ITIONS
ine definitions
Richfield
set out ve:-batim.
contained in Ordinance Bi 11 No . 1996-27 of the City of
are incorporated herein by reference and adopted as fully as ii
SECTION ~. Er r=.CiTVE DAi~ A:~-D TAM OF REN~~VAL
i his Ftancluse shall commence on the e^e.^~.ive date described in Section I3 and shall e~ire I5
ve :rs therearter.
SECTION 5. WRITTr.N NOTICE
.-ill notices, reports or demands reauira to be given in writing under this Franchise shall be
de.°med to be given when deliver.,d personally to any officer of Granter or Ciry's lviana~er of
tris =ranchise or 48 hours aster it is deposited in the united States mail in a sealed envelope,
~•ith registered or certuied mail postage prepaid thereon, addressed to the parry to which notice
is being given, as follows:
City of Richfield
If to City: 6700 Portland Avenue' South
Richfield, MN 55423 .
If to Granter: KBL Cable Systems of the Southwest, Inc.
Such addresses may be changed by either parry upon notice to the other parry given as provided
in this section.
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SECTION 6. DESIGN PROVISIONS.
6.1
6.2
6.3
Svstem Desi~rt.
Grantee agrees to upgrade its System to a capacity of 7S0 AfIiz which is the
equivalent of 112 6 MHz analog video channels. However, Grantee, will initially
use the 54 MHz-550 MHz section of the System to deliver analog signals and
reserve the 550 MHz to 750 MHz section for future applications. Stated in teens
of 6 MHz analog channels the 54 MHz to 550 MHz of the System has capacit}~
for 79 channels. The upgraded System shall have the technical capacity for non-
voice return communications which means the provision of appropriate system
design techniques with the installation of cable and amplifiers suitable for the
subsequent insertion of necessary non-voice communications electronic modules.
Such upgrade shall be completed and in use by December 31, 1999.
Cable Nodes Svstem Connect.
Grantee will locate its "nodes" near schools where possible, without in Grantee's
opinion, comprising the engineering design of the System. The City will provide
maps showing the location of the schools.
Service to the Schools and Government Buildings.
A. Service to Pubic Schools and Public Buildings
1. The Grantee shall continue to provide one outlet of Basic Service,
the Cable Programming Service Tier and one Converter, if needed,
to those facilities presently served. Service to public schools and
municipally owned buildings constructed or occupied after the
effective date of this Franchise shall be similarly provided subject
to the building being located within 200 feet of the Grantee's then
existing System.
If facility is over 200 feet from Grantee's then existing System, the
school or municipality shall be responsible for all equipment,
construction costs and additional wiring beyond the first 200 feet
that are the Grantee's responsibility.
3. All internal wiring cost beyond the one outlet that Grantee agrees
to provide shall be the responsibility of the school or municipality.
4. The financial responsibility for any additional Converters desired
by the school or municipality shall be their responsibility.
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B. Service to Private Schools
_. Grantee shall provide Installation to private schools within 200 feet of
plant. A private school is defined as any private secondary school that
receives funding pursuant to Title 1 of the Elementary and Secondary
Education Act of 1965. Installation and Cable Service shall be provided
for free to such privatc schools through the year 2000.
6.4 Parental Control Lock.
Grantee shall provide, for sale or lease, to Subscribers, upon request, a parental
control locking device.
6.5 Standby Power.
Grantee shall continue to provide standby power throughout the System now and
as rebuilt capable of providing at least three hours of emergency supply.
6.6 Periodic Review Provisions.
1
The City may request aState-of--the-Art review at any time between the sixth year
anniversary and the twelfth year anniversary of the granting of this Franchise.
In conducting aState-of-the-Art review, the City shall undertake the following
process:
A. The City and the Grantee shall undertake a review of the then existing
Cable System. This review shall, at a minimum, take into account the
following:
Characteristics of the existing System;
?. The State-of-the-Art;
3. Additional benefits provided to customers by the State-of--the-Art;
4. The market place demand for the State-of-the-Art; and
5. The financial feasibility of the State-of--the-Art taking into account
associated rate increases, and the prematurz retirement of assets,
B. The City shall hold at least two public hearings to enable the general
public and Grantee to comment and to present evidence.
C. For the purposes of this Section the term "State-of--the-Art" shall mean
equipment or facilities that:
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1. Are readily available with reasonable delivery schedules from two
or more sources of supply;
2. Have the capability to perform the intended functions demonstrated
within communities with similar characteristic (including, but not
necessarily limited to, population, density, Subscriber penetration,
etc.) under actual operating conditions for purposes other than tests
or experimentation; and
3. Are technically and economically feasible to implement. The term
"State-of--the-Art" shall not include equipment or facilities
associated with or dedicated to the general public, educational or
governmental access or telecommunication services.
D. Notwithstanding anything to the contrary, the City may not undertake a
State-of-the-Art review at any time the Grantee is deemed subject to
effective competition pursuant to then applicable state or federal law.
E. As a result of any review based on this Section, City and Grantee may
enter into good faith negotiations to amend this Franchise as agreed upon.
SECTION 7. PUBLIC. EDUCATIONAL AND GOVERNMENTAL ACCESS
PROGA:AMIylING.
7.1 Access Channels.
A. Grantee shall provide four public, educational and government (PEG)
Access Channels (the "Access Channels"). One channel shall be dedicated
to public access, one channel shall be dedicated to governmental access,
and two channels shall be dedicated to educational access.
B. Grantee shall provide to each of its Subscribers who receive all or any
part of the total services offered on the' System, reception of each public,
educational and governmental Access Channel.
C. Grantee shall provide at least one specially designated access channel
available for lease on a first come, nondiscriminatory basis by commercial
and noncommercial users. This Section is not applicable to Subscribers
receiving only alarm system services or only data transmission services for
computer operated functions. The VHF spectrum shall be used for at
least one of the specially designated noncommercial public Access
Charu~els required.
D. Whenever any of the Access Channels are in use during 80 percent of the
weekdays (Monday-Friday), for 80 percent of the time during any
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consecutive three hour period for six weeks Winning, and there is demand
for use of an additional channel for the same purpose, Grantee shall then
have six months in which to provide a new specially designated access
-' channel for the same purpose at no additional cost to Subscribers.
E. Grantee must establish rules and regulations for the public, educational
and leased Access Channels. The rules and regulations established by the
Grantee are subject to approval by the City.
F. Subscribers receiving programs on one or more special service channels
without also receiving the regular Subscriber services may receive only
one specially designated composite Access Channel composed of the
programming on Access Channels. Subscribers receiving only alarm
system services or only data transmission services for computer operated
functions shall not be included in this requirement.
7.2 Studio/Facilities.
A. Subject to a transition plan that shall be filed with the City before the City
executes this Agreement and that shall be updated annually until the
transition is complete, Grantee will pmvide one large facility containing
one studio with the current square footage of 1440 square feet in the Eden
Prairie studio for public, educational and governmental access production
which will be located in Eden Prairie. The studio will have the capacity
for audience participation. The facility will include two separate editing
suites, storage space and the entire studio facility will be wheelchair
accessible. The facility shall meet the current hours of Monday through
Friday 10:00 a.m. to 6:00 p.m. and by appointment on evenings and
weekends. The facility shall also add regular weekend hours and some
regular week night hours.
B. Grantee shall make readily available for public use at least minimal
equipment necessary for the production of programming and playback of
prerecorded programs for the specially designated noncommercial public
Access Channel. The Grantee shall also make readily available upon need
being shown, the minimum equipment necessary to make it possible to
record programs at remote locations with battery operated portable
equipment.
C. No charges shall be made for channel time or playback of prerecorded
programming on the specially designated noncommercial public Access
Charuiel. Grantee can include any costs associated with production and
playback for the noncommercial public Access Channel in the total sum
allocated for public, educational and governmental access programming
as stated in Section 7.3. Additionally, at the City's request, Grantee will
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work with the City to institute a nonunal membership fev for users of the
PEG access facility.
D. Need within the meaning of this section shall be determined in the sole
discretion of City or b}' Subscriber petition. Said petition must contain the
signatures of at least 10 percent of the Subscribers of System, but in no
case more than 500 nor fewer than 100 signatures.
7.3 Funding for PEG Access.
In the fast year after the effective date of this Franchise, Grantee shall provide
no less than $200,128 annually for PEG access operating expenses collectively
for the cities of Edina, Eden Prairie, Hopkins, Minnetonka, and Richfield. After
the first year of the Franchise, Grantee shall provide sufficient financial and in-
kind support to maintain a substantially equivalent level of services, facilities and
equipment in the remaining years of the Franchise Agreement Ordinance
comparable to the services, facilities and equipment provided in the first year of
the Franchise. These expenses will be itemized on customers' bills. This amount
will provide the following services: (a) labor costs; (b) educational consultant;
(c) facilities and utilities; (d) access expenses; (e) educational expenses;
(f) equipment maintenance; (g) technical support; and (h) replay expenses. This
funding shall not be deducted from the Franchise Fee within the meaning of this
Agreement. Grantee shall not calculate a Franchise Fee upon funds itemized on
the customers' bills for public, educational or governmental access production and
programming .
7.4 Reeional Channel Six.
Under Minnesota Cable Communications Act, standard VHF Channel six has
been designated for usage as the regional channel. Also known as Metro Cable
Network, this independent, non-commercial, non-profit channel shall be made
available without charge. This provision shall remain in effect as long as a
regional channel is required by the State of Minnesota.
7.~ O~~erride of the Goy-ernment Access Channel.
Grantee agrees to provide the capability such that the City, from its City Hall,
can switch its government Access Charuiel in the following ways:
A. Insert live Council mP,~tings from City Hall;
B. Repla}~ government access programming from City Hall;
n
C. Transmit character generated programming;
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D. Schedule for Grantee to replay City-provided tapes in pre-arranged time
slot on the government Access Channel; and
E. Switch to C-SPAN 2 or other comparable proro~rammins provided by
Grantee at any time when not carrying live or taped government access
programming.
SECTION 8. PERIODIC CUSTOMER SURVEYS
8.1 The Grantee shall upon request of the City and at times mutually agreed upon by
.the parties, but no more frequent than once every three years conduct a random
survey of a representative sample of Subscribers. Fach questionnaire shall be
prepared and conducted in good faith so as to provide reasonably reliable measure
of customer satisfaction with: (1) audio and signal quality; (2) response to
customer complaints; (3) billing practices; (4) programming; and (5) Installation
practices;
8.2 The survey shall be conducted in conformity with standard research procedures
including the use of telephone survey conducted by an independent person in the
business of regularly conducting such surveys. The survey shall consist of a
sample size of 300 customers or such other sample size as to yield a margin of
error of plus or minus six percent or less of the total customer base.
8.3 The Grantee shall report the results of the survey and any steps the Grantee may
be taking in response to the survey within 60 days of the completion of the
survey.
8.4 Notwithstanding anything to the contrary, the Grantee shall be under no obligation
to conduct a survey at any time the Grantee is deemed subject to effective
competition under then applicable state or federal law.
SECTIO?~ o LINE EXTE?~'SION POLICY:
9.1 The Grantee shall within 12 months of receiving a request, extend the System to
any residences within the City served by City water and sewer facilities.
9.? The City recognizes that in some instances the Grantee needs the permission of
private property owners to extend service to others who may be interested in
service and agrees that should the Grantee be unable to obtain these needed
permissions under terms reasonable to the Grantee and the property owners from
whom permission is required that the Grantee shall be under no obligation to
extend service.
seae3s
Fran~niic AFrtc'mcC: Ord~aancc
Oaoou lo. logo - PaAc 8
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SECTION 10. GENER4L FINANCIAL AND II`'SUR.ANCE PROVISIO?`TS.
10.1 Payment to CitX.
A. Grantee shall pay to the City a Franchise Fee in an amount equal to fi~~e
percent (5 ~) of its annual Gross Revenues.
B. The foregoing payment shall be compensation for use of Streets.
C. Payments due the City under this provision shall be computed at the end
of each calendar quarter. Payments shall be due and payable for each
quarter not later than 60 days from the last day of the quarter. Fach
payment shall be accompanied by a brief report showing the basis for the
computation. At the end of each calendar year, Grantee shall complete
a Franchise Fee Payment Worksheet attached hereto as Fr,xhibit A.
Grantee shall file a completed Franchise Fee Payment Worksheet no later
than 60 days after the last day of the calendar year.
D. No acceptance of any payment shall be construed as an accord that the
amount paid is in fact the cormct amount, nor shall such acceptance of
payment be construed as a release of any claim the City may have for
further or additional sums payable under the provisions of this Franchise.
All amounts paid shall be subject to audit and recomputation by the City.
E. In the event any payment is not made on the due date, interest on the
amount due shall accrue from such date at the annual rate of 12 °b.
10.2 Bonds.
A. At the commencement of this Franchise, and at all times thereafter until
Grantee has completed the System Upgrade in Section 6.1 of this
Franchise, Grantee shall maintain with City a bond in the sum of
5300,000,00 in such form and with such sureties as shall be acceptable to
City, conditioned upon the faithful performance by Grantee of this
Franchise and the acceptance hereof given by City and upon the further
condition that in the event Grantee shall fail to comply with any law,
ordinance or regulation, there shall be recoverable jointly and severally
from the principal and surety of the bond, any damages or losses suffered
by City as a result, including the full amount of any compensation,
indemnification or cost of removal of any property of Grantee, including
a reasonable allowance for attorneys' fees and costs (with interest at two
percent in excess of the then prime rate), up to the full amount of the
bond, and which bond shall further guarantee payment by Grantee of all
claims and liens against City or any, public property, and taxes due to
City, which arise by reason of the construction, operation, maintenance
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or use of the System. Upon completion of the System Upgrade as
described in Section 6.1 of this Franchise, the City may reduce the bond
to the sum of 5100,000.
B. The rights reserved by City with respect to the bond are in addition to all
other rights the City may have under this Franchise or any other laa•.
C. City may, in its sole discretion, reduce the amount of the bond.
10.3 Security Fund.
A. In the event the Grantee is given notice of anon-compliance pursuant to
Section 34 of the Ordinance, the Grantee shall within ten (10) days thereof
deposit into a bank account, established by the City, and maintain on
deposit the sum of Twenty Thousand and 00/100 Dollars ($20,000.00) or
deliver to the City a letter of credit in the same amount as a common
Security Fund for the faithful performance by it of all the provisions of
this Franchise and compliance with all orders, permits and directions of
the City and the payment by Grantee of any claim, liens, costs, expenses
and taxes due the City which arise by mason of the construction, operation
of maintenance of the System. Interest on this deposit shall be paid to
Grantee by the bank on an annual basis. The security may be terminated
by the Grantee upon the Resolution of the alleged non-compliance.
B. Provision shall be made to pernut the City to withdraw funds from the
Security Fund. Grantee shall not use the Security Fund for other purposes
and shall not assign, pledge or otherwise use this Security Fund as
security for any purpose.
C. Within ten (10) days after notice to it that any amount has been withdrawn
by the City from the Security Fund pursuant to (A) of this section,
Grantee shall deposit a sum of money sufficient to restore such Security
Fund to the required amount.
D. In addition to recovery of any monies owed by Grantee to City or
damages to Cin~ as a result of any acts or omissions by Grantee pursuant
to the Franchise, City in its sole discretion may charge to and collect from
the Security Fund the following penalties:
1. For failure to complete System construction in accordance with
Grantee's upgrade plan, unless City approves the delay, the
penalty shall be $200.00 per day for each day, or part thereof,
such failure occurs or continues.
C~
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2. For failure to provide data, documents, nporu or information or
to cooperate with City during an Application process or Svstem
review, the penalty shall be 550.00 per day for each day, or part
thereof, such failure occurs or continues.
3. For failure to comply with any of the provisions of this Franchise
for which a penalty is not otherwise specifically provided pursuant
to this Paragraph C, the penalty shall be 550.00 per day for each
day, or part thereof, such failure occurs or continues.
4. For failure to test, analyze and report on the performance of the
System following a r~uest by City, the penalty shall be 550.40
per -day for each day, or part thereof, such failure occurs or
continues.
5. For failure by Grantee to provide additional services as negotiated
between City and Grantee at a periodic review session within 45
days after a request by City the penalty shall be 5200.40 per day
for each day, or part thereof, such failure occurs or continues.
6. Forty-five days following notice from City of a failure of Grantee
to comply with construction, operation or maintenance standards,
the penalty shall be $200.00 per day for each day, or part thereof,
such failure occurs or continues.
7. For failure to provide the services Grantee has proposed, including
but not limited to the implementation and the utilization of the
Access Channels and the making available for use of the
equipment and other facilities to City, the penalty shall be 5100.00
per day for each day, or part thereof, such failure occurs or
continues.
8. Eash violation of any provision of this Franchise shall be
considered a separate violation for which a separate penalty can be
imposed.
E. Exclusive of the contractual penalties set out above in this section, a
violation of any provision of this Franchise is a misdemeanor.
F. If Grantee fails to pay to the City any taxes due and unpaid; or fails to
repay to the Ciry, any damages, costs or expenses which the City shall be
compelled to pay by reason of any act or default of the Grantee in
connection with this Franchise; or fails, after thirty (30) days notice of
such failure by the City to comply with any provision of the Franchise
which the Ciry reasonably determines can be remedied by an expenditure
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of the security, the Ciry may then withdraw such funds from the Security
Fund. Payments are not Franchise Fees as defined in Section 29 of the
Ordinance.
G. Whenever the City finds that Grantee has allegedly violated one or more
terms, conditions or provisions of this Franchise, a written notice shall be
given to Grantee. The written notice shall describe in reasonable detail
the alleged violation so as to afford Grantee an opportunity to remedy the
violation. Grantee shall have 30 days subsequent to receipt of the notice
in which to correct the violation before the City may require Grantee to
make payment of penalties, and further to enforce payment of penalties
through the Security Fund. Grantee may, within 10 days of receipt of
notice, notify the City that there is a dispute as to whether a violation or
failure has, in fact, occurred. Such notice by Grantee shall specify with
particularity the matters disputed by Grantee and shall stay the running of
the above-described time.
1. City shall hear Grantee's dispute at the next regularly scheduled or
specially scheduled Council meeting. Grantee shall have the right
to subpoena and cross-examine witnesses. The City shall
determine if Grantee has committed a violation and shall make
written findings of fact relative to its determination. If a violation
is found, Grantee may petition for reconsideration.
2. If after hearing the dispute, the claim is upheld by the City, then
Grantee shall have 30 days within which to remedy the violation
before the City may require payment of all penalties due it.
3. The time for Grantee to correct any alleged violation may be
extended by the Ciry if the necessary action to correct the alleged
violation is of such a nature or character as to require more than
30 clays within which to perform provided Grantee commences
corrective action within 15 days and thereafter uses reasonable
diligence, as determined by the City, to correct the violation.
H. If Ciry draws upon the Security Fund delivered pursuant hereto, in whole
or in part, Grantee shall replace the same within three days and shall
deliver to Ciry a like replacement Security-Fund for the full amount stated
in Paragraph A of this section as a substitution of the previous Security
Fund.
I. If any Security Fund is not so replaced, City may draw on said Security
Fund for the whole amount thereof and hold the proceeds, without
interest, and use the proceeds to pay costs incurred by City in performing
and paying for any or all of the obligations, duties and responsibilities of
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Grantee under this Franchise that are not performed or paid for b~•
Grantee pursuant hereto, including attorneys' fees incurred by the Cit}~ in
so performing and paying. The failure to so rtplace any Security Fund
may also, at the option of City, be deemed a default by Grantee under this
Franchise. The drawing on the Security Fund by City, and use of the
money so obtained for payment or performance of the obligations, duties
and responsibilities of Grantee which are in default, shall not be a R•aiver
or release of such default.
J. The collection by City of any damages, monies or penalties from the
Security Fund shall not affect any other right or remedy available to City,
nor shall any act, or failure to act, by City pursuant to the Security Fund,
be deemed a waiver of any right of City pursuant to this Franchise or
otherwise.
SECTION 11. SOCIAL CONTRACT.
The Social Contract between Grantee and the Federal Communications Commission is attached
hereto as Exhibit B. It is expressly understood by the City and the Grantee that the Social
Contnet is made a part hereof for informational purposes only. Inclusion of the Social Contract
by reference is not intended to nor shall it create any right of the City to enforce any provisions
of the Social Contract directly or indirectly under the terms of this Franchise. The parties
expressly acknowledge and understand that the Social Contract and the obligations contained
therein are enforceable exclusively by the FCC as more fully set forth in the Social Contract.
SEC':'IOI~' 12. COMPETITION ADJUSTMEIv'T.
12.1 In consideration of Grantee's substantial investment estimated at $20 million
dollars to rebuild its System at an early date for the Cities of Eden Prairie, Edina,
Mirtnetonka, Hopkins and Richfield, MN, the City agrees to include the following
provisions.
12.2 Any additional or subsequent cable Franchise granted to cable or non-cable
companies who may compete with Grantee within the Franchise area will be
granted only on substantially similar terms and conditions as this Franchise and
shall not contain less burdensome nor more favorable terms than those imposed
on Grantee by this Franchise.
12.3 The City and Grantee agree that all Franchise provisions that Grantee is subject
to are effective against the Grantee only if such requirements are applied as well
to any and all wired competitors of the Grantee within the Franchise area. For
purposes of this subsection, a wired competitor is any video provider using
Streets and offering at least 12 channels of video programming at least one of
which is a broadcast signal, which uses wires, coaxial cables, optical fiber or
other similar technology and places or attaches such wires, cables or fibers on
-14-
Streets or public utility facilities. This definition of wired competitor does not
include a Satellite Master Antenna Television system located wholly on private
property within a building.
12.4 Any Franchise provision or other regulation enforced by the City upon Grange
which is not also imposed upon Grantee(s) wired competitors within the Franchise
area of the City, shall be void as to Grantee, subject to the folloa~ing
requirements:
A. Tfie existence of a wired competitor in the Franchise area of the City shall
not relieve Grantee of an obligation to provide an annual minimum
Franchise Fee of two percent of Gross Revenues. If the wined competitor
obtains a cable Franchise which rrcluires it to pay a Franchise Fee or
substantially similar fee of an equivalent amount to the City, the State of
Minnesota or any other governmental entity which is less than five percent
of Gross Revenues, the City shall reduce Grantee's Franchise Fee to the
same level, but in no event less than two percent of Gross Revenues. If
the wired competitor does not obtain a cable Franchise, but it is required
to pay a Franchise Fee or substantially similar fee to the City, State of
Minnesota or any other governmental entity, then Grantee shall pay the
same fee, but in no event less than two percent of Gross Revenues. If the
wired competitor is not required to pay a Franchise Fee or similar fee to
the City or the State of Minnesota, then the two percent minimum
Franchise Fee shall apply to Grantee for all homes and customers who are
passed by the wired competitor's system. If at any time a wired
competitor with a cable Franchise pays a Franchise Fee of move than two
percent, or if a wired competitor without a Franchise Fee pays a
Franchise Fee or similar fee of more than two percent, Grantee shall pay
the same Franchise Fee. In no event shall Grantee be required to pay
more than a five percent Franchise Fee. If the wired competitor
discontinues providing multichannel video services, the Grantee's
Franchise Fee shall immediately return to its original level.
B. The existence of a wired competitor shall not relieve Grantee of an
obligation to provide at least one chatnnel for public, educational and
governmental access programming. If the wined competitor obtains a
cable Franchise which requires it to provide less than four public,
educational and governmental Access Channels, the City shall, upon the
effective date of the subsequent Franchise, reduce Grantee's requirement
to the same number of channels, but in no event shall Grantee provide less
than one public, educational and governmental access channel. If the
wired competitor does not obtain a cable Franchise, but it is required to
provide less than four public, educational and governmental Access
Channels, or if the wired competitor is not required to provide any public,
-15-
educational or governmental Access Channels, then the Ciri~ shall reduce
the number of Access Charu~els required of Grantee as follows:
(i) If the wired competitor passes less than 25 ~ of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
Minnetonka and Richfield, Grantee shall provide at least four
public, educational and governmental Access Channels.
(ii) If the wired competitor passes 25 ~ or more but less than 50 ~ of
the homes and customers in the cities of Edina, Eden Prairie,
Hopkins, Minnetonka and Richfield, Grantee shall provide at least
three public, educational and governmental Access Channels.
(iii) If the wired competitor passes SO °b or more of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
Minnetonka and Richfield, Grantee shall provide at least one
public, educational and governmental Access Channel.
If at any time, a wired competitor provides channels for public,
educational and governmental access which exceed the channels provided
by Grantee, Grantee shall provide the same number of channels as the
wired competitor. In no event shall Grantee be required to provide more
public, educational or governmental Access Channels than it has agreed
to in this Franchise Agreement Ordinance.
If the wired competitor discontinues providing multichannel video
services, the Grantee's requirement for the provision of public,
educational and governmental Access Channels shall immediately return
to its original level.
C. If a wired competitor obtains a cable Franchise which requires it to
provide less funding for equipment or facilities for public, educational and
governmental access or less facilities and equipment than Grantee, the
City shall reduce the Grantee's requirement for funding for public,
educations] and governmental access and facilities and equipment to the
level of the wired competitor. If the wired competitor does not obtain a
cable Franchise, including open video providers in accordance with the
Telecommunications Act of 1996 and FCC rules, but it is required to
provide less funding for public, educational and governmental access or
less equipment or facilities than Grantee, or if the wired competitor is not
required to provide any funding for public, educational or governmental
access or equipment or facilities, then the City shall reduce the Grantee's
required funding as follows:
-16-
(i) If the wired competitor passes less than 25 ro of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
Minnetonla and Richfield, Grantee shall continue to provide the
~~ same level of funding for public, educational and governmental
access facilities and equipment as indicated in this Ordinance.
(ii) If the wired competitor passes 25 °b or more but less than 50 ~ of
the homes and customers in the cities of Edina, Fden Prairie,
Hopkins, Minnetonka and Richfield, the City shall reduce the
funding and, equipment and facilities requirements of the Grantee
by 30 ~ .
(iii) If the wired competitor passes 50 9b or more of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
Minnetonka and Richfield, the City shall eliminate the funding
and, equipment and facilities mquirements for public, educational
and governmental access funding.
It is not the intent of this section to reduce Grantee's funds, equipment
and facilities requirements regarding public, educational and governmental
access programming to an amount less than the amount provided by its
wired competitors. if at any time a wired competitor provides funds,
equipment or facilities for public, educational and governmental access
that exceed the funds, equipment or facilities provided by Grantee under
this paragraph, Grantee shall provide the same amount of funds,
equipment and facilities. In no event shall Grantee be required to provide
more funds, equipment or facilities than it has agreed to provide in
Section 7 of this Franchise Agreement Ordinance.
If the wired competitor discontinues providing multichannel video
services, the Grantee's requirement for the provision of funding and,
equipment and facilities for public, educational and governmental access
and, facilities and equipment shall immediately return to its original level.
D. For all other Franchise provisions imposed upon Grantee in this
Ordinance, if a wired competitor obtains a cable Franchise which does not
require it to meet the same Franchise provision, the City shall not require
Grantee to meet that Franchise provision. If the wired competitor does
not obtain a cable Franchise and it is not required to meet the same
Franchise provision, then the City shall relieve the Grantee from that
Franchise provision as follows:
(i) If the wired competitor passes less than 50 °b of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
_~~-
Minnetonka and Richfield, Grantce shall continue to compl}• with
the Franchise provision.
"~ (ii) If the wired competitor passes 50 ~ or more of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
Minnetonka and Richfield, the City shall not require Grantee to
meet the Franchise provision.
If at any time a wired competitor provides a requirement contained
originally in this cable Franchise, Grantee shall comply with that same
requirement.
If the wired competitor discontinues providing multichartnel video
services, the Grantee shall be required to meet the Franchise provision.
12.5 If Grantee is aware of a Franchise provision imposed by the City upon Grantee
which is not also imposed by the City or the State of Minnesota upon a wired
competitor, it shall identify the wired competitor, including the basis for stating
that the entity is a "wired competitor" as defined above; it shall identify the
Franchise provision in question; and it shall provide this information to the City.
Within 90 days, the City shall: (1) pass a resolution declaring that Grantee is
subject to this section for that requirement; (2) declare why the entity in question
is not a wired competitor; or (3) state that the "wined competitor" is subject to a
requirement that substantially duplicates the Franchise provision. During the
above process, the Grantee shall escrow any funds at issue in the above process
that the Franchise requires be remitted during the time period of the above
process and Grantee shall continue to meet any and all requirements in question.
If the City declares such requirement void as to Grantee, the City is not liable for
Grantee's past compliance with the requirement, including any past fees remitted
to the City.
1.'.6 If the City and Grantee are unable to agr~rce upon the operation of this section of
the Ordinance within 90 days after one party provides notice to the other party,
the parties ma}~ agree to enter mediation.
SECTIO?~ 13. ACCEPTANCE.
13.1 Other Franchises.
A. The System intended for City, may be part of a joint system that serves
the cities of Eden Prairie, Edina, Hopkins, Minnetonka and Richfield,
Mi.ru~esota.
B. Grantee will, in good faith, apply for and accept, if offered to it, a
Franchise (similar Franchise) from each of the other cities on all the same
-18-
terms and conditions herein provided, except provisions omitted as
inapplicable.
~- 13.2 Time of Acceptance: Incorporation of
Offerin;: Exhibits.
A. Grantee shall have 30 days from the last date of adoption of a similar
Franchise by all of the cities listed in Section 13.1(A) of this Se:.tion, to
accept this Franchise in form and substance acceptable to City. Such
acceptance by Grantee shall be deemed the grant of this Franchise for all
purposes.
B. Upon acceptance of this Franchise, Ordinance No. _, also ltttown as the
Cable Communications Ordinance, shall be repealed and Grantee shall be
bound by all the terms and conditions contained in Ordinance No. ,
also lrnown as the Cable Regulatory Ordinance, and herein. With its
acceptance, Grantee also shall deliver to City an opinion from its legal
counsel, acceptable to City, stating that this Franchise has been duly
accepted by Grantee, that this Franchise is enforceable against Grantee in
accordance with its terms, and which opinion shall otherwise be in form
and substance acceptable to City.
C. With its acceptance, Grantee -also shall deliver to City tnie and correct
copies of documents creating Grantee and evidencing the power and
authority referred to in the opinion of Grantee's counsel, certified as of
a then current date by public office holders to the extent possible and
otherwise by an officer of Grantee.
D. At the time of acceptance, Grantee shall provide a copy of its initial
services which shall be attached hereto as Exhibit C.
E. The effective date of this Franchise Agreement Ordinance shall be the date
executed by Grantee including acceptances as described in this Section 13.
I
J
-19-
IN V~'ITNFSS WHEREOF, Grantor and Grantee have executed this Franchise agreement
the date and vear first above written.
CITY OF
(SEAL)
(Corporate Sea])
STATE OF )~
COUI~'T~' OF )
riinnesota
By
Date:
Mayor
ATTEST:
City Clerk
KBL CABLE SYSTEMS OF THE SOL:~I~HwF.ST,
INC., A WHOLLY-OWNED SUBSIDIARY OF
TIIvIE WARNER II~tc.
By
Date:
L1
The foregoing instrument was aclmowledged before me on , 199_, by
the of the City of ,
on behalf of the City.
Notary Public
- Z ~ EXHIBIT A
PARAGON CAF3l F - SOU T I IWES T, MIIJNF iO F A REGION
UE TAIL CALCUI AiION OF- 19XX fRANCNISE FEES (%)
PAYMENT PEF2C[NiAGES BASEU ON 19XX REVEIJUE AND f3AU DEBT
PERCENTAGES BASED
19XX REVENUE ~ ON 19XX REVENUE AND
__________________________________ I BAD DEBT
BASIC 0 I -----------------------
FR4'~'CHISE FEE PAYME'N'T ~'ORI;SHEET
ADDITIONAL OUTLETS 0 I EDEN PRAIRIE 0.0000%
EQUIPMENT RENT 0 I
PAY TV 0 I EDINA 0.0000%
PAY PER EVENT p I
TRANSACTION FEES 0 I HOPKINS 0.0000%
ADVERTISING 0 ~
STTOPPING SERVICE 0 I MINNETONKA 0.0000%
OTFTER p I
--------------------- I RICHFIELD 0.0000%
TOTAL REVENUE 0 I ________________
I TOTAL 0.0000%
LESS: BAD DEBT 0 I =________
LESS: LOCAL ACCESS 0 ~
CFIARGEABLE REVENUE --------------------- I
0 I
x FRANCHISE FEE % 0% I
TOTAL 19XX FRANCHISE .-------------------- I
30 I
FEES TO BE PAID iN =__________- I
19XX I
STATE OF )
COUNTY OF )
Sl !' I 199E
<------------ PAYMENT SCHEDULE ------------>
TOTALI9XX
puarter - - puarter --- - puarter puarter PAYMENTS
SO EO -
EO ------------------
EO -------------------
s0
0 0 0 0 0
0 0 0 0 0
0 ~ 0 0 0 0
0 0 0 0 0
Eo EO EO 3o E0.
The foregoing instrument was aclrnowledged before me on , 199_, by
the of KBL Cable Systems of the Southwest,
Inc., awholly-owned subsidiary of Time Warner Inc., on behalf of the company.
Notary Public
E:~IBIT !3 - 21-
T~ZE V4'AR~'ER SOCIAL CO'N'TRACT
FOR FCC RECORD OMLT
f// MOLO, Tine Varner Social Contract, fCC 95-678//S
S/ 79.922 Rates for the basic service tier and cable programming services tier /i
S/ 76.962 Refur+ds /S
S/ 76.950 Coeplaints regarding cable programming service tiers /S
FCC 45-67a
Before the
FEDERAL COMl1MICATIOMS CdMI55I0N
Yashinpton, D.C. 20554
In the Matter of)
Social Contract for )
Tia+e Varner )
MEMORAMDIM OP11130M AMD ORDER
Adopted: Movetnber 30, 1995 Released: MovtmDer 30, 1995
By the Commission:
Table of Contents
Paragraphs:
I. Introduction 1
II. Background 2
A. Overvieri of the Social Contract 5
lll. Discussion
A. waiver T6
B. Preemption of Stott •nd local Motice Requirements 20
C. Provisions of the Social Contract 2G
e. Systewt UppradKS and CPS Price Cep Increases
i. Tert+s of the Social Contract25
i i . Conwients 28
iii. Discussion 31
b. Eouipment and Installation Averaging
i. Terns of the Social Contr~ct37
i i . Comments 38
iii. Discussion LO
c. Resolution of Pending Cases
i. Terws of the Social Contract42
i ~ . Comwrmts 63
iii. Discussion 65
d. Lifeline Basic Tier Rates
i. Tern of the Social Contract52
ii. CoaRentc 54
iii. Discussion 56
e. Migrated Product Tier
i. Ter~as of the Social Contract59
i i . Co~wients 62
iii. Discussion 63
f. Services to Schools
i. Terns of the Social Contrect65
ii. Comments 68
iii. Discussion 71
p, Move Yiring
i. Terns of the Social Contract7G
ii. Cowaents ?5
iii. Discussion 76
h. Systaw Acquisitions and Divestitures
i. Terns of Social Contract 77
i i . Cawents 7E
iii. Discussion 79
i. Modification and Terwination Provisions
i. Terss of the Social Contract(S1
i i . Coaarcrtts E3
iii. Discussion dL
j. Preaaption
i. Tens of the Social ContractQS
i i . Coawettts ~
iii. Discussion E7
k. Other Issues E8
IV. Conclusion and Ordering Clauses 92
I. INTRODUCTION
1. Tine Varner Cable (Tine Varner) and the Federal Commurtications Caainission
("Commission") have negotiated • Social Contract designed to provide upgrade incentives for
Tine Varner and to provide rate stability and increased gwlity of service for its consumers.
In addition, the Social Contract resolves over 400 rate cases and provides refunds of
approxiwately K .7 pillion plus interest to subscribers. In this Order we approve the Tine
Varner Social Contract ("Social Contract"), rhich is attached as Appendix A. The proposed
Social Contract ws placed on Public Notice and comment periods rere established. The
Commission received both initial and reply cainrcnts.
II. BACKGROUND
2. in the Cable Television Consumer Protection and Competition Act of 1992 (ai992
Cable Act"), Congress set •s oex of its policy goals to insure that cable operators continue to
expand the capacity and programs offered over their systems, there economically viable. !n
Implementation of Sections of the Cable Television Consumer Protection and Coapetition Act
of 1992: Rate Regulation, MM Docket Mo. 93-215, Report and Order and Further Motive of
Proposed Rulewaking ("Cost Order") establishing interim regulations for cost of service
filings, re adopted an upgrade ircentive plan on an experimental basis. Ye noted that the
basic outline of this approach could be "to permit an operator to enter into • social contract
rite its customers under rhich the operator could be given substantial flexibility in setting
rates for per regulated services it introduces, such es per service tiers offering additional
program charnels. In exchange, custamrrs could be guaranteed thst rates for current services
could be kept stable and reasonable, and that this rate could purchase at least the same
program charnels, or charnels of equivalent value to customers. The operator could also
commit to otnerrise waintaininp or iaprovinp its service qw lily. The contract could be
effective for • terms of years and could be overseen by this Commission, and reviewed before
the erd of the ter~.^ Ye also noted that this plan "protects the rates and gwlity of current
cable service tiers, chile providing profit ircentives for operators to introduce new and
improved regulated 'cruises, wsy help carry out the purposes of the Cable Act chile •lso
beirp fair to customers of current services, less burdensome on cable operators and chose
responsible for their regulation, and wore likely to encourage rorthrhile irnestwente to
upgrade cable service.' Ye recently have approved such a social contract rith Continental
Cablevicion, lnc. (the "Continental Contract"). The Continental Contract was approved by the.
Coaniasion in an Order adopted an August 1, 1995.
3. On May <, 1995, pursuant to special ex pa rte procedures available in certain cable
rate proceedings, Tian Varner requested relaxed ex parts treatment to enable it to discuss
broad rate related wafters rith Coasnission officials. The Bureau orally approved this
reou~rt on wy 16, 1995. Consistent rith these ex parts procedures the Cable Services
Bursa., ("Bureau") and Tian Varner negotiated the terms of the Social Contract. On August
3, 1995, the Coaaaiscion approved the release of the draft of the Social Contract for public
comment.
G. The Commission has reviered and considered the comments it received in
approving the terac and conditions of the Social Contract and waking sodifications to it.
A. Overvier of the Social Contract
5. The Social Contract is for a tens of five years. From t995 through 2000, Tine
Varner is required to invest f4 billion to rebuild and upgrade all of its domestic cable
systaos, ircludinp deployaKrtt of fiber optic technology, ircreased charnel capacity and
iaproved systaw reliability and signal gwlity. At least 60X of all capital expended in
correction with the upgrade cownitwent rill be applied for the benefit of basic service tier
("BST") and cable prograrwinp service tier ("CPST") subscribers. In addition, at least 60X
of the neti analog capacity added as a result of the upgrade rill be used for traditionally
regulated CPSTs, and, on •verape, trsditionally regulated CPSTs on the upgraded eystees tilt
have at least 15 additional chanxls. To fund this investa+ent, Tian Varner rill be •llored
to ircreace the wonthly rate for the awst highly penetrated CPST in each systaw by ft during
each year of the Social Contract. If Tian Varner tails to meet the upgrade coaraitarnt
rithin the tick provided for under the Social Contract, subscribers to the cable systamc that
have rot been upgraded rill be entitled to refunds egwt to the CPST rate ircreases provided
by the Social Contract, rith interest, plus a liquidated dawages penalty of t5X of such
aan~nt. The Social Contract contains a provision that allots Tiwe Varner to average broad
categories of aquipawnt and installation and associated costs for all of its syctamc on •
geographic regional basis.
6. The Social Contract rill resolve Tian Yarner~s pending CPST ca:es, ircludinp
CPST cases against the systeas Tian Varner recently acquired from Houston Industries, Inc.
(KBLCOM) and Nerf+ouse Broadcasting Corporation. Altogether this resolves 946
coaplaints. To resolve these cases, TiaK Varner rill wake cash refunds in the form of bill
credits to certain cuetoar:rs totalling approxiwately s4.7 willion plus interest for the period
bepi mine on the date of the applicable eonplaint and ending rith the date of payment.
Tisrc Horner carrot iaplewent any rate adjustwent for the upgrade of a particular system
unless the refund provided for order the Social Contract has been issued to such system or the
isswrce of the refund begins siaultaneously with such rate adjustwent. All refunds gust be
issued vithin six worths of the first rate adjustwent iaplewented rith respect to the upgrade
for the Tier: Varner systaws. BST cases rill not be resolved by the Social Contract. Those
cases rill continue to be resolved by Tiarc Varner std the local franchising authorities
purswnt to Cowaission rules.
7. Tiae Varner rill create a "lifeline basic tier," priced to enharce the affordability
of BST. Tiwe Horner rill accoaplish this in tro wys. First, on systems serving at least
85X of its total subscribers, Tian Varner rill reduce the price on its BST by 1QX rithin six
sionths of the effective date of the Social Contract, rith a revenue neutral increase iin CPST
rstes. Local franchising authorities any elect not to have this reduction by notifying Tiny
Hsrner and the Coawiission in writing rithin GS days of the effective date of the Social
Contract. Second, on the raweininp systems there BST rates have not been reduced by tOX,
The streamlined lifeline basic tiers rill carry only those stations required by tar, such as
soot-carry stations, public, educational and governnrntal ("PEG") stations, and local
origination. Any additional charnels rill be wooed from the BST to the CPST with a
corresponding revere neutral decrease in the price of the BST and ircresse in the CPST
price.
8. Tiwe earner rill offer a free cable correction to all of the public schools
located in the franchise areas rhert Tism Horner provides cable service snd that are passed
by its systeas. Tiwe Horner also rill provide a cable correction at cost to alt secondary
private schools chose students receive funding order Title I of the Education and Secondary
School Act in such franchises that are passed by its systems. Tiwe Harper rill Tire
additional classrooas in existing schools at cost. For net public schools and existing public
scnools uroerpoinp extensive ret~abilitstion, Time Horner rill coordinate with the local
officials and contractors to rite each of the tlassroam6 in net schools free of Charge, if lime
Harper is ratified of construction. BST and CPST rill be provided to each outlet in the
corrected public and private schools rithout cost. Tiwe Ysrner rill also provide the
cometted schools rith a sor-thly educational program guide rith curriculum support ideas to
assist educators in effectively using the per services. In addition, TiaK Varner and Tiny
!rc. •re oevelapinp an on-line personal canputer service. Orce this service has been
developed and test-warketed, TiaK Hamer rill offer this service to each corrected school in
areas in rhich the service is generally offered, free of charge, during the school year and rill
also provide • free endear to access the service. TiaK Hsrner rill provide schools rith
additional ax~deaes at cost and rill provide free service to each additional sndem purchased.
Time Horner also rill sponsor rorkshops and abterials so that teachers have the training
necessary to appropriately use the services provided.
9. The Social Contract further provides that, in Time Harper systems there neither
Tiwe Harper ran its predecessors have created a la carte packages, Tiwe Horner rill be
permitted to crests Migrated Product Tiers ("MPTs"), consisting of up to four services
^igreted frow the regulated tiers. The ^iprated enamels will be priced at the rate regulated
price with increases •llored for inflation and external costs in accordance with the
Coaawission's price cap rules. There wilt be no limitation on the rxwber of new enamels
that Tian Varner ary add to the MPTs at the price of up to 5.20 per Memel plus license
fees. After April 1, 1497, Tine Varner ary convert any MPT into • new product tier
.('NPT•), ac Defined by laplaeentation of Sections of the Cable Television Consumer
Protection and Coapetition Act of 1942: Rate Regulation, Mw Mos. 42-266, 92-215, Sixth
Order On Reconsideration, Fifth Report And Order, and Seventh Motiee of -roposed Rule
Making, (•6oing Forwrd'") provided that the tier is offered without • buy-through
requirearcrtt other than tST.
10. finally, during the tens of the Social Contract, Tiwe Varner rill forego its right
to use a cost of service justification to support any future rate increases in any franchise ^rea
covered by the Social Contract. The Social Contract rsquires that no later than 90 days
following the end of each calendar year during which the Social Contract is in effect, and
within 90 deys folla+ing the end of the last swnth following expiration of the Social Contract
other than calendar year and, Tick Wrner rill provide the Conaissian and each local
franchising authority having jurisdiction over an area covered by the Social Contract with •
progress report outlining the asioutt of capital investments srde, the nuaber of subscribers
•ffatted by those investaKnts, iaprovea~ents in systaa reliability and ssrviee, and projected
expenditure and upgrades for the following year.
11. The Social Contract m.y not be andified or terminated without the autwl
agraearnt of both parties to the Social Contract. Time Varner any petition the Camnission
to modify or terwinate the Social Contract based an any relevant Mange in applicable taws,
regulations or circustances. !n addition, in the event of any changes to the provisions of the
1992 Cable Act or any arterial changes to the Caaission's rules thereunder relating to rates
(BST, CPST or aoluipaient) that are favorable to Tian Varner, any Tine Varner system ay
elect to be relieved fray the relevant rate provisions in the Social Contract, but shall remain
bond by all other provisions of the Social Contract.
12. Ye believe that the Social Contract is consistent with the goals for upgrade
incentive plans which were outlined in the Cost Order. The Social Contract benefits
subscribers by assuring reasonable and stable rates in all Tice Varner systems, iaproving
service offerings and picture qw lily with state of the art teMnology, increasing coneua+er
choice by lifeline basic tier pricing and eliwination of buy-through requiraeimts, and
providing refurtits to custasiers. The Social Contract further benefits subscribers through
Tier earner's agreement not to restrict subscribers' ability to remove, replace, or rearrange
wiring so tong as it does not interfere with Tlwt's ability to provide services and collect
reverxxs frown that subscriber or other subscribers in a aultiple dwelling. Local franchising
wtnorities benefit fray the opportunity to assist elderly, law incase, and basic only
cut scribers with the lifeline basic pricing. In addition, the Social Contract rill reduce the
saninistrative burden and cost of regulation for Tier Varner, local governments, and the
Commission. The Social Contract also provides a significant public benefit to all public
schools and certain private secondary schools that are located within Time Ysrner franchise
cress arx! passed by its systees.
13. The Social Contract rill permit a rate structure that rill •lla+ Tisrc Varner to
focus on its lore-tens strategic plaming and growth, having resolved its outstanding rate
coRpta,nts. Local franchising authorities rill retain their right to regulate rates for basic
service, their right to negotiate upgrades and other benefits for their individwl franchises, and
their aoility to cvaasmt and participate on arty changes in this Social Contract that could
a~fect their localities, The Social Contract ensures that the rights of local franchise •uthorities
amp cutzcribers to seek redress at the Cownission rill be preserved.
III. DISCUSSION
A. Hover
14. Upgrade Inc mtive Puns represent an alternative to the Commission's uswl
DrotaDUrK for resolving rate coaplaints ageirut cable operators. indeed, the Coinnission
recognised in the Cost Order the experiaKntal nature of this type of social contract. There
are several •spetts of the Social Contract that do not conform precisely to the Coarsieeion'c
rate reputation rules or to the elated experiaKntal Upgrade incentive Plan outlined in the Cost
orosr. He believe that the Social Contract furthers the Coaission's policy goals of
ere caring that cable operators expand the capacity and programs offered over their systems
mere etonoaiicatly viable, and reducing regulatory burdens chile still ensuring that cable
rates •re reasonable. Ac a result, re conclude that special circumstances warrant a deviation
from our generally applicable rules and that waiver of certain of the Commission's rules is in
the p~tic interest.
15. In particular, Time Verner seeks a waiver of ^U 76.923 to •llar equipment cost
averapirg. This section of Lhe rules sets forth the arthodology for deterstininp the rates for
equipatrnt and installation used to receive BST service. The intended purpose of the section
is to ansurc that equipment is charged at cost and that all BST subscribers pay for the
equiparrnt. Yaiver of this provision to enable Tine Varner to average equipaent costs on
' a regional basis is consistent rith the purpose of "U76.923 because equipment rill continue to
be charged at cost; this cost will be spread across •ll subscribers in a region, rather than a
franchise •rea.
16. Time wrner also seeks • wiver of "U 76.%1(e), Mich requires local franchising
authorities to reiaburse Tian Varner for CPST franchise fees that were based on CPST
charges that are being refunded to subscribers. Time Varner has agreed to wive its right to
reimburseaknt by the franchising wthorities; thus, this vaiver provides a benefit to the local
franchising wthority and subscribers, and re see no reason to deny it. Tick Varner alto
aeeits a wiver of "I!"U 7b.309(t)(i)(S) and Tb.964 on a one-tier basis to allot Tiwe Varner
to add service and change line-ups on less than 30 days rotice.
iT- Tiar Varner seeks G one-liar wiver of "U 76.933 to allot it to iapls~ertt rate
and service restructuring and amwl rate adjustments to the iST and the CPST on 30 days
notice, or less, subject to refunds std subject to the further cardition that, if • local
franehisinp authority exercises the opt-out provision -flat Tian Varner caaaaences
iaplamentatian of the January 1, 19% rate and service restructuring and adjuetarnt, Tine
w rner rill restore the fOX reduction in the itST rate in the next bitting cycle (i.e. the
difference between the net rate and the rate chsrped order the Social Contract, if a subscriber
cancels service during the first month of implementation of the Social Contract). These
provisions set forth customer service ctardards to ensure, among other things, that eustaa-ers
have adegwte notice of changes in their service and liar to cancel services. The Social
Contract further provides that if any subscriber cancels its subscription to the rslevant CPST
within 30 days after the date of the first bill reflecting the CPST adjustment authorized by the
Social Contract, Time wrner rill issue a refund to that subscriber for the incresrntal
am~o~nt attributable to such increase.
t8. Ye understand the need for a vaiver of these provisions if Time Varner is to
impleamnt the necessary charges by .Janwry 1, 19%. These velvets •re on a one-tine basis
only. Subscribers rill be protected if the local franchising authority opts out of the creation
of a lifeline basic tier, or if subscribers choose r-ot to receivt the restructured service. Ye
concluck that a wiver of these provisions is not inconsistent rith the purposes of the
provisions.
14, In addition, Tiar Varner seeks w fivers of various Commission rules that it states
ere necessary to effectwte the taros of the Social Contract. At the core of the Social
Contract is the upgrade incentive plan thereby Time Varner rill rebuild and upgrade alt of
its do~rstic cable systems and in turn till be allured to recover the costs of the upgrade
over t,ar by adding a charge to the highest penetrated CPST during the years of the Social
Contract. Consequently, Tine Varner seeks a wiver of "U"U 76.922 and 76.933 to •llor Time
warner to recover the CPST rate increase for the upgrade in lieu of the methodology provided
under our Going Forwrd rules. Time Varner •lso seeks to naive: 1) "U 76. 960, requiring
tnet prior approval bt sought for rate increases for one year after CPST rate reduction under "U
76. 933; 2) "U"U 76.922(b), 76.430, and 76.956, to allot Time Varner to use a one-time
restructuring form in sitwtions there systeas become Wetly regulated; and 3) "U 76.922 to
allot reverxx neutral, pro-rata adjustments rather than adjustments to the msximunt permitted
rate less previous externs! costs (•residuel rate") there the lifeline tier and/or an MPT are
created in accordance rith the Social Contract tens. Ye believe that the Social Contract
provides cipnificant overall benefits and that the vaiver of these provisions is not inconsistent
r,tn the purposes of the provisions and such wiver is in the public interest. Accordingly, re
neretry find good cause to wive these provisions of the Caaanission~s rules necessary to
effectuate the terms of the Social Contract.
B, Preemption of State and Local Motice Requirements
20. Tian Varner asked the Caa~iesion to preempt; on a one-time basis, those local
franchise rules that require advance notice of rates and service charges to subscribers in
comect,on rith its initial iaplanentation of the Social Contract. Time Ysrner asserts that it
rill otherwise be unable to comply with the January 1, 19% rate restructuring date contained
,n the Social Contract •nd to fulfill 60 or 90 day local notice requirements.
21. ve believe that preemption is appropriate in this case as the state and local
notice repu,renentc may hinder Ttme Yarner~s ability to iaplement rate adjustments
un,tor~ly purswnt to the terns of the Social Contract by Janwry 1, 1996. Preemption
generally is held to be appropriate in cases such as this one where the local taw conflicts with
agency regulation or frustrates the purposes of the regulation. Indeed, many of the goals
regarding upgrade incentive plans outlined in the Cost Order, and net in this Social Contract,
could not be achieved ff iaplsn~tatian of rate restructuring Does not occur by Janwry 1,
1946. For example, army of the prograascinp cost increases occur on Janwry i of each
year. As such, Tine Varner could seek to adjust its rates to account for these irrreased
costs as provided for under our rules. In order to achieve the Social Contract's goal of
having a orx liar rate adjustarnt, and thus provide rate stability to subscribers, it is eeser+tial
that Tian Varner iaplaarnt the upgrade surcharge provioed for t~der the Social Contract by
Janwry 1, 19%.
22. Ye further believe that praapt iaplawerttation of the Social Contract best serves
the public interest. Thus, to allot Tian Varner to iaplaarnt ihs rate restructuring and MPT
provisions of the Social Contract, arty local franchise apreearnt or any state or local lac or
regulation is presapted an a one-tiwe basis to the extent that it rpuiras Tine Varner to give
greater than 30 days advance rotice of rate and service changes to subscribers. Such
preeaption shall be li~ited to the period prior to Febrwry 1, 1996. if Tiar Varner is
unable to eow•erxe i~lewentation of such refunds and rate adjustasrtts by Janwry 1, 1996,
but coswences such iaQlaarntation betreen the period Janwry 1. 1996 and Febrwry 1,
19%, it shall provide at least 30 days' rotice to lout franchising wthoritias and subscribers.
23. The Social Contract further provides that if any subscriber cancels its subscription
to the relevant CPST rithin 30 days after the date of the first bill reflecting the CPST
adjustarnt wthorizad by the Social Contract, Tine Varner rill issue • refund to that
subscriber for the ineraarntal aatiourtt attributable to such increase. Accordingly, the
preeaption of start and local rotice raquiraarnts and the raiver of Cansission rotice
conernts rill rot injure subscribers.
C. Provisions of the Social Contract
24. The Caawiission received rx~aerous coasnents on several terws of the proposed
Social Contract. This section addresses the concerns of the commenters and sets forth
modifications to the proposed Social Contract.
a. System Upgrades and CPS Price Cap Increases
(i) Terse of the Social Contract
25. The Social Contract provides for an investment of S4 billion over • five year
period to upgrade all of Tiwe Yarner's systems. As part of this investment, each Tine
Verner system rill have • minimum bardridth capacity of 550 MMZ and at least 5QX of
Tiwe corner's ubccribers rill have access to a winiaun bardridth capacity of 750 MHz.
In the 750 MMZ systems, •t least 200 MMZ is expected to be used for digital distribution. All
Time Varner systems rill be deployed to include fiber to the node architecture, rhieh rill
improve signal qty lily and reliability for all subscribers. Tian Yarner's ability to correct
outages in a wore tiwely warner rill also be improved through the use of telemetry to locate
problerts rithin the system.
26. To ford this invectarnt, Tiwe Varner rill be pen+itted to increase the mortthly
rate for the wort highly perKtrated CPST in each of its systems by ST.00 during each year of
the Social Contract. Further, this increase will serve •s the only increase on the CPST with
the exception of revenue-neutral adjustwents provided elsernere in the Social Contract and
sdlvstments for inflation and external costs perwitted under the Commission rules. For the
teen of this contract, live Varner wives its right to increase its CPST rates purswnt to the
Cuw~icsion~s Going Forrard rules. Moreover„ Tiwe Varner rill add 60X of all net analog
services to the CPST offered rithout any further ircrease in rates beyond the f1.00 per year
per~~tted by the Social Contract. This rill cow t an •verape of 15 net charnels to the
CPSTc on Tear rarr-er systes . Additionally, bOZ of the capital cost of the upgrade rill be
urea for regulated purposes. Tiwe Varner wives its right to file a cost of service shoring to
~uctify any rate increases during the tens of the Social Contract.
27. The Social Contract wandatK that Tiwe rarner'f investmMt in the upgrade of its
svstans rill be condixted rithout discrimination used on the eocio-eeorwesie status of Time
Vrarner's aura cribers. !f Tir Varner fails to upgrade •ll of its systeas as prescribed in the
Social Contract, Tiar Varner rill provide refunds (in the forty of bill credits) to alt
s~nscrioers rot receiving the upgraded service. The refunds rill equal the aawcrtt of the total
eurcnarpe levied on each suCscriber plus interest and a i5X liQuideted damages peY-alty on the
refund aa~oun t .
(i i ) Cawentc
28. Most crs~wrcnters express support for the system upgrades, waintaining that
s~txcr~txrs rill berxfit from wore advanced technology, access to the inforwation
superhighwy, and iaproved picture ouolitY. for a:ample, Cern Canty, California states
tnat Tiwe Harney rill briny infonaation superhipnray services to a •vest rxnoer of its
residents, a substantial rtiaoer of rnan •ere uroerserved and live in rural ereas.• Many
eoawrenters support Tian Herner's plan io phase in rate adjustarnts over a five year period
because it spreads the costs over a period of ties and provides for rate certainty.
29. Many coaercnters did not appose the concept of the systee upgrade but
neverthelees raised various objections to provisions in the Social Contract. Soar coewenters
clei^ that the upgrade could be required in any event either because of the efforts of local
frarchisiro wthorities or caapetitive raquireeents. Other cdwnenters clei^ either that too
each or too little of the upgrade is to be dedicated to digital services and that those
jurisdictions which had already required upgrades rill be disadvantaged vis-e-vis those
jurisdictions that previously did not require upgrades. Sane eoassenters oppose any CPST
rate ircrease that exceeds the li~its of the Coawission's Going Forwrd rules. First, these
coewenters cloi^ that the rate increase: 1) should be liwited to the awoutt of the Going
Forwrd ircrease which Tick Varner could have received during the save period, 2) should
not cover the cost of par services which custaarrs have not requested, 3) should not be
required for an upgrade which is a settla^e~nt corcescion, or 6) should not irclude external
costs). Second, these coeeKnters claie that the Conaission~s cost-of-service rulings
require that the rate ircrease not be iepleeentad before the upgrade it in service. Finally,
soave of these caewenterc state that the rate ircrease rill require users of regulated cable
services to subsidize other Tice Varner services. AaxriteM Mer Media Enterprises, lrc.,
bell Atlantic Telephone Coepanies aM Circimati sett Telephone Coapany contend that
Tice Varner rill ace the revenues frow the rate ircreases to enter the local telephone warket.
In particular, these eaapanies propose that Tice Varner: 1) account for the costs of the
upgrade eo that those costs can be properly allocated; 2) file an application for • certificate of
public convenience and necessity under Section 216 of the Coamnications Act; and 3) be
required to adhere to the rules applicable to telephone eoepanies on cost seeounting, cost
allocation, depreciation, transactions with affiliates, and joint warketing of services. The
City of Wrdena raises a question as to whether system upgrades required by franchising
authorities could be passed through to subscribers along with the upgrades required by the
Social Contract. finally, soave cannenters raise questions as to the iaplementation of the
rate increase, and sole have eiscorceptiorss about the weaning of langwge in the Social
Contract. for exaaple, one cananity inquired as to hoc the rate increase wilt relate to the
increase in the CPST to offset the BST rate reduction.
30. to its reply caaeents, Tice Varner contends that the Social Contract requires all
carnnrities it serves to have upgrade benefits. Tice Harper further eainiains that, even
mere Tia,e Varner already is coarnitted to asking upgrades, the Social Contract provides a
firm coapletion deadline and • federally enforceable upgrade carmiteent with weaningful
penalties. Tia,e Horner denies that its rate increase includes the cost of any equipment
needed to provide telephone service, such as telephone switches, and further contends that the
Commission has carefully reviewed Tiwe Harner's costs to preclude cross-subsidies. Tiwe
uerner states that it believes that it has accowplished the goal of udertskinp only those
upgrades that are econawtically justified and best Beet customer needs in the cost efficient
,nemer possible. According to Tian Horner, the purpose of the upgrade is to ieprove
reliability and picture qw lily, and to allow increased system addressability and interactive
capability. Tia,e Horner also argues that phasirg in the cost of the upgrade, as provided
u,oer the Social Contract, provides predictable, though wodest, rate ircreases, avoiding rate
snuck. Tine Horner states that subscribers rill benefit because spreading the cost over
f,ve years is preferable io prying one large sun once the upgrade is eoapleted. To the
extent that coaaaenters argue that the rate increases will exceed the awount allured by the
Gong Forward rules, Tine Horner argues that those rules provide an incentive t0 add
prograaw„ng services, not an incentive to add capital for the upgrade of charnel capacity.
T,ne Horner also rotes that it hoc agreed to wive any right it way have to take any future
,rcrcases u~oer the Going Forwrd ruler as of the effective date of the Social Contract.
Finally, Tine Harper eaintains that it has ro intention of passing through the cost of any
local franchising upgrade requiraarnt that does rot exceed the requiresents in the Soeiat
Contract.
(iii) Oiscuscion
31. The eejority of the cowwenterc have expressed support for the provision of the
Social Contract that requires Tiwe W rner to invest SL billion to rebuild and upgrade Tice
earner's cable systara:. The cuw,enterc support the deploye,ent of advanced technology
and i.proved picture qw lily. They also support Tiwe Harner's plan to phase in the
parwentc over • five year period to avoid rate shock.
32. we find that the upgrade provision of the Social Contract represents a velwble
tx.xfit to su~ccriberc in terws of advanced technology, iwproved reliability and picture
duality, and increased progranening choices. Further, re conclude that phasing in the cost of
the upgrade, in contrast to a one-lice increase rnen the upgrade is completed, is preferable
because it provides predictable raft increases, avoiding rate shock.
33. Yhile Tian Varner ray have chosen voluntarily to upgrade er have been
raquirsd by local franchising authorities to upgrade soar tectionc of its systaa-, the Social
' Contract binds Tire Varner Cable to eontirrre to rake significant upgrades throughout its
systems. Those local franchising authorities that have negotiated upgrade benefits will not De
disaovantaped. The Social Contract rakes clear that local franchising authorities can enforce
local franchise apraerertts or negotiate future apraasrnts which provide for upgrade benefits
exetedinp the upgraeie benefits of the Social Contract. Section III. J. 2. a. states that
•IN othinp herein shall affect the enforceability of arty otherwise valid pra~existing local
franchise apreerrnt, ordinance, local law or regulation which provides benefits which exceed
those provided in this Contract relating to systs upgrades or the ririnp of schools, roc shall
local franchising authorities be restricted in their authority to negotiate for such additional
benefits after the Effective Date of this Contraet.e Further, Tire Wrner has agreed to
andity the Social Contract to rake elaar that, except in those situatiorts Were • local
franchising authority plates upgrade raquiraarmts on Tire Wrner that excaex>1 the
raquiraarcrtts of the Social Contract, Tire Varner rill rot seek to pass throtph any capital
costs (other than the surcharge provided under the Social Contract) to the subscribers.
3L, The upgrade provision asbodies a balance betreen a guarantee of an average of
15 ner analog channels to benefit CPST subscribers and the initiation of digital distribution
teehrology, rhieh rill expand the capacity of Tian Varner to add propraessing and iaprove
picture o~+ality. As rated in the Social Contract, Tire Varner agrees that at least 60X of alt
capital expended in comeetion rich the upgrade eormitnent described in the Social Contract
will be applied for the benefit of tST and CPST subscribers. The Commission does rot
believe that it is in the public interest for it to deterrine how each digital and analog
capacity Tian Varner should use for particular prograar: and anrkets, since such a
requirearent ^ipht licit the etonocic feasibility o! the upgrade. However, rt point out that
Tier Varner eey use digital capacity for the benettt of regulated services.
35. Ye are rindful of the concerns expressed by soave caamenters that the rate
increases r.y be used to p.y for Tiar Yarner~s plant to provide competitive services. Ye
have examined Tine Yarner~s cost data and believe that the Costs of the upgrade are
reasonable and necessary and that Tine Varner has fairly allocated the costs of the upgrade
betreen its current regulated and non-regulated operations. Further, Tire Varner has agreed
to a codification to the Social Contract which provides that the amxxnt of the capital costa of
the upgrade that will be recovered in the rate increases on regulated services rill be applied
for the benefit of regulated BST and CPST subscribers during the period of the Social
Contract. The Coamission also has the authority under the Social Contract to audit Tire
Verner~s books and records and to interview Tian Varner corporate employees to eYtsure
cowpliance rith this aer+drment. Indeed, if it is deterri-xd that Tice Varner has rot
coaplied rith the obligations under the Social Contract, re r.y exercise any of the rights
and raeediec which arc attendant to violations of • Commission order. Under these
c,rcuectancec, we find it umecessery to adopt the suggestion of several telephone coepenies
teat T,atie Varner be required to comply with the rules applicable to telephone caepanies.
36. The conter+tion that the upgrade increases rill exceed the amount permitted under
the Going forrard Order is cisplaced. The Going forrard Order was intended to be an
,ncentive for operators to add a s+nsll nurCer of cable charnels to existing systems. The
,ncreasec uroer the Social Contract, ~n the other hand, ere intended to enable Tine Varner to
uroe~tate a miejor system upgrade, rhich rill eoderni2e facilities to provide ieproved
oua~,ty •rd etficiency and to add neti tiers of services and ner types of services.
Consequently, the rate increases ere not pria»rily being paid for new services, but for
,ap~oved quality of services es a result of eedernization. The Social Contract does not
cnsnge the requirements of the Comawission'c rules governing the pass-through of external
costs and inflation. Finally, the Social Contract provides that the upgrade rate increase is to
tx •acesced amW lly on ell CPST subscribers, in addition to any amxxnt necessary to offset
the 1Q2 BST rate reduction.
b. Ew,Arent and lnetellation Averaging
(i) Terns of the Social Contract
3T. Uroer the Social Contract, Tier Varner rill be perTitted to establish • blended
average req,onal rate for the equiFwent basket categories of hourly service charge,
,nctaltat,ons, remote control devices, addressable converters, non-addressable Converters, other
leases equ,pnrnt, and cuxtoeer tier charges. The geographic regions used for averaging are
snore on Anoe*dix B of the Social Contract and essentially correspond rith the Areas of
Doa,nant Influence (`pals') served by Tier Varner, Regional averaging Mill be
acco.pl,cned by the filing of • Form 1205 Equ~pcent Fong or its equivalent Yith the
Caew„ss,on on an arYxal basis begi ming ro sooner than December 1, 1995. Time Varner
a~ay txy,n cnargirg revised equipment rates upon 30 days notice to the Commission subject
to a refund pursuant to Caawission rules. The local franchising authorities rill be
responsible for reviewing the rates charged to ensure consistency with the rates approved by
the Commission. If Tiwe Varner charges rates in excess of those per'itted by the
Commission, the local franchising authority way order • refuni.
(ii) Comaents
3a. Cowaenters rho support the eo)uipwent and installation averaging contend that it
rill strtaeline the process for review of these rates. On the other hand, save local
franchising authorities claim that both Co.aaission regulation of aQuipaent rafts and
•veraping of eQuipeent rates violate the 1992 Cable Act. Other local franchising authorities
raise specific Questions about blending, including whether blended rates vill track costs,
whether there rill be different rates for different types of eouipeent, nether addressable
converters rill be subsidizing ron-addressable converters, whether tht peopraphic regions are
appropriate for bending, the effect blertdinp rill have on the level of rates, and hov the
Cawsiesion and the local franchising authorities rill cork together under the blending
proposal.
39. !n its reply caaerertts, Tiax Varner notes that, in the Continental Contract
Order, we granted a w fiver to permit Continental to aggregate eQuipaent and installation
costs on • state or regional basic. Tine Varner rotes that re granted this wiver because it
we our belief that eoNipaent averaging rill serve the objectives of the Upgrade Incentive
Plan and rill eininize drastic increases in rafts for subscribers as upgrades take piece. Tian
Varner contends that because the Social Contract has a sieilar equiparnt averaging
provision, the rationale in the Continental Contract Order applies here. Tice Varner states
that it would be titling to establish separate charges for addressable and non-addressable
converters, due to specific concerns raised regarding converters. Tice Varner further
explains that, in those situations there any local franchising authority is still reviewing a
Fortin 1205, the process rill eontirxre under local franchising authority jurisdiction.
According to Tine Varner, after the effective date of the Social Contract, the Commission
rill review future eQuipwent rates, but the local franchising authority eay order rollbacks
and refunds of any rate in excess of that approved by the Caeaission, subject to the rora+sl
Commission appeal process.
(iii) Discussion
G0. we believe that • waiver of our rules to allow Tice Varner to average broad
categories of eQuipwent and various installation costs for all of its syetews on a regional basic
is ,n the public interest. As in the case of the Continental Contract, rt conclude that
equipnmt averaging rill einiwize drastic increases in rates for subscribers as upgrades take
place and viii reduce the administrative burdens on Tice Varner to prepare rates On a
frencn,se by franchise basis. Nhile the rates for particular franchise areas way change, the
overall iapsct rill be reverxu neutral. re conclude that the geographical regions established
,n the Social Contract are appropriate because they reflect Tice Yarner'i regional Cost
centers end therefore would simplify cost tracking. Ye do rote, however, a concern raised by
com+rncers tnat addressable converters rill be ubsidizing non-addressable converters. To
eaaress this concern, Tine Varner has •pre~ed to a wodification to the Social Contract which
prov,des tnat the prices of addressable and non-addressable converters rill be separately
estaol,sned.
L1. ue conclude that this provision of the Social Contract does rot violate any
p'ov,s,on of the 1992 Cable Act. As re recopn,zed in the Continental Contract Order, the
1992 Cao(e ACt does not wandate the level at which equiptnlftt and lnstallatton rates ar!
estebt,sned, i.e. the franchise, system, rep,onal or coaQeny level. Rather, Compress specified
tnet the rates cost be based on actual cost. This provision in the Social Contract is
caru,stent rich the 1992 Cable Act's directive that the Coaanission establish standards by
.n,cn local franchicirp wthorities ei[ablicn rates for installation and equipwent used to
re[e,ve orcic service. Ye rill review nev req,onal rates submitted by Tian Varner for
coapl,sn[e with the requirement that they br true regional averages of the local eQuiptnemt
and ,restattation costs. Motice of our Oecrstorx rill be provided to local franchising
autnor,t,es. Through refolds or rate roll-netts, the local franchising authorities rill eontirxx
to enforce the reQuiraarent that Tian Wrner emerge equiparnt and Installation reset rhteh
corply r,th our ftandardi.
c. itecoluti m of Pending Cases
(,) Tens of the Social Contract
c2. uroer the Social Contract, Tine yawner rill settle its existing benchwark CPST
cases. T,ar Wrner is new iced to provide refunds Of apprOXinstely s.G.7 ellllon t0
custo+raer6 ,n the franchise areas shorn in Appendix A of the Social Contract. Refunds rill
cont,nue to accrue interest until the sate snot the refunds are •etually paid. Tian Varner is
also precluded fraw wakirp any rate adjustwent allowed under the Social Contract prior to
the tune such refunds are made to affected suoscrioers. The refunds were drterwined based
upon thr Conmiission's review of Tiae Yarner's rate justifications for the CPST where •
_ coeplaint had been filed. Pending cases justifying rates for the iST wilt contirxx to be
resolved with the local franchising wthorities.
(ii) Cowwents
G3. Mumrrous eaasscnten expressed support for the resolution of the pending Tine
Varner rate cases in the Social Contrut as a wy to avoid litigation expenses and to conserve
resources. However, • rtia~er of local franchising authorities raised eaneerns regarding the
settlamknt of the rate eases in this Social Contrut. Awong the concern, save local
franchising wthorities contended that coaplainants have the statutory right to have their
eosplaints adjudicated individually on the record, that the Cosseission violated its own ex
parse rules, and that the Ccmmission's proposed procedures for social eontruts were not
followed. Others argued that the local franchising authorities should receive refunds and
punitive drarges, and that the refunds should be paid earlier than provided for under the
Social Contrut. Further, the City of St. Petersburg expressed corkern that there we ro
finding of wrongdoing and that the refund awounts can be recovered by Tier Wrner's price
ea~p and other increases allowed order the Social Contract. Save local franchising
authorities contend that the finding that the Tian Varner rates are reasonable will result in
rate increases in the tST rates.
44. In its reply coaaaents, Tier Varner states that the Cowmission has stated •
general policy "to hake every effort possible to resolve appropriate disputes through
wediation, arbitration, settlement negotiation, negotiated Rule Making and other swans of
dispute resolution." Citing the Rate Order, Tiwe Varner further eonterds that the
Commission has advocated the use of alternative dispute resolution techniques to decide cable
rate cases. Tiwr Varner further contends that each coaplaint has in fact been reviewed on an
individual basis, and that the resolution of the complaints in this Social Contract will result in
immediate bill credits to subscribers in contrast to the delay that rill result if each case is
individually litigated. !n reply to the City of St. Petersburg, Tune Varner states that
findings of no wrongdoing are necessary to give operators the incentive to enter into social
contracts, and that here there is ro evidence of wrongdoing. Tier Varner further states that
the ability of Tune Varner to recover its future costs under the price cap provision is
irrelevant to refunds for pest overcharges. finally, in response to caaments that the
Commission's ex pane rules and other social contract procedures were not followed, Tiae
uerner first notes that the cwwrcnters fail to specify which particular provisions of the
Conn~ission's ex pane rules have been violated. In any event, Tiwe Varner states that it has
followed the eawe procedure as the Commission approved with respect to the Continental
contract, i.e., it hoe wade an initial proposal to the Commission, including an outline of its
objectives. Tiwe Varner notes that in the Continental Contract Order, the Commission
waived its requirawent that a cospany's initial proposal for an upgrade incentive plan
include ctetemients from affected local franchising authorities because there are "significant
rx~roer of franchises with diverse interests and concerns". Tiwe Varner argues that given
the nwtber of commenters and affected franchisirp authorities in this case, wiver of this
requireiment is even acre applicable here. Tiwe Varner further notes that the social contract
negotiation procedures followed here were arrw~rxed in the Commission's Cable Ex Porte
Order srd tnat consistent with that Order, (arxl similar to the case with the Continental
Contract), all interested parties nsvr had sn opportunity to comment on the Social Contract.
(iii) Discussion
<5. tre conclude that proper procedures were followed with respect to the Social
Contract. Ac an initial wetter, re address the co.+eents regarding the resolution of the rate
complaints as wrt of the Social Contract. re rote that the 7992 Cable Act provides the
Commission with broad discretion to resolve cable rate complaints. The 1992 Cable Att
direttc the Commission to create "fair and expeditious procedures for the receipt,
consideration, and resolution of complaints.• uroer the 1992 Cable Act, the Commission
also is emerged with ettablishirp "the procedures to be used to reduce rates for cable
progras"inp services that are deterwined by the Cameniesion to be unreasonable and to
refund cucn portion of the rates or charges that were paid by subscribers after the filing of
cucn complaint and that are determined to be unreasonable. Pursuant to these statutory
provisions, the Commission adopted rules providirp for the use of social contracts as one
wetnod of setting cable rates. Ye believe tnat the broad language of Congress' wandate
allows the Commission to choose the procedures used to resolve complaints. Ye further
believe that Congress' desire to siaplify able rate reputation supports the adoption of the
woct exaeditious weans of resolving complaints tnat rill afford adequate protection for the
cuoccritxrc. Contrary to the claias of some ca.w+enters, there is no statutory requirewertt
tnst each rate complaint be individually adjudi sited. Rather, the Cammisiion is required to
establish procedures to resolve rate complaints and to provide refunds of excessive charges.
A coc~al contract is one each procedure.
G6. Ye find that the rates provided for in the Social Contract are reasonable.
Although pact rates are rot lard to be unreasonable, the Social Contract proviaes for refunds
of amai+ts paid in excess of rates re find in this Order to be reasonable. Those rates rere
arrived at after waking certain adjustsrnts claimed by Tiwe Varner and after factoring in the
public interest benefit to consumers of prompt, certain relief. Moreover, although ve oo not
rule on the werits of each of Time Wrner's dais , re believe that it is fully consistent rith
the 1992 Cable Act to eenaider the benefitc of avoiding the delays and uncertainty of
litigation in setting rates rithin the range of reasonableness. further, rc believe that it is
fully consistent rith the 1992 Cable Act, as cell as the social contract rules, to consider
upgrades and other iaprovamecits in service as part of • determination of Wat constitutes a
reasonable rate. Finally, re do not believe that deviation from our usual practice of requiring
refunds to subscribers and instead requiring refunds and punitive dawages to local franchising
authorities is wrrantad. Our rules provide for refunds to subscribers and do not provide for
punitive dawages in any ease. further, re do not believe that six annths is an unreasonable
period for Time Wrner to cake refurdc, in vier of the iaplaiaentation and bitting problems
involved in a nationride settisnent. Thus, re conclude that the Cowsission has the authority
to resolve rate eoaplaints in the homer esdodied in the Social Contract.
4T. In the Cable Ex Porte Order, re noted that "Iv]arious cable television system
operators have wade presentations to the Coawissian on issues relating to the Cosasissian's
cable television rate regulations, These caaaaunications have generally been in the nature and
context of broad policy discussions regarding the rules as cell as the future application of the
rules to the operators, but fregtxntly also have focused on the specific ecoromic situation and
future prospects of • particular company." Ye held that relaxed ex parts rules are
applicable to such discussions "that are general in nature although they potentially implicate
specific pendirg rate proceedings." These are the very type of discussions that occurred
here. A party rishinp to take advantage of the modified ex parts procedures oust: T) submit
to the Cable Services iureau a rritten request to west and, if applicable, a request for related
ex parts treatment; 2) receive Bureau approval to west and, approval of the relaxed treatment;
and 3) in the event of the development of a specific company-ride proposal or proposed
resolution, serve all parties to each affected perding rate coaplaint and/or appeal proceeding
with the final version of the proposal or proposed resolution. The Cable Ex Porte Order
states that "the Couaission rill take ro action based on any such proposal or proposed
resolution rithout it having first been served on all parties to each affected pending rate
caapliant and appeal proceeding and rithout providing rot less than thirty days for
c o•e+ent . "
48. Ye conclude that these requirements were complied rith here. On May G, 1995
Timms Verner wade the necessary rritten request for application of relaxed ex parts rules in
order to engage in general discussions. This request vas subsequently granted by the Cable
Services Bureau. Atl coaplainsnts and affected local franchising authorities rere served rith
e copy of the proposed Social Contract and given GO days to comment. These coaments have
berm reviewed and considered by the Coamission and, in why instances, have resulted in
changes to the Social Contract. The Commission's ez Wrte procedures stt forth in tht Cable
Ex Porte Order have been fully eoieplied with as to the Social Contract.
t9. Ye further address those caa,rnts that the Social Contract procedures set forth
,n the Cost Order rert not followed. In the Cost Order, the Commission stated that it could
consider upgraae proposals ar+d d~reeted any interested cable operator to "submit • proposal .
. •ccoaaanied by • rritten statesrnt try any certified franchising authority rith jurisdiction
over cools sycteaas affected by the plan of its views concerning the proposed agreement." !n
the Continental Contract Order, we rated that `given that the initial proposal and aubeequent
negot~at~ors affected a significant nwoer of tranchices rith diverse interests and concerns, it
~s an re efficient and has proven sere practical for the Coaenission to negotiate the proposed
Social Contract rith Continental.' In the Continental proceeding, re wived, on our orn
action and for good cause shorn, the requirement that at the Liar a proposal is Dade a
statement be filed by the local franchising authority. Norever, consistent rith the
new irement in the Cable Ez Porte Order, this raiver ws conditioned on local franchising
wtnoritiec and cosplainants being given the opportunity to express their viers after the
Public Motice ws issued. Ye rote here that there are significantly more local franchising
aurnorities affected by the Social Contract than rere affected by the ContinenU t Contract and
that these local franchising wthorities likewise have diverse interests and Concerns. Ye
conclude that the rationalt stated in the Continental Contract Order for raiving the
requirement that etatayaents from affected local franchising authorities be included in the
prooossl is applicable in this case. As rated shove, the comment period and extensions have
prov~oed significant opportunity for local tranchicing authorities to express their viers as to
the Social Contract. re believe it is appropriate to naive, on our own notion and for good
cause u+own, tnc requirement in the Coct Order that a coapany's initial proposal for an
upgrade incentive plan inclucse ctate+aents tram affected local franchising authorities.
50. The City of St. Peterburg~s concern that there is ro finding of rrongdoing is
wicplated. One of the poets of the Social Contract is to resolve disputed issues without
requiring the Coawission to spend significant tier and resources to wake a finding of any
rrorpdoinp as to these issues. Ye also rote that the statement in the Social Contract finding
that the CPST rates, other than those resolved in Appendix A to the Saeial Contract, are
-- reasonable has ro bearing on deterwinationc by local franchising authorities as to the
reasonableness of BST rates. Local franthisinp authorities way eontirxrc to wake their oyn
deterwinatian as to the reasonableness of BST rates without being board by rates Derived as •
result of negotiations of the Social Contract.
51. finally, under Sections T6.9L2(f) and 76.961(e) of the CoawissiaMe rules, local
franchising wthorities are required to return to cable operators an aaxxnt agwl to that
portion of the franchise fee that ws paid based on the total aaaxrtt of refunds, then refunds
are ordered by the local franchising authority or the Caea+ission. Ye risk to clarify that
local franchising authorities for Tiwe Yarner~s systees are not required to return arty portion
of franchise fees collected froal Tiwe Varner pursuant to the tars of the Social Contract.
The Cowaission has rot wade a deterT•instian that Tier Varner has isposed unreasonable
rates on subscribers in the Social Contract.
d. Lifeline Basic Tier Rates
(i) Terec of the Social Contract
52. The Social Contract provides that Tiwe Varner rill create a •lifeline basic tiara
priced to enhance the affordability of basic service. Tiwe Varner rill aeeowplish this in fro
wys. first, on systaaas serving at least E5X of its foist subscribers, Tiwe Varner rill reduce
the price of its BST by 10X, with a corresponding revenue neutral increase in CPST rates.
In systeaa: there Tiwe Varner proposes to apply the tOX BST reduction, local franchising
authorities way elect not to have this lifeline reduction by notifying Tiwe Verner and the
Coaaniscion in writing within i5 days of the effective date of tl~e Social Contract.. Second,
on the remaining systeas, Tiwe Varner rill restructure the tSi to create a lifeline type
service concistinp only of stations required by tar to be carried on the BST. All other
existing BST charnels rill be wooed fraw the BST to • CPST with a corresponding revenue
neutral decrease in the price of the BST and an increase in the CPST price.
53. Tiwe Varner rill rot add any additional satellite channels to the BST for the
terw~ of this contract, except as required by tar or regulation, Purthenrore, in the event that
the Caw•ission'c aaxt-carry rules are rendered invalid, Tiwe Varner way discontirxu
carriage of local broadcast stations but all local broadcast stations that it continues to carry
^.~st be carried on the BST. To the extent that Tiwe Varner discontinues the carriage of any
broadcast station, Tiwe Verner w.y substitute any progranminp service in place of the
discontinued station to weintain the sire of the BST. This substitution is liwited to an
average of three services per systew over all Tiwe Varner systems and five services for any
ind,v,axl Tiwe yawner system. The Social Contract provides that these substitutions only
~,tt affect BST rates and only to the extent there are changes in external programming
cnerges to Tune yawner.
(i 1 ) l.0emtieftLS
5c. Most coaarenters support the, creation of a lifeline BST because for cable rates
are K GMtlal to various prOlp6 including the elderly and toy-income persons. Of those
cowrrtters yho expressed opposition, the concerns are: 1) a large rxarlixr of CPST accts
~~tt be supoortirp a for rate for a fw BST-only subscribers; 2) tST is rot iaportant there
the reception of broadcast television is clcar; 3) total franchising authorities wipht prefer
otner bMrfits to the creation of a lifeline BST; and 4) the restructuring of the BSTc rill
enable Ti~•e yawner to rewove iaportant charnels fros+ BST and increase prices for services
tnat prev,oucty rare regulated. Cowarcrtterc alto raise various questions with respect to the
creation of • lifeline basic tier. They question whether the Social Contract perwits live
yawner to exclude 15X of its syctas frow the reduction in BST (in light of the Social
Contract provision that et least ESX of Tiwe yarner't systems rill be changed io a lifeline
basic). Tney ask whether the raitrictionc contained in the Social Contract precluding increases
in eat rates and the ntw~ber of BST charnels should be changed (either because of the desire
of a local franchising authority to wake wore extensive BST cervices available or the
oes~rabiltty of proaptirp toy poser television). They also raise concerns as to: 1) whether
the reOUCtion in BST r.hamelc rill reduce franchise fees; 2) what effect a local franchising
eutnority~t decision to opt out of the lifeline BST provision rill have; 3) whether the
Com~,sc~on rill revi w the CPST rate increase that is erode to offset the BST price decrease;
c) ynr the discount is tOX instead of 15X as it was in the Continental Contract Order; and
5) .rnetner the Social Contract mould contain a date for completion of the restructuring of the
BS'.
55. In its reply comamts, Tian yawner contends that a tor- priced BST was one of
the goals of the 7992 Cable Aet and, in eomection with the tontinental Contract, the
Cowt++ission approved that goal and its iapieanentation rich winiwal cross-subsidization
(betreen CPST and BST) in the creation of a lifelirx basic tier. In addition, Tiwe Varner
contends that any local frarohising authority that Does rot spree rith the creation of a lifeline
- BST way opt•out of this provision of the Social Contract. Tine Varner also contends that
its right to determine the charnels that it rill include on the HST, other than aunt-carry
stations, PEG access stations, and television broadcast stations except for superstitions has
been upheld by the Commission aril the Court of Appeals for the District of Coluitbia
Circuit. Tian Varner stater that a local franchising authority's daeision to opt-out rill
alleviate the Head to offset a BST rate reduction rith a CPST rate increase, but otherwise rill
rot affect the terwc of the Social Contract. Finally, Tine Varner explains that services
retiered frow the HST rill rot be unregulated, except for those services that are placed on an
MPT in syatewe rfiich are eligible for • Her MPT viler the Social Contract, and that all
coaaaunities rhich do rot opt out rill receive the 1OX raft reduction during the tern of the
Social Contract.
(iii) Discussion
56. In the Continental Contract Order, re approved the creation of • lifeline BST
rating that there rare strong social benefits to the creation of a lifeline LST that furthered the
goals of the 1992 Cable Aet. In particular, re rated that the creation of a lifeline BST
increases the option of cansuasrs and increases eerpetition for services on the upper tiers.
Ye also rated our belief that sny increase in rates for subscribers that receive both the BST
and the CPST rill be de winimis. Ye find that the save eircuastances exist here and thus
approve the siwilar provision in the Tine Varner Social Contract. In view of the valuable
public benefits brought by the creation of a lifeline BST, as yell as the other benefits of the
Social Contract discussed elser~ere in this Order, the preference for other benefits cited by
the Ithaca City Cable Coamission in the Social Contract does rot wrrant a rejection of the
Social Contract. One of the wain arpuwents advanced by eoawrenters opposing the lifeline
BST we that it ws rot necessary because there rare so far BST•only subscribers.
Moravec, because there are far BST-only subscribers the overall iapact on the majority of
subscribers rho receive both BSTand CPST rill be winiwl. !n addition, re note that the
Social Contract contains • provision that alloys local franchising authorities to elect rot to
have Tiwe Varner iaplament the BST rate reduction and corresponding CPST adjustannt in
its franchise area. This provision provides subscribers additional proiectian if lifeline BST is
inadvisable in a particular area.
57. Because soave Tiwe Varner systeas contain only one tier, rot all of the Tiwe
earner systems can inaediately provide for a lifeline BST. Moravec, Tine Varner has
represented that those systeas that initially are not given the benefit of • iQX reduction rill
subsequently be restructured and rill have the right to a per charnel rate reduction after the
restructuring is accoaplished. Heeause the restructuring is likely to include the upgrading of
Tine Yerner~t facilities, re find that • requiram+ent to complete the restructuring by a
specific date prior to the terwination of the Social Contract could be iroonsietent rith the
Social Contract, rhich permits Tian Varner to upgrade its facilities over the five-year term
of the Social Contract. Ye thus reject the eupgestion that the Social Contract contain a date
for completion of the restructuring of the BST. Ye also rote that chile the restructuring rill
require Tiwe Varner to shift proprawm+ing betreen the HST and the CPST, Tian Varner
already has that right and can exercise it independent of the Social Contract. Likerise,
T~we earner has the discretion, independent of the SOCial Contract, not to increase the
nuroer of BST charnels. Ye believe that •llorinp Tiwe Ysrner to add more charnels to
the BST, and subsegixntly increase rates, is contrary to the purpose of creating a lifeline
service. Thus, re reject the suggestion by sane comnrnters that these provisions in the
Social Contract require modification. Moravec, in order to alleviate soarc of the concerns
raised by the coaaaentere, Tine Varner has agreed to rodify the Social Contract to ensure
that any restructuring (other than for the creation of MPTS) rill rot result in the shifting of
charnels fraw the HST to unregulated tiers. Further, chile re note the argument of the Mer
Jersey Hoard of Public Utilities that a reduction in the BST rill reduce franchise fees order
aver Jersey lay, re point out that Tice Varner hoc agreed to raive its ripfit to a credit for
the franchise fee paid to a local franchising autnority on CPST refvd amounts. !f a -oeal
franchising wthority rishes to preserve its rights order Mer Jersey lay to a franchise fee for
• wore exper+cive HST, it has the right to opt out of the lifeline BST provision.
56. Finally, re address the effect on the Social Contract of an local franchising
authority's Decision rot to elect the lifeline HST provision. The only effect a local franchising
authority's Decision to opt out of the lifeline provision is that there rill be ro reduction in the
BST and no offsetting CPST rate increase. For purposes of clarification, Tine Varner has
agreed to andify the Social Contract to specifically state that the opt-out provision contained .
in the Social Contract is liwited to local franchising authorities opting out of the creation of a
BST lifelirx tier.
e. Migrated Product Tier
(i) Terar of the Social Contract
59. The Social tontract provides that in the Tian Varner systeas there Tier
Varner or its predecessors did rot create a la carte packages, Tian Varner rill be permitted
to wiprate up to four existing services fraw its cable progrann+ing services tier to an MPT.
The charnels wigrated fraw the fLST or CPST rill continue to be priced at the rate regulated
price, subject to increases allowed for inflation and external costs under the taanicsion's
rules. There rill be ro liwitation on the nwber of net charnels that Tine Varner way
• add to an MPT at a price of up to 5.20 cents per charnel plus license fees. Atter April 1,
1997, Tian Varner any convert the MPT into an NPT as defined by the Coawission's
Going Forwrd rules. The Social Contract provides that tier Varner way rot require the
subscription to any tier other than the tST as • condition for subscribing to an MPT, and way
rot require subscription to an MPT ac • condition for subscribing to a CPST. Tian Varner
also ry not offer an NPT rith a but'-through raquiraaent of any tier other than the RST.
60. For the Yedtouse Systaws that had a la carte packages, Time Varner rill be
perwitted to create tro MF'ts. One IfPT rill consist of typi idly three superstitions and
one satellite charnel and rill initially be priced at its current rate, the average price of rhich
is less than 29 cents per charr~el (exclusive of copyright tees). Tine Varner also rill be
allowed to create an MPT consisting of charnels currently located in a la carte packages, so
that the total Haber of eiprsted services is ro pnater than six. These channels rill be
priced at the current per charnel rate. (Nerhouse's non-superstition a la carte packages rere
affirwatively warketad and had traditionally for penetration rates, ranging frow 26X to 59X
of BST subscribers). Tier Varner rill be able to add an unliwited txwber of Her charnel
offerings at the rate of up to 5.20 cents per charnel plus license fees to these MPTs as cell.
The ramaininp charnels that had been offered in a la carte packages on Nerhouse System
rill be returned to CPSTs. The rates for CPSTc will increase due to the addition of these
charnels; however, the increases rill be liwitad to up to 50.25 per Marnel.
61. !n systaas there Tiar Yawner has created a to carte packages that are being
treated as MPTs in areas contiguous rich franchises there MPTs rill be created pursuant to
the Social Contract, Tiar Varner rill be pensittad to loner the prices of the MPTs and raise
the prices of the adjacent MPTs in a revenge neutral aaimer to provide uniforw rates for
uniform offerings in those systems. In those circumstances, the MPTs rill be subject to the
price caps applicable to the MPTs under the Social Contract (i.e. prior to April 1, 1997, the
price way be adjusted solely to reflect unrecovered inflation and external cost increases).
(i i ) Coriaents
62. The wajority of coswents on these provicionc raised questions and requests for
clarifications. The questions raised included: bar any charnels Iiwe Varner is allowed to
move to MPTs; hot want' MPTs can be created; and chat the effect rill be on rates in the
regulated tiers. !n addition, ac to subeeribere to the Yerhouse Systeau, • question roc raised
ss to whether the provision in the Social Contract allowing for price uniforwity in contiguous
Time earner and Henhouse Systaws rill lead to excessive rate increases. Other
coanrnters contertided that charnels should not be removed from the regulated tiers, but just
duplicated. Coaernters carped that a la carte charnels created between April 1993 and
Septeaoer 1946 by Me++house which had previously been marketed as a separate tier and are
not required to be returned to a CPST' should be subject to anti-buy through and price
restriction rules. Soave cawaenters proposed that there should be specific requirements as to
the rtiwCer of packages of charnels on non-BSTs and that there be a uniforms rate schedule
std charnel line-up throughout the Charlotte-Metkenburq coinnnity. Finally, there were
cowentc which ^icperceived the atoning of the Social Contract. In its reply eaaoente,
Tiwr Varner rotes that • total of only four charnels way be wigrated from both the YST and
CPST, that the rate for arty regulated Liar fraw which the charnels are taken to create an
NPT rill be proportionally reduced so that the creation of any MPT will be done in a
revenue-neutral awn~er to Tiar Varner, and that the Coawiiccion recognised in the Lost
Order that the rate-regulated services rill provide coapetition for Her services offered tixler
social contracts.
(iii) Discussion
63. In the Continental Contract Order, which contained provisions similar to those
in the Social Contract, re waved the charnel migration provisions of the Cott Order and the
Going Forwrd Order to the extent that they prohibited the migration of up to four existing
services frow, its cable progranniinq services to an MPT. Ye found that a waiver was in
the public interest in the context of the Continental Contract because the creation of MPTs
and NPTs expends the progrnwwing choices for subscribers. Ye believe that the public
interest alto rill be served and that a similar waver of the charnel wiprstion provisions of
these orders is appropriate in the context of the Social Contract. Except in the case of the
Henhouse Systems, only four charnels can be r+igrated to a MPT, whether the charnels ere
wigrsted fraw the CST, the CPST, or a toabination of both. further, the Social Contract
provides that only one IIPT per franchise •re• can be created, except in a Baited nunoer of
Merhouce Systeas rt+ere there rill be superstition tiers and a second package containing
such nuwber of charnels as brings the total ender of Marvels on MP1s in the franchise
' •rea to six, offered es separate MPTs. Siwilar to the Continental Contract, pricing for the
MPT wsy be ircreased only if Tiae Varner adds additional Msrrels to the tier. like the
Continental Contract, the Social Contract also provides that if Tiwe Varner elects to convert
the MPT to an MPT, the eliwination of all buythraiph raquiraaents rill ensure that the
product offerings and rafts on the MPT are eoapetitive with the ragulatad fiSTs and CPST:.
Thus, the MPT option rill ircrease custoaer Moice rftile •intaining reasonable rates, and
wrrants our authorization. Ye do not believe that re should prescribe what charnels should
be in the MPTS, sirce this eight require Tiwe Varner io engage in aervicet that •re not
econowically feasible. In response to the Her York State Cowaission on Cable Television,
re clarity that any a la carte packages created on Ma~ouse Systaas between April T, 1993
and Septawber 30, 7994, frog which ro charnels are required to be returned to a CPST, are
MPTc for the purpose of the anti-buy through end price constraining provisions. finally,
under the Social Contract, any adjustaents between contiguous Tian Varner systaes and
Merhouee Systewc watt be accosQlished on a reverxu neutral basis.
64. Ye conclude that the provisions in the Social Contract that •llor for the creation
of MPTs rill briny benefits to subscribers. However, for purposes of clarification, and to
alleviate the concern raised that the creation of MPTs rill increase the prices of the regulated
tiers, Tiwe Wrner has agreed to a provision in the Social Contract that states that the rates
for any BST or CPST frawt which Marvels •re awved to create MPTs shalt be reduced so
that the creation of any such MPT rill be revenue neutral to T.iae Varner.
f. Service To Schools
(i) Terms of the Social tontratt
65. Order the Social Contract, Tise Kerner has agreed to provide a cable correction
free of charge to all public schools in its franchise areas that are passed by Tine Varner
systems. Tiae Varner also rill provide a cable correction et cost to all secondary private
schools having students that receive funding order Title I of the Education and Secondary
School Act of 1%5 and that •re passed by Tiwe Varner systaac. fiST and CPST cable
service rill be provided to all corrected public and private schools without cost. Tiae
Varner rill Tire additional classroows in existing schools at cost, artd provide iST and
CAST service to each such outlet free of charge. Vith respect to new public schools and
existing public schools undergoing refabilitation, if Tiae Varner is notified of new
construction or rehabilitation, Tiae Varner rill coordinate with local officials and contractors
to Tire each of the classroaws in the new or rehabilitated public schools free of charge.
66. Time Varner also wilt provide a free wonthly educational proprara listing to each
corrected school and rill provide wsteriels explaining the educational apQlieetions of Time
Verner's broadband cable systeas. Eath school district rill receive one copy of the
materiels free of sharps with the opportunity to purchase additional copies at cost.
67. Tiwe Varner rill provide each corrected school with a fret correction to the
Time Varner/Time lnc. on-line service for personal coeputers, assuming this service is
successfully developed. If requested, each school will receive one free awdem to use this
service with additiorol sndee~s provided at cost. Time Verner •lso rill sponsor a workshop
in each franchise •rea to demonstrate the service and its educetiorol uses to teachers.
(ii) Cowwents
68. The wajority of coaraents support this provision of the Social Contract because
the schools need advanced toots to enable their students to compete in a techrologicat world,
srd these technological tools can help equalize the gap between affluent and less effluent
scnools. The Orange Canty Public Schools state that they could greatly btnefit from the
Social Contract, coawenting that of "special interest to our educators are the educational
waterials, educational progras and the future on-line conputer service, all of which will
enable our teachers and students to keep current with the latest infornetion and techrology."
The Spring Indepe+xlent School District, Houston, Texas, praises Tiee Varner'c comsitaent
to supporting the educational process as shorn by its "efforts in providing free installation
and cable services for educational use in their 'Cable for the C-assroam' project'" and further
canwrcnts that the additional services such as on-lime computer services and technical training
are "of trewerdous value to our District considering our liwited funds."
69. A rxwoer of coranenters requested that the proposed services be exprrded to
colleges and universities, private schools, local governnents, srd schools which are rot passed
by Tiwe Varner, but are Close to Tiwe Varner facilities. Soee connenters contend that
the benefits in the Social Contract are already provided under Tiae Varner's franchise
obligations, and that the Social Contract fails to require equipment in schools rhiM has been
required by the local trarx:hicinp authority, such as video distribution aaplifiers. Susie
coaaaenters claim that Tir warner rill only incur ^inirl cosec in providing the school
benefits, but rill pain through the advertisirq it rill provide. Others eorent that these
benefits rill force schools to spend money on such things as VCRs and rintenance.
Finally, sonr coaa+enterc asked that the schools be peraitted to do their own Tiring.
70. in etc reply coaaaents, Tiar Wrner acknorledges that amny schools already are
corrected or are plarrinp to be corrected pursuant to franchise apra~mer~ts, but that in my
cases these corrections are a new benefit to the schools. Tir Wrner further states that the
Social Contract provides additional benefits not typically contained in the school service
clauses of franchising agreements, such as internal Tiring at cost, corrections to certain
private schools, educational training for teachers, program guides, on-tine service, and
oedema.
(iii) Discussion
Tt. we believe that the school services to be provided by Time Yarntr are a
significant provision of the Social Contract. Yhile the Social Contract cannot, and is rot
intended to, provide benefits to every institution that desires them (e.p., universities and
hospitals) we note that it does briny ner and iaproved educational opportunities to public and
private schools. Ye note that the cost to Time Wrner of these services will be borne by
Time Varner, and is not included within the f•4 billion upgrade cost that forms the basic for
the rate increases authorized under this Social Contract. These benefits will be provided
across the economic spectrum, helping many schools that otherwise could rot access the
•infonaation superhighray.• we believe that the benefits to the schools are significant even
if the schools incur certain secondary costs, such as televisions, VCRs, or maintenance. while
re carrot be certain what these costs could be, re note that the schools have the option to
accept or reject the benefits being offered by Time Varner and can decide rhether or not
they should expend any necessary fords.
T2. Despite the significant benefits these provisions will provide to students, re are
mindful of same of the concerns expressed by some coas+rnters and, as a result, have
negotiated come modifications to the Social Contract. In particular, as originally drafted, the
Social Contract provided that Tier Varner could offer service corrections free of charge at
one outlet in TOOX of the public schools passed by its cable syster and at cost to any private
secondary school rhieh receives funding purswnt to Title I of the Elementary and Secondary
Education Act and which are passed by its cable systeaic. In rtsponse to requests by
coamenters that corrections bt provided to schools which are close to Time Varner
facilities, Time Varner agreed to offer free of charge service corrections in TOOX of public
schools and at cost corrections to any privets secondary school which receives funding
pursuant to Title i of the Elementary and Secondary Education Act which are located within
200 feet of the activated plant of its cable systems and are rithin its service area.. In rkinp
this .edification, Time Varner retied upon the definition of "Standard" installation provided
u!xSer Section 76.309(c)(2)(i) of the Cawnission'c regulations which defines a "Standard"
irtistallation as "those that are located up to 125 feet from the existing distribution system."
T+.+e warner extended the range to 200 feet of its activated plant. Time Varner further
agreed to provide such corrections at cost to any other public or private schools locsted
beyond 200 feet from its activated plant and within its franchised service areas. In addition,
re spree that schools, like the subscribers themselves, should have the option to do their own
r+r+rp. Tine Varner hoc agreed to this request and has modified the Social Contract to state
tnat any such p~lic or private school My elect to install its own internal wiring at its own
cost.
73. Some commenters raised concerns that the Social Contract fails to provide soar
of the benefits already provided order certain Tiwe warner franchise obligations, we wish to
clarify that the Social Contract is rot intet+cled to affect any apreementc that a franchising
wtnority has otherwise obtained from Time warner. To rke this clear, Time warner has
agreed to modify the Social Contract to state that "tn)othinp herein shall affect the
enforceability of any otherwise valid preexisting local franchise epreearnt, ordinance, local
tam or rcpulation which provides benefits which exceed those provided in this Contract
retat+rp to system upgradet or the wiring of schools, nor shall local franchising authorities be
restr+Cted in their authority to negotiate for such additiorol benefits after the Effective Date of
tnic Contract." Further, the Social Contract provides that to the extent • local franchise
apree.ent contains an obligation to provide eorv+ections to schools as agreed to in the Social
Contract, Time warner carrot seek to recover any such costs for these corrections as external
or otner costs. Accordingly, any school benefits obtained outside of this Social Contract will
not tx affected.
p. Mope ~irinp
(i) Tersts of the Social Contract
_ 74. Order the Social Contract, Tiar Varner rill rot restrict the ability of a
subscriber to reaove, to replace, to rearrange, or to srintain any cable tiring lotsted within
the inttrior of a his or her orellinp as tang ac these actions do not interfere rith the ability of
Tiwe Varner to collect revenues free that subscriber or any other adjacent subscribers.
Subscribers rill be reeponcible for the cost of rawedyinp any iwproper installation resulting
in a violation of the Caaaaission rules. Tiwe Varner rift provide high Quality hoar tiring
and arterials at cost to its subscribers.
(ii) Cawments
75. Save eoswenters claiw that the have tiring provision in the Social Contract
werely restates the Coss#issian's preexisting rules. Other eowarnts relate to the fact that
the Social Contract does rot specifically extend the subscriber's rights to obit touted at least
trelve inches outside the subscriber's drellinp; a ^iseorception that there has been a total
deregulation of inside Tiring and that ro need for the Social Contract provision; a Question as
to the o+mership of the tiring and rhether Tiwe Varner has ayintenarce obligations if the
subscriber does rot waintain the hove tiring. In its reply cosssertts, Tiwe Varner claisti
that the Social Contract goes further than the CowTission's rules because, unlike the
Cawwission's rules, the eontractwl provisions here apply before a euetosrr terwinstes cable
service.
(iii) Discussion
76. Contrary to the claiwt of soave eoscsenters, the have tiring provision of the
Social Contract does rot werely restate our existing rules, but rather goes beyord those rules
to cover sitwtions prior to the tier • custower terwinates its cable service. Morever, the
provision does not exeegt Tiar Varner from these rules; therefore, those rules continue to be
applicable to cable tiring located at least trelve irches outside the subeeribtr's drelling.
Yhile telephone rate regulation of inside ririrp has been terwinated, our cable host tiring
rules have not been eliwinated. Ye find that the hoar tiring provisions of the Social
Contract provide a benefit to subscribers as the provisions enable subscribers to change the
location of their cable rithout incurring additional costs. Further, the provisions provide that
Tian darner rill inforT the custoarrs of their rights to remove, to replace, to rearrange, or
to maintain hove tiring, as cell as their obligations if signal leakage occurs as a result of
their installation or rearrangement. This education process rill be a public benefit sirce it
rill enable customers to wake rational choices rhether to install or to rearrange hove riving.
h. System Acoluisitions and Divestitures
(i) Terss of the Social Contract
T7. Tiarc Varner has a pending contract to acquire cable systems frow Cablevisian
Industries Corporation (CVI). The Social Contract provides that at its option, Tiwe Varner
a+ey include any cable systeas acquired from CVI, provided that the CPST settleaent
provisions of the Contract rill not apply until any applicable settlements are mutwlly agreed
won betreen time Varner and the Coalnission. The Social Contract further provides that
the addition of any other rawly acquired systeaa by Tiwe Varner to the provisions of the
social Contract rill be subject to Cosaiission approval, thick rill be expeditiously decided
and not unreasonably rithheld. Finally, in the event of a sale of any syttaw during the
period of the Social Contract, the purchaser way elect, rith the Concurrence of the
Cuwi~ccion, for the provisions of the Social Contract to continue to apply to each systems
aro the Coa>wiscion'c concurrence shall be expeditiously decided and rot unreasanabiy
r~thneld. In the event the purehaaer elects not to have the provisions of the Social Contract
apply to any ouch systew, the CPST subscribers to such syttew shall be eligible for the
refunds calculated order the Social Contract in the event the upgrade eowmitarnt has not
peen caapleted prior to the consuswation of such sale.
(ii) Cowarnts
7B. The coewents regarding this provisi m rere from coasm.nities served by CVI,
contending that they should be part of the Social Contract. in addition, the City of lot
Angeles contends that it should not have to coaniertt on this issue until the aeQuisition of CVI
is fineli2ed, but that CVl systeait should not be added to the Social Contract rithout tht ,
consent of the local franchising authority. !n its reply cosnrnts, Tiwe Varner stated that +
it mac no objection to including CYI coaeanities as part of the Social Contract.
(iii) D~scuscion
79. In vier of the desire of frarchicing authorities (with the exception of Los
Angeles) of CVI systeatc to be included in the Social Contract and Tiwe varner't apreeaartt
to irclude all CVI systars in the Social Contract. we find that the irclucion of such systems
is in the public interest. The Social Contract is thus modified to state that Tine varner shall
include any cable systems acquired frow CYI within the provisions of the Social Contract. In
addition • provision in the Social Contract has been added providing for GS days notice of
the Social Contract to the affected local franchising authorities in order to provide thee, with
an opportunity to opt out of the lifeline BST provision of the Social Contract.
1f0. tscause the upgrade capital costs coaaaitted by Tice Varner in the Social
Contract are tied to the systaan it currently owns, any such acquisition or divestiture of
systaac by Tine warner, as provided for under this section, could change the aew~stt of
capital costs expended for the upgrade. As port of our oversight responsibilities with respect
to the Social Contract, • provision in the Social Contract Aas been added that states that the
upgrade capital costs set forth in the Social Contract rill be adjusted, as mutually agreed to
by Tine Varner and the Cos~ission, to reflect any additions or deletion of systaar subject
to the Social Contract. To address the parties' desire to have the raquirad revisr and
apprwal of additions and deletions of smaller systaas aeeoaplishad expeditiously, the Social
Contract further provides that the approval from the Coamission of such adjuctarnts shall be
expeditiously decided and rot be utreasonably withheld. !n vier of the fact that these capital
cawitwent decisions acct be Wade expeditiously and involve • thorough exawination of the
upgrade plan, ue belt we that, with respect to acquisitions or dispositions of cable assets
involving 100,000 or fewer subscribers, the Cable Services Burew is in the best position to
take any actions contaaplated under section III F. b of the Social Contract, ircludinp approval
or disapproval of addition: or deletions frog the provisions of the Social Contract and the
adjustarnts in the monetary amotstt of the upgrade which results from such additions or
deletions as cell •s any other actions contemplated under this section. Therefore, on our own
wotion, we order that the Cable Services Bureau be given delegated authority to take any
actions contemplated order section liI F. b of the Social Contract.
i. Modification and Terwirotion
(i) Terws of the Social Contract
61. The Social Contract provides that it way not be wodified or terminated without
the autuel apreoment of both parties. Tiwe warner way petition the Cownission to modify
or tersiirote the Social Contract based on any relevant change in applicable laws, regulations,
or circun~ctsnces. Any petition to wodify or teroirote this contract will be served on the
local franchising authorities for the •ffetted systems. The Caamicsion will allot 30 days
after the relesse of the Public Motice for interested parties to comment and 15 days for reply
cansnents before acting on any such petition.
112. In the event of • waterial change in the 1992 Cable Act or the Caamission rules
that could favorably iapact Tiar Varner, any Tier warner system way elect not to be
board by the relevant provisions of the contract addressing the BST price cap (III.A.2),
sdditions to the BST (II1.A.3), equipment rates (II1.8.), MPTs (111.0.), and the CPST price
csp (III.F.4). All other provisions of the Social Contract would remain valid and enforceable.
(ii) Comments
83. Several cowwenters contend that the provision in the Social Contract permitting
T,ar v.rner •ystees to elect not to be bound by certain sections of the Social Contract is
one-sided because it allows Tiar Varner to tera,rote the Social Contract unilaterally if any
applicable tar or regulations change. Sawn caiwaenters alto contetded that the local
franch,s,np authorities should have input on sny wodifications or ter+airotions. In its reply
ca.wentt, T,ar wrner conteros tMt this prov,sion relates only to Certain rate provisions in
the ioc,al Contract, and that notwithstanding any such changes in the law or in regulations,
T,ar warner still is required to coaply with otner non-rate provisions and that Tiwe Varner
r,ll be subject to the rate reputation rules in effect at that tine.
(iii) Discussion
64. we believe that the provision in the Social Contract allowing Tier Varner to
take advsntage of any changes in the current rate regulations is both justified and neeesssry.
tre are a,ndful of the pending telecoamnications legislation and the reality that we could
not reasonably expect Tiwt Varner to spree to comply with existing rate regulations in the
evMt they are eliwi rated. Thus, order the Social Contract, Tiwe Varner, Bali law to alt other
cable ooeretorc, will be able to tare advantage of any changes in either the 1992 Cable Act or
the Coaan,ss,on~s regulations with respect to the rate provisions in the Social Contract, i.e.
1,aie Varner rill be subject to whatever rate regulation is in effect at that tine. However,
even if the statutory or regulatory provisions concerning rate regulation change, Time Varner
,s not rel,eve0 of any other provisions in the Social Contract. ve retain our oversight
authority rith respect to these non-rate provisions and do not believe further revier by (Deal
franchising authorities is necessary,
j. Preeaption
(i) Tens of the Social Contract
b5. The Social Contract provides that to the extent that any state or local law,
reputation, ordirw~ee, or franchise is inconsistent rith the feces of the Social Contract, the
Social Contract precepts those requiraaentc. Additionally, the Social Contract provides that
all wivers of the Commiscian~s rules and s+odifications to the Ca.saissian fors necessary
to effectuate the ters of the Social Contract are granted. The Social Contract does not
preerpt the right of local franchi:ing authorities to negotiate upgrades rhich exceed the scope
of the Social Contract.
(i t ) Coasaents
bd. Harty local franchising authorities argue that the Social Contract contains
language rhieh could be interpreted as precluding thw frog requiring that Tine Varner
adhere to the eorditions iaposad in franchising apreaaiertts or from iaposing certain
conditiors in future franchising agrea~ents. in its reply coasaents, Tian Varner conte+tds
that the language does rot preclude any local franchising authority frow negotiating rith
Tiae Varner for a higher level of upgrades.
(iii) Discussion
bT. In view of the concerns raised by arny local franchising authorities, Tine Varner
has agreed to a andificatian to the Social Contract that limits the scope of the preewption. In
particular, the Social Contract only precepts the local franchising authority front regulating
rates or ordering refurds in a armor inconsistent with its tens. As stated in Section III. I.
2. •. of the Social Contract, the provision added specifically offices the enforceability of any
"otherrise valid preexisting local franchise agreasient, ordinance, lout tar or regulation
rhich provides benefits rhieh exceed those provided in this Contract relating to system
upgrades or the Tiring of schools, nor shalt [local franchising authorities( be restricted in their
authority to negotiate for such additional benefits after the Effective Date of this Contract."
~e believe this language sufficiently addresses the concerns raised by various local
franchising authorities as it clarifies that the Social Contract is not intended to preerttpt any
preexisting or future franchising agreenrcnt that provides for a different or higher level of
upgrades or benefits.
k. Other lssues
(i) Comnrnts
88. A variety of other issues and questions core raised by cannenters. Aatong the
Issues raised •re that (i) the coaarnt period ws too short; (2) the Coentission has abdicated
Its oversight responsibilities over the cable atonopoly; (3) focal franchising authorities should
tx permitted to deny franchise renew is for failure to coaply rith the Social Contract; and
(~) the Coawtission should address the issue of scrambling. Further, a ntarber of comments
o~scuss ntetters related to Tian rarneNs behavior in particular coatnanitiec including claittts
of unfair competition and discriwinrtion. In its reply cotmtents, Tian Yarnter did not
recpord to all of these issues, but did contend that it is subject to M increasing arrant of
competition and that the Comwiicsion has angle pfl.rer to enforce the Social Contract rithout
further harsh perutties being added by local franchising authorities.
(ii) Discussion
a9. Ye have allured almost fro atoriths for cotwttents and reply cowsaents on the
Tiwe wrner Social Contract. !t is our vier that this period of floe correctly balances the
need for public coaaaent rith the need to sekt the public benefits Of the Social Contract
wadable •s soon as possible. One of the grin goals of the 7992 Cable Aet is to protect the
interests of subscribers. Comtatents that tK have aodicated our oversight responsiibilities
over Tear corner •re rithovt support. To the contrary, the Social Contract is a regulatory
rcnanisai expressly provided for in our rules for cable systems not subject to effective
competition. Moreover, under the Social Contract, re have retained oversight responsibilities
for Ti.e wrner~e coiapliance rith the Social Contract. Ye believe that the goals of the
1992 Cable Act •re being art in this Social Contract. The Social Contract provides
ressonabte, stable rates to suDscribere, as cell •s various social benefits..
90. be find that the Social Contract provides remedies for violations, and, thus,
furtne~ enforcement procedures by local franchising •uthorities are not necessary, Ye note
that the Social Contract provides that each local franchising authority rill be served with
progress reports ro later than 90 days following the erd of each calendar year that the Social
Contract is in effect. The Social Contract provides that any violation of its teraa snail be
treated as a violation of a Cawiasion order with the corresponding rights ar+d remedies
_ associated with the enforcement of an order. Tian Varner rill report to the Coaaaission on
an amual basis within 90 days following the end of each calerdar year of the Social Contract.
This report will detail the nunoer of SST and CPST subscribers benefitting tram upgraded
service, the system reliability and service iaprovements resulting frog the upgrade, ud the
projected upgrade activities for the following year. This report rill bt servsd on each loco(
franchising authority. To verify the accuracy of these reports and ensure eoaplisnce, the
Caweission reserves the right to inspect the books and records of Time Varner and to
interview corporate eaployeec.
91. To the extent that local franchising authorities or other interested parties disagree
with Time Yarner's interpretation of any provision of the Social Contract, perceive a lack of
anforewent of its terms and conditions, or disagree with the remedies re nay prescribe, they
any sack redress at the Coswission. Further, the Social Contract is rot intended to resolve
every conceivable issue raised with respect to Tine Yarner's service and operations. There
are other avenues available to address concerns regarding such wafters as scrmablinp, alleged
discriminatory treatment by Tine Wrner of its coapetitars, poor service, billing probleas
and other disputes with coaplainants.
IV. CONCLUSION
92. The Saeial Contract negotiated with Time Wrner fulfills the objectives of the
incentive Upgrade Plans which were established in the Cost Order. The Social Contract
ensures that customers rill have reasonable, stable rates for existing services. Additionally,
Time Varner rill obtain pricing flexibility to upgrade its system in cost effective wys in
order to provide customers with increased prograamir-g choices and iaprovad gwlity of
service. furthermore, the Social Contract will reduce the regulatory burdens associated with
rate regulation on local franchising authorities, Time Varner, and the Commission.
93. It is our belief that by approving the Upgrade Incentive Plan re encourage
upgrades that provide services that are etorwaiically justified and that best meet customers'
needs. Therefore, re find this plan, to the extend modified above, to be in the public interest
and approve the •preewient.
9G. Accordingly, IT IS ORDERED that the Social Contract between Tian Warner and
the Coawission as modified above IS APPROVED.
95. IT IS FURTHER ORDERED that there is a general waiver of any Cortmission
rule that is necessary to effectuate the tens of this Social Contract including, but are not
li~aited, to the following rules: G7 C.F.R. "Il 76.923; 47 C.F.R. "U 76.987; G7 C.F.R. "U
76. % 1(e); 47 C.F.R. "U"U 76.309(c)(i)(B),76.964; 47 C.F.R. "U 76.%0; 47 C.F.R. "U 76.933; 47
C.F.R. "U 76.922; G7 C.F.R. "U 76.956.
% . tT IS FURTHER ORDERED that w fiver of any Commission rule or
~+odifications to the Caanission~s foses necessary to effectuate the terns of the Social
Contract 15 GRANTED.
97. IT !S FURTHER ORDERED that the Cable Services Bureau is given delegated
wthority to overce~e iapleraentation of the Social Contract, including authority to resolve all
pending complaints covered by the Social Contract and to make adjustments in the aaotnt of
Tiae hiarner~T upgrade comaitarnt on additions or deletions of systems subject to the Social
Contract.
9~. iT 1S FURTHER ORDERED that preemption of any local franchise agreement or
any state or local rule or regulation that reouires Time Ysrner to give amore than 30 days'
rotice of rate and service charges to stbccriberc for the period prior to Janwry 1, 1996, IS
GRANTED.
99. iT IS FURTHER ORDERED that the Secretary is instructed to sign the Social
Contract, •ttacned at Appendix S, on bM elf of the Coruniesion.
100. 1T 1S FURTHER ORDERED that this Order is effective upon adoption.
FEDERAL COreIUMIGTIOMS C0MISSIOM
William F. Caton
Acting Secretary
APPEMDiX A: Coweents E:pressing Unpualified Support of Tian Varner Social Contract
A t aba+as
City of Irondale State Senator Donald C. Sullivan
Bir+eingnam Public Schools Dave i lym McDaniel
City of Brighton Eastside Eleyae~ntary School, Haines City
City of Bessemer ~ Osceola High School, Saninolc
Alabw Public Service Caaaaissian iwra L. Mager
Oak Grove Middle School
City of Bir~ing~ha+a
City of Lakeland
California
School Board of Brevard County
Cathedral City
Millsboro Public SMools
Coronado Nigh School
City of Pinter Park
San Bernardino _
Orange County Public Schools
Councilaleaixr Barbara Wrden, San Diego
Faye C. Roberts, Coluabia County Public Library
Assenblyraman Dade Alpert
Polk County
San Diego County Office of Education
Richard Farley
Interr+ational Center for Catranications, San Diego
San Diego Business Roundtable for Education
Georg i a
City of Barstor The Travel Charnel
Congressman Brian R. Bilbray
Illinois
Paray Unified School District City of Berryn
Sen Diego City Schools Ronald F. Crick
City of Pslm Springs village of Tinley Park
Asseablyrowwan Susan A. Davis village of Stickney
City of Coronsdo
1 rd i ane
Coronsdo Unified School District MOIA, Indianapolis
Jean Farb NiOdle School, San D~epo lydiar+aoolis Chamber of Commerce
Kern County Indianapolis Urban League
Ssn Diego State University tlilliam G. Mays, Mays Chemical Company
Councilweetxr Randy Rorlcs, Batersii~lC K~rder Vision, Peru
Steve A. Pere 2, Bakersfield Congressman Dan Burton
Diame Jacob, Chairroaaan, San Diego Countr Boaro o~ Suaervisors Ird~anapolis Public Schools
San Diego CovtcilarnDer Marry Mathis Kentucky
T owsy Saroers
James fJ. Silva, Supervieor, Set and Dietr,c;, Orange Canty
Or. Robert M. McGaughey, Murray State University
Corr+ec t i cut
CeDle Te~ev~sion Advisory Council
FloriCa
Mat~onal Develovnent Prooert~es of Florioe-bey, Inc.
Representative John Norroni
Louisiana
Caooo Parish School Board
Csodo Parish Commitsion
St. John the Baptist Ptrish
Ouachits Psrish School System
i,
r
Monroe City Schools
Maine
Congreswn John E. Baldacci-
Massachusetts Torn of Melbourne Besth
City of Melrose Representative R.2. Safley
City of Medford Schoot Board of Polk Canty
Suzan Melson, librarian, Portland Nigh School
Dome Crook, Coaputer Teehrology Staerinp Caiwittae, Portland NiBI- School
Maryland
Discovery Coawcnications, inc.
lym Business/Education Fourxiation
Sraapseott Public Schools
Lynn Businsss Partnership
Salaa- Public Schools
Lym Piblie Schools
Melrose Chanter of Commerce
Central Berkshire Regional School District
Patrick J. Markham, Pittsfield Public Schools
City of Pittsfield
Mimesota
City of Shakopee
City of Chaska
City of Mer Ulra
Bloomington Chamber of Commerce
Richfield Chamfer of Coan+erce
Edina Public Schools
Eden Prairie Chanter of Coar+nerce
Ewen Prairie Schoolc
Mi meapolic Public Schools
Mrrv+ecota Public Utilities Cownission
Jackie Cherryhoarcs, President, City Council, Mi meepolis
Richfield Public Schools
Edina Chamber of Coaawerce
Greater Mi meapolis Chamber of Connerce
State Senator Steve Movsk
Susan Ray Euler, Fire Department Not Spots
City of Ranlo
City of Rockledge
City of Edgerood
Manatee County
Jaywie G. Carter
City of Belleair Bluffs
City of Taaple Terrace
Polk Education Fasdation t Business Partnership, lnc.
Brevard County
Torn of Indian Shores
Torn of Lake Maatilton
School District of Millsborouph County .
City of Auburndale
School Board of Manatee County
Representative Oemis 1. Jones
City of Treasure Island
City of Pate Bay
Pittsburgh Baseball Club, Florida Baseball Operations
Barnett Bank of Manatee County
Hillsborough Education Foundation, Inc
City of St. Pete Beach
City of Crystal River
City of Bradenton
City of largo
Torn of Malabar ,
School Board of Marv tee County
City of Bradenton Beach
lake Co~r+ty Infot~ation Services
City of Cocoa Beach
County Comwiccioner Joe McClash
City of Melbourne
City of Maitla+d
State Senator David G. Kelley
State Senator Carl Y. Kroening
Mississippi
Mississippi Ecor+onie Council
Jackson Public School District
Torn of Coldwter- Supports Contract, especially rate stability, reduced basic rates, and
upgrades.
City of Ridpeland
City of Rayewrd
Nindt County
City of Senatobia
Madison County
Torn of Edwards
Missouri
Ferguson-Berkeley Chaster of Co~nneree
City of Belton
City of Parkville
Village of Calverton Park
City of Lee's Summit
Mebrask•
City of Auburn
City of Lincoln
City of Tork
City of Mebrssks City
City of Superior
lsncsster County
City of Fairbury
Mer Jersey
Ascewoly~an Petrick J. Ronne
May fork
Esst Syracuse-Miroa Schools
Village of Malone
Village of North Syracuse
Village of Painted Post
Feyetteville-Manlius Schools
To.w~ of Catlin
To~+n of Cawwi t Luc
John P. Al~+onte and Edger F. Mies, Eest Syrscuse-Minos Central Schools
A t E Television Networks
Peyton C. Wtkins, Penfield
Ctnixrlartd Canty Schools
Town of Emerald lsle
Moore County Schools
c;ty of ll.a~let.
Guilford Canty
City of Fiiph Point
Instructionrl Teehnolopy, Charlotte-Meeklertburp Schools
Centralina Council of Governtaertts-
Canty of Moore, Departatent of Social Services
Tout of Mar River
Tarn of Landis
Cleveland Canty
Carteret County Board of Education
Lunberton Area Chamber of Coatnterce and Visitors Bureau
Town of Southern Pines
Southeastern university
Town of Rockwell
Public Schools of Robeson Canty
State Senator Luther N. Jordan, Jr.
Town of CMpel Mill
Shelby City Schools
Asheboro/Randolph Chanter of Commerce t Tourism Bureau
Guilford County Schools
City of Thomasville
C,ty of uinston•Salem
Clevelard County Schools
T o.in o f C r acne r t on
City of Kings Mountain
City of Burlirgton
City of Albe~erle
Gaston County Schools
To~+n of Matthews
County of Jorxs
Cabarrus County
City of Asheboro
Charles F. McCra~, Guilford County Schools
Torn of Chili
Torn of East Rochester
- Torn of Ogden
Torn of Wtes
Village of Endicott
Torn of Perinton
Torn of lfarcettus
Race City School District
Tout of Mewrk Vat ley
Torn of Kirkrood
ESPM, lnc.
Torn of R i r.iraord
Torn of Clarendon
City of Corning
City of Port Dickinson
Yillape of Johnson City
Joni Lincoln, Port 6yron Central School District
Torn of Parwa
Torn of Pittsford
Jaiwesville-DeWitt Central School District
Torn of Kirkrood
Torn of Conklin
To.m of Clifton Park
Board of Cooperative Educstionat Services of Cattaraugus, Allegheny, Erie and Wyoming
Counties
City Of Rochester
Torn of Stillwter
To.n of Fenton
City of Elwira
Village of Noraeheads
loin o1 6lebster-
Morth Carotins
City of Lexington
Torn of veddirgton
FTCC Fov~bation, Inc-, Fayetteville
University of North Carolina at Wiln+inpton
Pe+~rote State University
Charles M. Lineberry, Jr.
Torn of Raaiccur
.. City of Randle~aan
John G. Redncrd, North Carolina Council on Economic Education
Archdale-Trinity Chanter of Cainnerce-
City of Shelby
J. Parks Todd, Jr., North Carolina State Board of Cortmnity Colleges
Fayetteville Chanter of Coa~nerce
City of iessanrr City
Gremcboro Chanter of Caw++erce
Ohio
Village of Marble Cliff
Norwood City Sehools
IICET, Cinciewti
Museum Center, Cinei coati
Narpuerite Shurte
City of Piqua
Municipality of West Milton
lmmeculate Neart of Mary School, Cinci coati
Gahama-Jefferson Public Schools
Rudy Forsberg
Marian A. Spencer
Staff of Canton City School District
Elide Local Schools
Thomas Yorthington Nigh School, lJOrthingtm
Dick Le~fimem , 1lesterville South Nigh School, Vesterville
learning Materials Center, Rutherford B. Mayes Migh School, Delarsre
lar• Gianessi, Fort Mayes Metropolitan Education Center, Columbus
Village of Obetz
S. Julia Deitert
City of Grandview Neiphts
Elide Senior Nigh School
City of Akron
City of Colu,+tius
Brenda Jackson, lrilliam Nervy Nerrison Junior School, Harrison
Terrace Guild, Cinci coati
literacy Metrork of Grester Cinci coati
Yellness Community, Cinci msti
East Erd Adult Education Center, Cincimati
Camilla S. Nuff, St. Veronica School, Cincinnati
Green Township
Ansonia Local School District
Merton Local School District
John E. Miller, The Troy Schools
Milton-Union Exempted Village Schools
Covington Excepted Pillage Schools
City of Bexley
Baia/Allen Coolly Chaatber of Commerce
Yerdy E. Yebb, Youngstown City School District
Eldoma N. Ashley, Morth Union School District
Miami East Junior Nigh School
City of Akron
Best liberty-Salem Schools
John G. Olds, Northwestern College
Csrrie Clsrk, Playhouse in the Park, Cinci mati
Kids voting, Cinci mati
All About Kids, Cinci Mali
Arts Consortium of Cinci Mali
Oregon
Kathy Allen-Kirsch, Gregory Neights Middle School, Portland
Karen Gaddis-Philips, Sam Barlow Nigh School, Gresham
Portland Public Schools
Pe+nsylvanie
Ctty of Reading
Tttn 5mitn, Reading
Reedtrq Are• Canwanity College
Alvernia College, Reading
Reading School Dictrict
Pottsville Ares School District
Blue Mountsin Sehoot District
Serks County Intermediate Unit
Bellwood-Antis School Board
Moon Corm~ntty ACCl55 Television
Greater Johnstown Cawmittee
BT Financial Corporation
Moon Area School District
RepresenUtive Jim Lynch
Rapresentative Richard A. Geist
Richland Senior Mioh fehool, Johnstown
David Popp, Yestannt Nflltop School District, Johnstown
Altoona Area School District
irodford Cable Cawission
United wy of Serks Coutty
Representative Sheila Miller
Perr+sylvania State University
Greater JohnstaNCanbria Cou~tty Chattber of Commerce, Inc.
City of Altoona
Greater Johnstown School District
Franklin Area Chamber of Caa>rnerce
Franklin Area School Dictrict
Dsttey Grove School District
Richland School District
Representative Samuel E. Rohrer
Sugarcreek Borough
Valley Grove School District
Serks Comnnity Television
Pest Lebanon Township
South Caroliru
To.m of Dirvl~ood
Su~*ter School District Mo. 17
City of Darlington
To~+n of Clover
Sumter County Admiinistrator
City of Florence
T erneccee
Menp-its City Schoolc
Gertaanto.+n Area Chanter of Conwierce
Collierville Area Chanter of Coiwnlrce
Randy Moncton, First Temessee Bank, Collierville
Beverly A. Nolnigren, First Temesse! Bank, Bsrtlett
City of Bartlett
APPENDIX B
TA8t.E DF CONTE?iT5
Page
I. BACKGROUND AJiD SU1~lIART. 1
II. DEFINITIONS 2
I2I. TERMS AMD CONDITIONS OF THE SOCIAL CONTRACT 4
A. Basic Serviee Tier Rate Relief. 4
1. Creation of a La+-Cost, Lifeline Basic Servicr Tier. 4
2. BST Price Caq. 5
3. Additions To Basic Service Tier. 6
B.Equip~ent Retes. T
C.Resolution Of Existing CPST Rate Cases E
D.Migrated Product Tiers 9
E.CUStdmer Refunds and CPST Rate Reductions. 11 ,
F,lnfrastructure Upgrade Aequiremmt 12
1. Upgrade Requirement. 12
2. Mo Iaoairment Of Local Authority 13
3. Reporting Requirements 13
4. CPST Rates Subject To Price Cao. 1G
5. Failure To Meet Target 15
6. Adjuste+rnts To Systems Subject To Contract 15
G. BST And CPST Rate Stability. 16
H.Additional Consumer Benefits 17
1. Service To Public Schools. 17
2. Home Viring. 19
I.Miscellaneous Provisions 20
1. Modification And Termination ZO
2. Authority To Enforce Contract. 21
3. All Necessary Vsivers Ard Preenptioru Den+rd Granted 23
L. Effect On Other Proceedings. 24
5. Mo Aoeission Of Vrongdoirp 25
6. Contract In Public Interest. 25
7. legal Challenges 25
8. Effective Date And Tern. 26
9. Public Mot ice. 26
10. force Najeure. 26
11 . Severabi l i ty 2B
12. Entire Understendi n9 29
City of Lakeland
City of Ola»s Part Bartlett Kiwnis Club
Greater Irving Chaster of Caanrrce Texas
City of Hunters Creek Village
Councilron~an Cynthia Yhite, LeYisville
City of San Antonio
City of Cibolo
Fort Bend Independent School District
City of Shavano Park
i.M. Ropers School, Houston
Spring Independent Sehool District
Luling Independent School District
City of Pest University Place
City of Elgin
Helen S. Handler, Paul Revere Middle School
Robinson Independent School District
Elgin lndeperdent School District
Houston Cancitwsn Jahn Y. Peavy, Jr.
City of Converse- Late Filing
City of Piney Point Village
Leirisvi t le Chamber of Coasneree
Missouri City
Representative Peppy Hamric
Lity of McGregor
City of Yaco
City of Round Rock
Virginia
Greater Irving Chamber of Commerce Cypress-Fairbanks Independent School District
Poquoson City Public Sehools. City of Luling
Smithville independent School District Round Rock Chanter of Commerce
6-est Virginia El Paso Independent School District
nest Virginia Cable Advisory Board
Greater Austin Chanter of Ccw~nerce
Yicconcin City of 14eadows
Green Bay Area Chaster of Cannerce
Action, Menasha FOX 18, Yichita falls
Joseph A. Rice, Milwukee 1'sleta Independent School District, El Paso
City of Bastrop
wew+tec Studio, Green Bey
uhitnall Middle School, Males Corners Milt Country Village
Torn of Nolly-~ood Perk-
Oshkosh Aree School District
City of Castle Milts
Greater Milraukee Education Trust
Greeter Houston Partnership
School District of Beloit
Conpressa~sn Bill Archer
Marquette University Miph School
City of Sela~e
Kaukana, Yisconsin
City of Melotes
City of Bellaesd
St. Paul's Epiccopel Day School, Yeco
Esnes Independent School District
City of Balcones Heights
City of Kirby
SOCIAI. CONTRACT FOR TIME YARNER CABLE
"' 1. BACKGROUND AND SU}MART.
The "Soria( Contract" set out in this document (the "Contract") relates to certain
services and aquipsrnt offered by Tier Varner Cable ("TIK") actw lly or potentially
subject to regulation order the terns of the applicable provisionc of Title YI of the
Canasr~ications Act of 1934, as awarded ("Act").
The Federal Coaannications Coawission ("FCC" or 'Coae~i:sion^) finds that this
Contract rill advance the public interest by: (i) assuring fair a-d nuonsble rates for
TYC's cable service eustaerrs; (ii) facilitating the creation of a for-cost, lifeline basic
service level; (iii) iaprovinp TYC's cable service by suhetantially upgrading the charnel
capacity and technical reliability of its cable systentis; and (iv) reducing the administrative
burden and cost of reputation for local governments, the fCC and TIJC.
The Contract has been negotiated between TYC and the FCC in accordance with the
fCC'c authority to consider and adopt "social contracts" as an alternative to other regulatory
approaches applicable to cable television rates, as wodified and aaplified in the Order
adopting the Continental Social Contract, and its authority to regulate TYC's table
services under the Aet, particularly in light of the Stataarnt of Policy set forth in Section
2(b) of the Cable Television Consumer Protection and Coapetition Act of 1992, Pub. l.. Mo.
102-385, 106 Stat. 1460 ("1992 Cable Act"). Except as otherwise provided for herein, this
Contract covers alt of TYC's cable systems as of the Publication Date (as hereinafter
defined). Until such tier as there is a final decision permitting the transfer of the Laredo,
Texas cable television franchise to TI,rC, this Contract shall not apply to the affected cable
system serving Laredo, Texas.
II. DEFINITIONS.
The following taros shall have the eraninps set forth helot. Certain other tares are
defined elsewhere herein.
A. "Basic Service Tier" or "BST" weans the cable service level which includes
the signals of any local television broadcast stations and any public, educational or
governraentsl access charnel required by the relevant franchise to be carried on the BST.
8. "Cable Programming Service Tier" or "CPST" weans any tier of video
prograaminp service, but shall not include (i> video programming carried on BST; (ii) video
programming then offered on a per charnel, au(tiplexed, a la carte or pct program basis;
(iii) any Migrated Product Tier; or (iv) any Mew Product Tier ("NPT•) as defined by the
Going Forrard Rules and 47 C.F.R. "U 76.987.
C. "Cost" weans that the prices so designated have been designed to recover
actw t costs, including a reasonable rate of return as defined in the fCt Cost of Service
Order, supra, at "T 207.
D. •Current Rates" stone those T4C systew rates that are in effect as of the
Publication Date, or rates that rill becoer effective otter the Publication Date and for which
notice we given to subscribers an or before the Publication Date.
E. "CVI" weans Cablevision lrxiustries Inc., its subsidiaries and affiliates.
F. "Effective Date" crams the date on which the FCC releases sn order
approving this Contract. '
G. "Eligible Subscribers" eraru those CPST subscribers to •ny of T1IC's Cable
syste+es listed on Appendix A to this Contract •t the fire Refunds •re issued.
M. "Going Forrard Rules" weans the FCC's rules adopted in the Sixth Order on
Reconsideration, 76 RR 2d b59 (i99G), inctud~np alt subsequent clarifications and
aerriorrnts.
I. "Migrated Product Tier" or "MPT" irons (a) a tier consisting of up to four
services moved frow a systew's existing BST or CPST<s) as described in Section Ii1.D.5. or
(b) awry Superstition Tier or any tier consistirrq of those services rssininp an a Preferred
Tier, as defined in Section 111.0.1., after any excess charnels have been shifted to CPST as
described in Section 111.D.3.
J. "Publication Date" irons the date on which the Conniission releases its initial
Public Notice relating to this Contract.
K. "Refund" weans a prospective bill credit iccued to Eligible Subscribers.
L. "Tier Varner Cable" or "TYC" weans the collective reference to Tim
uerner Entertairwrnt Coapany, L.P, ("TYE"), 7111 Cable lnc. ("TYI Cable") and Tian
Varner Entertainernt-Advance/Newhouse Partnership ("TYE-A/N"), or any subsidiary,
division or affiliate thereof, or, there consistent with the context, any cable system o~rred or
a~snaped by TLIE, TY1 Cable or TYE-A/N, except there particular provisions of this
Contract specify a wore liwited scope.
III. TERMS AMO CONDJTIOMS OF Tt1E SOGIAt. CONTRACT.
A. Basic Service Tier Rate Relief.
1. Creation of a t.or-Lost, t.ifetine Basic Service Tier.
a. In order to provide its subscribers with the option to purchase •
tar-cost BST, ro later than six months otter the Effective Date, T1~IC rill reduce its BST
rates on systeas serving at lout 8SX of TYC~s total subscribers to a level tOX helot the
Current Rates. !n any systwi r+-ere the BST rates are initially reduced by tOX ac described
above, but there BST rates are pending review on the Publ;cation Date, TYC rill reduce
its BST rates further bey tOX free the level ultiwstely determined to be reasonab-e, otter
such determination is ro longer subject to revieti or appeal. TYC any irorease its CPST
rate(s) in any systesi by an as+ount necessary to recoup the reduction in reveries due to the
10X adjustaent in the 1ST rate in that systew. Such adjustment to CPST rates shall be
submitted to the FCC for review. A local franchising authority (•LFA•) ..y elect rot to
have TYC implement the BST rate reduction and corresponding CPST adjuatwant described
in this paragraph in its franchise area by providing rotice to TYi: and the Cesiuion ro
later than i5 days following the Effective Date. Such rotice shall (a) be in rritinp, (b) be
addressed to the Otfiee of the Secretary, Federal Coeaniutions Coanission, 1919 M
Street, M.Y., Yashington, O.C. 20551, with • copy to Tise Varner Cable, 300 First
Stamford Place, Stamford, CT 06902.6732, attention: General Counsel, (c) identify the local
franehieinp wthority, the eoasanity unit identification nusiber for the franchise area, and
(d) reflect the clear intent to rot have TYC isplaarcnt the 1ST rate rsductian described in
Section III.A.t.a of this Contract. Morever, such notice need rot stet any other
requirawents and may be in letter form. An election by a LFA to opt out of the provisions
of this paragraph shall not otherrise affect the applicability of the remaining provisions of
this Contract in such connia,ity.
b. 1n order to achieve its poet of creating lor•cost BSTs, TYC
rill restructure the BST an the rewainirq systems there the BST has not been reduced by
10X as described above sa as to create • lifeline-type service. Such restructuring rift
involve shifting charnels from the BST to an existing or Wetly created CPST (or MPT as
permitted by Section III.D.S.) and rot to any service level which could not De subject to rate
review upon the receipt of a valid eaaplaint uroer current FCC rules. Such restructuring
wilt rot be dewed by the FCC to be a •funda+aental change• of any affseted service tier.
At the time of suefi restructuring, the BST rate rill be reduced by an amount equal to the
pereentape of the BST channels shifted to CPST. NNere the BST charnels are shifted to a
Wetly created CPST, the rate for the CPST rill be equal to the anaxnt of the reduction in
the BST rate. Yhere the BST charnels are shifted to an existing CPST, the rate of the
existing CPST rill be increased by an amount necessary to recoup the reduction in revenues
resulting tram Lhe reduction in the BST rate as described above. The tOX 1ST rate
reduction, with CPST offset, rill be iaplen+ented upon restructuring of such rawainirg
syctws. Nothing herein shall be deeaed to affect any otherrise enforcesble franchise
provision relating to prograwwirp services to be provided by TYC.
2. BST Price Cap.
After isQlaa~entstion of the tOX BST rate reduction described above, all such
reduced BST rates tilt be subject to a price cap, even in currently unregulated TYC
systaws. TYC tilt 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 rill have ro adverse effect an any form 1210 BST rate adjustment request rhieh
w.y be pending before sn LFA as of the Publication Date or thereafter. Nothing herein shall
authorize revieti of the reasonableness of any BST rate adjustments in caawanities there
the lFA has not elected to certify in accordance with Section 76.910 of the Coneission~s
rules. '
3. Additions To Basic Service Tier.
TYC shall rot add any additional charnels to any BST for the term of this
Contract, except there required by applicable lw, reputation or contract lawfully entered
into pursuant to such lac or regulation, or to provide additional local origination charnels or
other ron•satellite delivered charnels. In the event that the FCC's asst-carry rules are
repealed or rendered invalid or inapplicable to TYC by a court of coapetett jurisdiction,
TYC rill have the right to substitute any prograam+inp service not then carried by such
system for up to an average (weighted by BST subscribers) of three local television broadcast
stations deleted fraw carriage per system covtred by this Contract, but ro ante than five
such substitutions on any given system, even if wore than five television broadcast stations
are deleted. Such substitutions shall have ro iepact on BST rates other than due to the net
change in programming costs. In the absence of suct-urry requiresents, however, any
local television broadcast stations which TYC contira+es to carry rill be carried on the BST.
Any such changes to 1ST rill be wade only upon provision of thirty days advance rotice to
the Coaamission and to affected LFAs and subscribers. Upon receipt of any necessary LFA
approval, TYC rill be perwitted to iaplawrnt appropriate BST rate adjustments to reflect
any such added or substituted charnels. Such adjustments (other than adjustments to BST
required by any retrarssmission earuent sgreen+ent) shalt rot be subject Lo the amual SST
adjustment limitation set forth in Section fII.G.i.
B, Equipment Rates.
• TWC rill be permitted to establish a blended rate, averaged for each of the
• folld+inp equipment basket categories: (1) hourly service charge, (2) installations, (3)
rarote control Devices, (4) non-addressable converters, t5) ad7ressable converters, (6) other
leased equipment, and tT) custaaer tier changes, by peopraphic region at reflected an
Appendix Q to this Contrut tend any reasonable andifications to such repione). Equipn+ent
rates rill bs adjusted amually to reflect changes in repienal equipment Costs in each
category. At least thirty days prior to ieplementation of the first CPST adjustment
wthorized pursuant to Section IJI.F.4., but rot sooner than Decaeder 1, 1995, TrC tilt
sutanit • single Forte 1205, or eauivatent reasonably uteptable to the Coamiiscion, for each
region to the FCC, and tilt submit am+al updates to such filings thereafter for Coassission
wavier. Any data required to support such amual aquipssnt rate adjustments nay be used
on the four cost recent available quarterly financial figures. TYC may begin Harping
revised equipment and installation rates to customers based upon the updated filing upon
thirty days' rotice. These revised equipment and instailatian rates rill be subject to refund if
Lhe Connissian later concludes that toter region-ride rates are called for by such filings
and applicable rules. Such region•ride aquipsent and installation charges as TIrC
establishes and the Cosisission approves pursuant to this Contract shaft be subject to
enforcement by local frsnchisinp authorities. Should any LFA find that TYC's equipment
and instillation rates charged exceed those permitted by the Commission, the lFA say order
TYC to wake refunds of any excess charges as necessary to cpmply with the equipment and
installation charges permitted by the Coasnission.
C. Resolution Qf Existing CPST Rate Cases.
t. All CPST cases or caaplaints currently pending before the Coasiission
are resolved pursuant to and as • result of the adoption of this Contract, es set forth in
Appendix A to this Contract.
2. The Commission has reviewed TYC's pending CPSt filings. In light
of itc wavier, the covenants and representations contained in this Contract, and in express
reliarce thereon, and in order to conserve Commission resources, avoid litigation costs, and
achieve the other benefits to the public contained in this Contrut, the Commission agrees to
resolve alt CPST cases and coaeplaints involving TYC currently pending before it.
3, In addition to those CPST rates which are subject to proceedings that
are being settled as set forth in Appendix A to this Contract, all other Current Rates, as
adjuKted for inflation erd changes in sxternal costs as of the Publication Date, charged Dy
TYC for CPSTs are deemed reasonable order the Act and the Coswission~e rules.
4. At such flak as TYC makes its first CPST rate adjustment authorized
by this Contract, such increase shall be netted against any Current Rate which rsquires
reduction in auordanee with the CPST settlements a~pprovad by this Contract, provided,
however, all such required reductions to Current Rates shell be implemented no later then the
final date for issuance of Refurds pursuant to section JII.I.e.d of this Contract.
S. a5T rate disputes rill enntinue to be resolved in the ordinary course,
pursuant to applicable FCC rules.
p, Migrated Product Tiers.
), The Caarniscion and T11C acMrorledge (~) rovid~ngtcollectiveMofferinps of a la carte
sYSt~ (the 'Migration Systems ) have been P1993 and Septeeeer 30, 1994 and which
enamels which rare crested between April 1,
consist of one or more (a) tor-priced collective offerings, contarrinhtpfeesr(ey"Swerstation
at an avera0e Price of less than 50.29 per charnel, ezcludinp copy p
Tier"), and (b) lor-pe*+etrated collective offerings prsdamirantlY containing charnels rich
had been affirwatively arrketed as a separate tier before being offered on an a la carte basis
to "Preferred Tiers) std (ii) that such offerings provided by such Nipration Systenss
cuwlatively contain in excess of six channels migrated from BST ardor CPST.
2. Any Superstition Tier offered by a Migration System shall be treated as
a separate MPT. The initial price of such NP1 rill be based on the Current Rate of the
Superstition Tier. lfiere neighboring TYC systess each offer sn MPT or MPT consisting
prisarily of superstitions and cuch MPT or MP1 would be priced differently order the
Coaaiicsion~s repulationc and this Contract, an adjustnertt m.y be wade between or annng
sucfi Current Rates on a reverxu netitral basis so that a unifono rate for such MPTs/MPTs
say be established. In selecting services to be returned to • CPST in accordance with
paragraph 3 below, the Migration Systea serving Charlotte, Morth Grolina and surrar+ding
areac m.y woves~hv~ icentwMPTt andeNPTs~ Allrsuch uneforwlytprieed MPTs/MPTs shat l
line-up among T beia+.
be s~ject to the price cap set forth in paragraph
3, Any Migration Systew shall select services Eras the Preferred Tierts)
to return to a CPST so that the cuwulative rxnoer of migrated services retaining on anY
Preferred Tier(s) and any SuDerstation Tier is ro greater than six. The subscriber's bill shalt
be adjusted by ro more than 25 cents per such charnel returned to the LPST. The services
not returned to • CPST from the Preferred Tier(s) shall be offered as a simple MPT, separate
from any Superctatian Tier. The initial price of any such NPT rill be based on the Current
-~ Rate of the Preferred Tier(s), reduced by an amxrtt equal to the pertentape of charnels
shifted to a CPST. Eligible Subscribers shall be issued a CPST Refund as reflected in
Appendix A.
4. On its orn notion, the Cable Services Bureau, consistent rith the
tenss set forth herein, hereby reconsiders any Letter of Inquiry (•LOI•) rulings involving
any Migration System (L01-93-24; LOI-93-32; LOI-93.47; t.OI-93.4E), and TYE-A/M
hereby petitions to rithdrw its Applications for Revi w of such LOI rulings and such
petitions are hereby granted by the toa~nission. The principles in this Section III.D.
relating to the unregulated treatment, for benchanrk calculation purposes, of up to six
migrated charnels, as incorporated in such reconsidered L0I rulings, shalt be binding on any
LFA decision relating to BST rates charged by any Migration System.
S. On each of its systaatc rhieh does net, as of the Publication Date, offer
a collective offering of a to carte charnels created betreen April 1, 1993 and teptamber 30,
1994, TYC may move a maxiaus of tour existing SST or CPST services to a single MPT
per system. TYC rill set the initial rate for any net MPT created pursuant to this
paragraph at the same level, on a per eharrtel basis, that is set for that frsnchise's CPSTs
under the Contract. The rates for any BST or CPST from rhieh such Marvels are moved
shall be reduced on • per charnel basis so that the initial creation of any such MPT shalt be
reverxu neutral.
6. TYC way rot require the subscription to any tier, other than the BST,
as a condition for suoscribing to an MPT, and way not require subscription to an MPT at a
condition for cuoscribing to a CPST. Because the restructuring involved in the creation of
MPTs) as described herein does rot funaawentally change the service provided to
subscribers, TK rill not be required to re-warket any of the affected services to existing
subscribers. Arty services ^iprated way be offered on sn a la carte basis as cell as in a
package.
7. for the period prior to April i, 1997, the price of any MP1 established
pursuant to thic Section III .D. way be adjusted solely to reflect unracoverad inflstion and
external cost ircreases, ircludinq that currently accrued but uncharged, in the warner
per+nitted by the Cawwission's rules for CPSTs. There rill be ro liwitation on the nartaer
of ne++ services T4C way add to an MPT. The price of arty such MPT may be ircreased to
reflect rver services sdded to the MPT by an awount not to exceed f.20 per added charnel,
plus the actual license fee(s) for the added charnel(s).
E. On or after April 1, 1997, T11C way convert any MPT into an MPT,
as defined in 47 C.f.R. "U T6.9dT, ircludinp subsequent elarifieaiions or amendwents.
Because cuetowers rill bt able to subscribe to CPST(s) and an MPT on a stand-alone basis,
ac of April t, 1997 the Coaa+ission tilt regulate MPT rates in the same marrter in rich
the Cawnission currently regulates MPT prices. Such MPTs rill be treated as alt other
MPTs order the Cow+iission's rules, provided such MPT is offered rithout a buy-through
requirewent of any tier other than the BST.
E. Custowcr Refunds and CPST Rate Reductions. Pursuant to the settlement
of TUC's existing CPST rate eases as described in this section, TYC rill provide Refunds,
rhich in the egpregate total in excess of f.G.T Million, plus interest coieputed in accordance
rith fCC requirements for subscriber refunds, and shall iaplentent CPST rate raKlxtioni, on
the terwc and conditions, and in the warner, set forth belor.
1. In settlement of all CPST eoepleints involving the nevi w of an FCC
Form 393 and/or FCC Fong t200 subwitted by TK rhich are pending as of the
Publication Date, TYC rill provide a Refund to each Eligible Subscriber as set forth in
Appendix A to this Contract.
2. TYC sprees to wive its right to a credit for the franchise fee paid to
the LFA on the CPST Refund aaaxatt.
3. Caawastities rhich receive CPST radiations to Current Rates, in
accordance rith Section III.C.4. of this Contract, are set forth in Appendix A to this
Contract.
F. Infrastructure Upgrade Requirewertt.
1. Upgrade Requirement.
TYC rill upgrade all its cable systeas so as to meet the follo+ring technical
standards: each TYC cable system rith a present capacity of •t least SSO NNt rill have a
bardridth capacity of at least 750 MNZ rithin five years after the Effective Date; •ll other
TYC cable systawc rill have a bandridth capacity of at least 550 NNZ rithin five years
after the Effective Date. At least SOX of all TYC subscribers tilt be served by a system
rith a capacity of at feat 750 NNZ, of rhich at least 200 NM2 it expected to be allocated
to digital distribution, fiber-to-the-node architecture rill be deployed to iaprove signal
quality and reliability of such systaaa;. At least bOX of the nw wlop cervices added
during the term of the Contract rill be added to the CPST and rot to BST, MPT or MDT.
tX+ average treignted by CPST subscribers), CPST service offered on the upgraded systems
rill contain at least 15 additional charnels by the end of the Contract. TLC sprees to invest
Si Billion in capital costs in correction with the upgrade of its cable systeas. At least b,OX
of alt capital expended in eorrrection with the upgrade eommiitment described herein shalt be
applied tar the benefit of BST and CPST subscribers. TLC has selected, and rill select, its
systaws to be upgraded without discrimination based on socio-economic status.
2. Mo lapeir•ent Of Lout Authority.
Nothing herein shall restriei the ls9al authority of LFAs to negotiate upgrades
for their pertieular frsneirise areas rhiM exceed the scope of this Contract.
3. Reporting Requirasrents.
wo later than 90 days follorinp the end of each calendar year during all of
which the Contract is in effect, and rithin 90 days foliating the end of the last month
follorinp expiration of this Contract other than calendar year end, TLC tilt provide •
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 TLC has made to upgrade
systamrs in compliarce with Section I1I.F.1.; the rxwcer of BST and CPST stdstribers
benefitting from such upgrades; system reliability std service isprovasrents resulting from
such upgrades completed during the previous calendar year, and TLC's projected system
upgrade activities during the follwing year of the Contract. Such report rill be served on
each LFA. The FCC reserves the right to inspect the books and records of TLC and
interview corporate saptoyets for the purpose of determining compliance with this Contract.
G. CPST Rates Subject To Price Cap.
a. Begi ming January t, 1996, TLC rill be permitted to increase
the annthly rates for the stoat highly penetraiad CPST on each of its systaas by 51.00
during each year of this Contract. These rate increases have been established at • -evel
designed to recover solely those costs allocable to BST and CPST subscribers.
b. During the life of this Contract, Lhe only other persisted
increases to CPST rates rill be for inflation and increases in external costs. In particular,
during the term of this Contract, TLC rill not avail itself of any additional per-Hamel
adjuctarnt persisted by the Going Forwrd Rules for any propra~aing services added to the
CPST after the Effective Date hereof. Except as to TLC systae which had already
commenced • roll out of the addition of charnels to CPST and associated per charnel
adjustments purswnt to the Going Forwrd Rules prior to the Publication Date, any per
charnel adjustsents iaplsarentad pursuant to the Going Forwrd Rules by arty T11C systaas
for services added by such systss after the Publication Date, but prior to the Effective
Date, shalt be netted against the initial CPST adjuctarnt wthoritsd by faction III.F.G.a.
above, Upon iapiasrrntation of any such initial CPST adjustarnt, net of any per charnel
adjustsient taken by such TLC systasso which have added services •fier the Publication
Date, such TLC systsaa: rill be allowed to concurrently adjust CPST rates to reflect any
license fees not already passed through to subscribers associated with any such services
added to such systsas after the Publication Date. TLC rill not seek to pass through to
subscribers any additional capital costs relating to the upgrade raquirssrnt in this Contract
pursuant to any provision of the Caaaission's rules, including, but not lisritsd to, any rules
or policies adopted by the Coa~aission relating to the pass through of external costs, upgrade
ircentives, or cost-of•service. TLC reserves the right to seek to pass through additional
capital costs •esociated with any uppraoes specified by any frsrchise apreasrnt, local tar,
regulation or ordinance which exceed the requirements of this Contract. Nothing herein shall
affect the ability of TLC to iaplaarnt arty Mer Product Tier ("MPT"), add charnels to any
such NPT, or establish rates for any such NPT, subject to the fCC Going Forrsrd Rules, or
to implement any MPT permitted by tfie terns of this Contract.
5, Failure To Meet Target.
If TLC faits to stet the upgrade requiranent so as to provide the bandtridth
capacities described in Section III.F.1. of this Contract rithin the tars provided for therein,
the then existing CPST subeeriben to the cable systam,e as to rhieh such eoawitarnt hoc
not been Bret rill be entitled to refunds (in the form of prospective bill credits) of the
ircreases (net of inflation and external cost adjustments) in CPST rates taken uroer Section
III.F.G.a. of this Contract, plot interest cosouted in accordance with FCC requirements for
cubecriber refuds, and a liquidstad dawages penalty of t5X of such refund amouLt.
6. Adjustments To Systaae Subject To Contract.
a. TLC shalt include any cable systsam: scquirad free CYI rithin
the provisions of this Contract, provided that the CPST settlemrent provisions of this Contract
shall not apply anti( any applicable settlesrnts are mutes lly agreed upon between TLC and
the Commission. Addition of any other TLC systems rithin the provisions of this Contract
shall be subject to FCC approval, ranch rill be expeditiously decided and not be
unreasonably rithhetd. Each LFA representing any such systew to be adcisd to the
provisions of this Contract shalt be served with a copy of the Contract and shall be afforded
a 45-day opportunity to opt out of the lifeline BST provisions in accordarce with Section
JII.A.l.a. of this Contract. The provisions of this Contract rill be'coae effective as to any
such additional systaw upon such notification to affected LFAS, rhich date shall beeoee the
Publication Date •s to such systsm, and the provisions of this Contract shall eaten! for •
period of five years frow that date.
- b. In the event of a sate of any systaw during the period of
applicability of this Contract, the purchaser way elect, rith the concurrence of the FCC, for
the provisions of this Contract to continue to apply to such systaw. Such FCC concurrence
shall be expeditiously decided and rot be unreasonably rithheld. In the want the purchaser
elects rot to have the provisions of this Contract apply to any such systaa, the CPST
subscribers to such systesi shall be alipiblc for the refunds caleulatad pursuant to Section
III.F.S. in the went the upgrade coawitarnt described in Section III.F.1. has not been
completed prior to the eonsussaation of such sale.
c. The upgrade capital coats set forth in Section III.F.1. of this
Contract shall be adjusted, as autwlly agreed to by TYC and the Cowission, to reflect
any addition or deletion of systaas subject to this Contract. The approval from the
Caar~ission of such adjustaent shall be expeditiously decided and not be unreasonably
rithheld.
G. BST And CPST Rate Stability.
1. In the event the FCC establishes regulations •tloving arrwl
adjustarnts to BST and CPST rates, rith procedures designed to reduce regulatory tap,
TYC agrees to be band by such regulations and to elect to adjust BST and CPST rates on
an arrw l basis pursuant to such regulations, provided, horwer, TYC shall rot be delayed
in iaplaarcrtting its anxnl adjustas~nts to CPST rates as sec forth in Section Ilt.f.i. due to
regulatory lag related to the BST rate approval process.
2. TYC rill not elect to file cost-of-service shorings to justify BST or
CPST rate levels above the level authorized by this Contract for any system s~ject to this
Contract for the terw hereof.
H. Additional Coneuwer Benefits.
1. Service To Public Schools.
a. TYC shall offer servicc corrections at one outlet in 100X of
the public schools (Grades K-12) touted rithin 200 feet from the activated plant of its cable
systems. Such corrections rill be wade free of charge and as promptly as possible to •ll
such schools requesting corrections. T6tC rill offer such service corrections to any ocher
such public schools located rithin its franchised service areas •t Cost. If any internal Tiring
installation is requested to serve additional outlets in such schools, it rill be provided at
TYC's Cost of waterials and tabor •t the applicable Hourly Service Charge; provided,
horever, that such interrol Tiring rill be provided rithout charge if TYC is able to
coordirote vith other coeparable electrical tiring installation in rases of net construction or
s~tstantial rehabilitation of existing schools. Any such public school way elect to install its
orn interrol tiring and to bear the cost thereof. BST and CPST servile rill be provided to
each outlet in such schools free of any charges.
b. TYC shall offer service corrections, ircluding any requested
interrot ririr-g for additional outlets, •t Cost to anv eu~L Seeorderv School as defined br
and rh i ch rece i vex t~w±+.+e ~,~: - t to T i t l e 1 of the E l enentarv and Second ~
~v EducalLon
AEt of 1 %5 20 U.S.C. 'U 2Gta et ~, .rv1 rhich is located rithin 200 feet from the
activated plant of its cable systems. BST and CPST service rill be provided to each outlet
in such schools free of any charges. TYC rill offer such service corrections to any other
such private Setordary Schools located rithin its franchised service areas at Cost. Any such
private Seconaary School way elect to install its orn internal tiring end to bear the cost
thereof.
c. TYC rill provide a free wonthly educatiorol program listing to
each corrected school. Additional copes of such program listings rill be provided, if
requested by a school, at Cost. Such educstioriel program listing rill identify and describe
prograwming on the TYC systew that is aporopr~ate for use in the Classroom and rill
provide suggested curriculu~s support cocas.
d. T61C rill develop and provide to corrected schools waterials
for teachers that explain the educational applications of TYC't brosdbard cable system6.
The srterialc rill irclude • self-explarvtory notet+ook and video. One copy of such
waterialc rill be provided •t no charge to alt scnool districts rith corrected stfiools in
franchise areas served by T1~lC. Additiorol cop~ec of such waterials rill be provided, upon
request, at Cost.
e. upon successful develapaent by T4C and Tian !rc. of an on•
line service for persorol eowputere, TVC rill provide each corrected school rith • free
correction to this on-line servicc to the extent it is available on the local TYC cable system.
upon req~xct, each corrected school rill restive one free modem grid tree access to the
TYC/TiaK Inc. on-line service for use during the school year. Additional modems rill be
made available, upon request, at Cost. Free access to the TYC/Time Inc. on-line service
rill be provideE through each such a>odan for use during the school year. In addition,
TrC rill sponsor a rorkshop in each franchise area to educate teachers about the
TrC/Tie+e !rc. on-line service and to provioe them rich an opportunity for hands-on
training.
f. To the extent a local frarchise agreement contains an obligation
to provide comeetions to schools as agreed to herein, Tl1C agrees rot to seek to recover any
such costs for these eorrw!ctione as external or other costs.
2. Moan Yiring.
• a. Prior to a custewer~s tenaination of cable service, TYC rill
• not restrict the ability of a customer to remove, replace, rearrange or waintain any cable
wirirg located within the interior space of the customer's drtllinp unit, so loop as such
actions do not interfere rich the ability of, such TYC system to acct FCC technical
staedardc or to provide services to, and collect usoeiatad revenues from, that customer or
any neighborirp custawer in • aultiple dwelling context.
b. TYC rill provide eusteaa!rs with a notification upon
eorawrcncaarnt of service, and annwlly thereafter, advising them of their rights relating to
home wiring. Such notice rill advise ctactomers that they ..y either (i3 rawove, replace,
rearrange or maintain the hove wiring thawselves, (ii) select a gwlifiad third party
contractor, or (iii) request the THC system provide such service at standard hourly
installation rates, plus waterials at Cost.
c. Such notice wilt informs customers that if any home wiring is
iaproperly installed or rearranpad by anyone other than TYC, and any harmful or improper
signal leakage occurs as a result, the customer way be held responsible for the Cost of
rectifying the problem. Pursuant to FCC rules, TYC retiognites that it is required to
terminate service to any location where signal leakage probleeat are not corrected.
d. TIIC customers rill be encouraged to use high gustily hoar
wiring waterials to avoid signal leakage and to swintsin signs( gwlity. Such rotice rill
offer to supply such waterials to subscribers at Cost.
e. TIJC rill provide a wodel of this notice to the FCC for
approval prior to its dissemination to its customers, such approval not to be unreasonably
rithheld.
I. Mitcellaneouc Provisions.
1. Modification And Termination.
a. Except as otherwise provided herein, this Contract may not be
terminated or wodifiad without the wutwl agreaarnt of Tl1C and the Coseeission.
b. TYC may petition the Coawission to modify or terminate this
Contract based on any relevant change in applicable tars, regulations or circunrctances.
TYC will serve • copy of any such wodifieation or termination petition, and the FCC Public
Motice relating thereto, on the LFAs for the affected systems. !n no event shall TYC be
required to make wore than one wailing to each LFA for any given modification or
termination request. lnteresteed persons will have 30 days after the FCC releases an
appropriate Public Motice to coaeaent and 15 days for reply coaeeents before the FCC acts
on any such TYC petition. The FCC's content to any such termination or modification
petition shall be demonstrated by an order issued by the FCC's Cable Services Bureau or st
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 rithheld.
c. In the event of any changes to the provisions of the Act or any
wsterial changes to the FCC rules therassder relating to rates (BST, CPST or equipment)
that are favorable to TIIC, any TYC system may elect to be relieved from the relevant rate
provisions (Sections III.A.2., III.A.3., III.B., lII.D., III.F.4, and III.4.) of this Contract
accordingly, but shall remain band 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 rill only be allowed to recover any ineremrntal
arao~nt that results order such favorable regulatory provisions in excess of any amxnt
already recovered purswnt to Setit~on JI1.F.4.a. of this Contract. Nothing herein shall
restrict the ability of any TYC system to adjust CPST rates in the event CPST rates are not
regulated based upon cfisrpes to the Att or FCC regulations.
d. The Comrwiscion expressly recognises that TYC has relied on
the current federal lw and FCL regulations governing cable television programming and
rates in entering into this Contract, and that the Contract represents an accommodation
between the FCC and TYC that generates substantial public interest benefits. Consequently,
the Comniscion agrees not to find any CPST or equipment rate adjustments iirplearnted in
accordance with this Contract to be "unreasonable" order any subsequently-modified FCC
regulationu or order any subeecP+entiy-modified applicable statute, to the extent the
Catmission has discretion order each statute in determining whether any such rate
adjuctarnts are unreasonable.
2. Authority To Enforce Contract.
a. Nothing in this Contract shalt restrict the ability of t.FAs to
enforce the provisions of otherrise valid local franchise agreements, local tars, reputations
and ordirrnces that are not tht subject of or affected by the terms of this Contract, except
that LFAs may not regulate rates or order refunds for the services and equipment subject to
this Contract except in accordance with the terms of this Contract. Nothing herein shell
effect the enforceability of any otherrise valid preexisting local franchise agreement,
ordinance, local tar or regulation which provides benefits which exceed those provided in
this Contract relating to system upgrades or the tiring of schools, nor shall IFAs be
restricted in their authority to negotiate for such additional benefits after the Effettive Dste
of this Contract. It is not the intent of either the FCC or TMC that this Contract create any
judicially enforceable rights in any other parties. This Contract shall be enforceable against
TYC by the FCC exclusively and ro other party way seek to enforce this Contract as a third
party beneficiary or otherrise, except that subscribers to TYC systewc rhich increase their
CPST rates rill still have the right to file eoaplaints rith the FCC to the extent permitted
' under applicable FCC rules.
b. for purposes of the Conniission's authority to enforce any
provision of this Contract against TIfC, ircludirtg enforeewent actions brought in U.S.
District Court, TNC agrees that any breach of this Contract by TYC shall be considered the
equivalent of a violation of an order of the FCC, antitlirtp the Coasission to exercise any
rights sad reaaedits •ttendent to the anforcastertt of • Coawission order. Morever, aside
free this liwitad purpose, TYC and the FCC spree that a breach of this Contract by TYC is
rot to be considered by any other party as the equivalent of a violation of an otherrise-valid
FCC reputation or fCC order, In particular, sny failure to coeply rich this Contract shalt
rat be a basis for any denial of a franchise reneral by, or other enforcaatertt action of, any
LFA.
3. All Necessary Yaivers Ard Preesptiona Deeeed Granted.
a. In addition to the specific w fivers of the Caernission~s rules
identified in the Contract, the Conaifaian order adopting this Contract shall affirwatively
state that any and alt wiven of the Cor~iasion'a rules, and any and al! aodifieatiores to
Coweission forwc, necessary to effectuate the tens of this Contract •re deawed to be
granted thereoy. The Cawnission finds that the coneurrer~t exercise of ron-federal
regulatory authority over the subject wetter of this Contract is an iapermissible interference
rith the FCC's regulatory authority and rith its ability to acceaplish its objectives in
entering into this Contract. Accordingly, the Caeenission hereby expressly precepts any
state or local tar, regulation, ordinance or frarrhisc that is irconsistent or conflicts rith this
Contract. The Caeaission rill rot assert in any proceeding that TYC's eoapliance rith
the tents of the Contract violates any Cowaission rule or order and, in any proceeding
before the Cana~ission brought by a third party, a shoring by TYC that it has conglied
rith the terse of the Contract shall constitute a defense to any elaiw that TMC's actions in
westing the tents of the Contract constitute a violation of any applicable Coasnission rule or
order.
b. CPST rate ircrsases referenced in Section III.F.L. of this
Contract rill rot be subject to prior FCC approval pursuant to Section 76.9b0 of the FCC
rules or otherrise, even if an adverse decision has been issued by the FCC as to arty T~fC
CPST rate in the year prior to the Publication Date. Subscribers to TirC systeatt rhich
increase their CPST rates still have the right to file caeplaints rith the FCC to the extort
permitted under applicable FCC rules.
4. Effect On Other Proceedings.
a. The Coweission sprees that it rill rot institute, on its o.n
wotion, any proceedings against TYC based upon the infonistion obtained during the
consideration of the Contract. In addition, in the abserce of additional facts, the
Cawnission •gre~es that any •llegationt and other circua6tarces involved in consideration of
this Contract or settlewent of the perdinp rate cases rill rot be aced against TYC rith
respect to any future proceedings •t the Cosaission. Mor ry they be used against TYC as
evidence of any refund liability due, subscribers in any proceeding conducted by any LFA.
b. This Contract is intended to resolve the CPST caaplaints beirtp
settled in accordarce rith Section III.C.; to provide certainty regardirtp the CPST rate
adjustarcrtts deterwined to be rsasonable in atcordarce rith Section IIl.f.4., and to
otherrise cover those rtters expressly set forth herein. The Coawission and TYC
ackrarledge the existence of various larsuits to rhich they are both parties. The
Coaenission and TYC spree that this Contract shall have ro effect on any perdinp larsuit to
rhich TMC is a party or, subject to Section 1I1.1.7., on any future challenges to the
Coawission~s regulatory authority that TYC ry elect to initiate, other than • chatlertpe to
the Coawission~s regulatory authority to enter into and anforte this Contract.
c. The Cowwiasion sxpressly reeopnisss that this Contract is of
liwited duration and scope, and ry be andifiad or tcrwinated before its terw has ended as
provided for in Section III.1.1. of this Contract. Accordingly, the Caaaaission and TYC
spree that this Contract does not aaot any legal challenge or defense relating to any
provision of the Act or to the Coawiission's regulatory authority that TYC has brought or
way briny in the future, other than a challenge to the Coa~eissioM s regulatory authority to
enter into and enforce this Contract. The Commission rill not eett to dismiss any such
legal cnallerpe on grounds that this Contact renders such challenge Hoot and rill actively
oppose •ny assertion in court that this Contract Hoots any such challenge.
- S. Mo Aolnissian Of Yrortpdoirp.
- This settle+mertt is rithout a finding by the Commission of any rrongdoing by
TYC or any of its systems, euesidiaries or affiliates. Neither this Contras; nor •ny aspect of
the settlement contained herein constitutes an adTissian by TYC of any violation of, or
failure to conform to or caaply rith, any taw, rule or policy applicable to TWC or any of
its systam~s, subeidiaries or affiliates.
6. Contract !n Public Interest.
In consideration of the Cassnission entering into this Contract, ar+d resolving
and terminating pending CPST cases and complaints in aceardanee rith the tenas of this
Contract, TYC hereby agrees to the terns, conditions and proeearres contained in this
Contract. TYC •nd the Coaission each acl;r+orleCge that it believes this Contract, and the
terns, conditions and procedures hereof, provide for and rill facilitate a fair and expeditious
resolution of the eases and coaplaints that are the subject hereof in a roamer that serves the
ptdlic interest.
7. legal Challenges.
a. TYC naives any right it way have to any judicial revier or
appeal, or any other right to otherrise challenge or contest the validity of arty order by the
Caaission adopting this Contract, or to use this Contract as evidence in arty such
proceeding. TlK agrees that the provisions of this Contract shall be incorporated by
reference in the CoaisissioM s order fon+ally approving this Contract. TYC and the
Commission agree that they rill each actively defend, before any forum, any Coaission
order adopting the provisions of this Contract against any appeal of or other legal challenge
by any third party to any such order. Tt,fC and the Commission each agree that they rill
reasonably cooperate rith the other in any such defense of the Contract and any such order.
b. If the Coaission, or the United States on behalf of the
Commission, brings an action in any United States District Court to enforce the terse of any
Commission order adopting this Contract, Tt,lC agrees, subject to the terc+s of the
iawediately preceding paragraph, that it will not contest the validity of such Caaaoission
order, or the Coa~aission's authority to at+ter into the Contract. TYC reserves the right, in
defense of such art amforeaaaertt action, to daaionstrate that it Ass eoapliad rith the
provisions of the Contract or to assert its orn interpretation reyardinp any performance
obtipations imposed by the Contract rhich way be subject to dispute.
d. Effective Date And Term.
a. The term of this Contract shalt coamence on the Effective Date
and, subject to Section III.I.I. above regarding atodification and termination and Section
11I.f.6. above regarding adjustarnts to systems covered, shalt continue in effect for five (S)
years.
b. T4C and the Caaaaission spree to execute this Contract as of
the Effective Date proeptly upon isswnce by the Commission of an order approving this
Contract.
c. The Coawiission and TYC expressly acknorledge and agree
that the effertivenesc of this Contract is contingent upon resolution and tenairtation of TYC~s
CPST proceedings; isswnce by the Coaanission of an order approving the Contract, and
TLtC's compliance rith the terms, conditions, and procedures set forth in the Contract. If
this Contract is not approved try Censission order and •crepted by TkC, or if the Contract
is otherrise rerdrred invalid, in Thole or in part, by final order of any court of competent
jurisdiction, the Contract or such part stay rot be used in any fashion by the fCC in any
leysl proceeding.
tl. TVC way cossaente any necessary or aapraoriate actions to
initiate the rate adjustsrnt processes saoodied in this Contract at any Liar after the Effective
Date, provided, horever, as to any system listed on Appendix A, TYC shall not iaplament
any rate adjustarxtt pursuant to faction III.f.4.a, of this Contract tnless the Refund provided
for in Section III.E. has bean issued as to such aystaR, or the issuance of such Refund begins
sisultsneousty rith such rate adjuttsrnt. All Ret~atis rill be issued rithfn six aonths of
the first rate adjustwent iaplearnte0 purswnt to Section III.f.4.a. To facilitate prompt
initiation of the refunds and rate adjustarnts authorized by this Contract, any local franchise
sgreem+ent or any state or local lar or regulation is preespted on a one-Liar basis to the
extent that it reo~ires T)rC to give advance rotice of rate and service changes to s~scribers.
.Such entice shall be provided by the best arms practicable, such as rterspaptr
amounceswents and/or on-screen arssages. Such praeaption shall be liwited to the period
prior to febrwry I, 1996, if TYC is unable to cawence iaptementstion of such refunds
and rate adjustarnts by danw ry 1, 1996, but cowaertees such iaplarntation on or before
Febrw ry 1, 1996, it shall provide at least thirty days notice to LiAs and stnccribers. It any
sutccribers cancels his or her suoecription to the relevant CP57 rithfn thirty days otter the
date of the first bill reflecting the CPST adjustatent wthorized by this Contract, TI,rC rill
refund to that subscriber the increarntal rnant attributable to such increase.
9. Public Motice.
The Coamissian rill issue proeptly • Public Motiee in rhieh the Comeaission
proposes to adopt the Contract as a frost order, and shall provide interested parties rith
thirty C30) days to easenent on the Contract and an additional fifteen (15) days in rhich to
" file reply caen+ents.
10. Force 1lajeure.
TUC cha p rot be deawed in breach of its cowmitwents under this Contract in
the event of any delay or failure in perforwanee by grey TYC systaw frow any cause beyond
its reasonable control and rithout its fault or negligence, includin0, but rot liwited to, acts
of God, acts of civil or wilitary authority, governsent regulations, aabarsoes, epidewics,
ran, terrorist acts, riots, insurraeiions, fires, explosions, earthe~uakes, naelear accidents,
floods, ctrikes, purer blackouts, unusually severe reether conditions, or inability to secure
local psrwits •ftcr all diligent efforts by TUC to secure such per•its.
11. Severability.
If any provision, clause or part of this Contract is invalidated by order of any
court having proper jurisdiction over the subject wafter of this Contract, the rarirder of
this Contract shall not be affeetsd thereby and shall swain in full force and effect; provided,
hoe+ever, that, if either party reasonably deterwines that such invalidation is waterial to this
Contract, the parties shaft negotiate in goad faith to reeonctitute the Contract in a forty that
is, to the waxiwua extent possible, consistent rith both the original intent of both parties in
entering into thic Contract and the rationale of such invalidation order.
12. Entire Urderstardinp.
This Contract and its appendices, as either or both way be amended in
accordance rith the tenas herein, constitute the entire agreement betreen TUC and the
Canenission vith respect to the st~bjett wetter of this Contract and supersede all prior
agreements and unaerstandings, rhether oral or mitten, betveen TUC and the Cemnission
vith respect to the subject wetter of thit Contract. Mo representation, rarranty, promise,
inducement, or stateaeent of intention has been ands by TUC or the Caanistion vhich is
not aeoodied in this Contract, arxi neither party shall be bound by, or be liable for, any
alleged representation, wrranty, promise, indueeeeent, or stateewent of intention not
eeoodied in this Contract or its appendices.
IM YITNE55 YNEREOF, this Social Contract has been duly executed rrd delivered
by or on behalf of the parties hereto as of the Effective Date as defined herein.
TIME YARMER ENTERTAINMENT COtPAMT, L.P. FEDERAL COMMUMICATIDNS CDlMISSION
By: tY:
Name: Naar:
Title: Title:
TY1 CABLE 1MC.
By:
Naar:
Title:
TIME YARMER EMTERTAIMMENT-
ADVANCE/NEYNOUSE PARTNERSHIP
By: Tian Varner Entertainnrnt Conpany, t..P.
Mar-apinp Partner
BY:
Name;
Title:2838
1.51
APPENDIX A
CD1wUN1TT CUID REFUND
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Indian Marbor .FL0009 .2,38E
Me t bourne. . f 10013 . 14 ,362
Me t bourne. . F10014 .30,759
Volusia County .FL0015 12,505
Palm Bays. .Ft.0017 .89,135
vest Melbourne .F1.0021 .2,198
tape Caroveral .(1,0163 .1,557
Melbourne. . FL0165 .717
Or ta~do. . F10181 1E,TTO
St. Petersburg .FL0196 .63,508
Brooksville. . FL0240 .3,270
Orlando. . FL0252 .34,089
lakclard . FL029U .6,200
Brooksvi 1 le. . (10312 . .6,500
Brooksvi f le. . FL0314 .8,217
Sandford . FL0322 74,787
Brooksvi t le. . F10597 .3,107
Be t l tv i ew. . f 10622 . .7, 763
Salem. . MA0063 11, 274
Me t rose. . NA0097 .5 ,080
Stoneham . MA0101 322
Kansas City. . N00198 .78,801
Jackson' . M50080 .164,600
Clinton' . MS0128 .54,208
Salisbury, including:. . N00015 .22,48)
East Spencer. . NC0285
Spencer . Mt0158
Granite Cuarry. . MC0407
Baran County (central). . MC0385
Rockrell. . MC0677
Faith . NC0676
Cleveland . MC0574
vilmirgton, including: . N00016 .106,115
urightsville Besch. . N00041
Mer Hanover County. . NCO140
L e t and. . NC0695
Mavasa. . MC0692
Shelby, including: . M00027 .20,516
Clevelsnd County. . NC0279
Polkville . NC0521
•CPST rste reduction reQuired.
L
1
Patterson Springs .NC0522
La~~aa t e. . MC0523
Fallston. .MCp52G
coiling Springs .MCQ529
-~ Grover. .NCO69G
Ear t . .NCOd93
Yaco. . MC0756
Lattiwore .MC0757
Moorasboro. .MC0816
celrood .NC0839
Cesar .NC08G3
Yi-wington-Southport,~includirg: .MCOtb7 .
Gcrell teach .NC0228
Holden teach. .MC029G
Long teach. .MC0227
Ocean Isle teach. .MC0270
>faupon teach. .MC017Z
coiling Springs Lakes .MC0862
crv~c~ick County. .MC0229
Morehead City, including:. .MC0168 .
Atlantic teach. .MC0197
ceauf o r t . . M C01 %
Cape Carteret .NC0200
Cedar Point .MC0815
Carteret County .NC0202
Ewerald Isle. .MC0199
Marport .MC0201
Pine Knoll•Shores .MC0198
Swncboro .MC0203
lydian teach. .MC0282
Onclo~ County .MC038G
Craven County .MC0205
Havelock. .MC0170
Naycville .MCO585
Pollockcville .MCO583
Jones County. .MCQ58G
Kamapolis, including: .MC0193 .
Cabarrus County .MC017G
China Grove .NC028G
Concord .NC0173
Harrisburg. .MC0287
Landis . . NC0288
Rarsn County. .MC019G
Mt. Pleasant. .MCOG55
. 29 , 73 2
......39,706
. G1,358
Albemarle, including:. .MC0286 .15,990
Stanly Canty .MCO515
Nonrood .MC0519
Mt. Gilead. .MC0530
' Locust. .MC0518
Richfield .MCOSOE
Oakboro .MC0517
Mer t.onda~. .MCO507
Stanfield .MC0520
Mecklenburg, including:. .YC0405 .121,204
Charlotte .MC0755
Mint Ni t t .NC0504
Pinevitlt .MCO505
Mattheirs. .NC0691
Paddington. .MC0720
lancacter Canty. .SC0372
Cabarrus Carty .NC0174
Pil~ingcon-Burpaw, including:. .MCO40E .6,719
Pander Canty .MC0409
ueddinpta . . . . . . . . . . . . .NC0720 . . . . . . . . .3,042
L i nco t n. . ME0032 .233, 263
Nashw .MN0034
~ .60,935
including: .MJ0082
Fort lte, .129,719
Cliffside Park. .MJ0232
Edgerster .NJ0092
Englewood .MJ0251
Enplerood Cliffs. .MJ0208
Fairvieti. .MJ0253
Guttenberg. .MJ0338
Leonia. .MJ0431
little ferry. .MJ0339
Moorvchie .MJ0427
Palicadec Park. .MJ0252
Ridgefield. .NJ0203
Ridgefield Park .MJ0254
Teterboro .MJ0484
upper MaMattan* .MY0104 .599,837
B~rphamton, including: .Mr0133 .219,198
1o~+n of Binghamton. .MT0132
Chenango. .MY013L
Conklin .MT0135
Dickinson .NT0136
Fenton. .Nrot37
Kirkwood. .M1'0139
•CF'ST rate reoluction required.
1
Port iyron. .Mr0981
solv.y. .wr0671
Village of Tully. .Mr1194
Yeeosport .wr0915
- Troy, including: .Mr0352 .182,844
Cohoes. .Mr0582
Mechanicville .Mr0643
bruisrick .Mr0509
Clifton Park. .MT0668
E. Greenbush. .MT05%
Malfaron. .Mr0742
Pittstown .Mr1534
Torn of Schsghticoke. .MTO7%
Torn of Stillwster. .Mr0636
Town of Yaterford .MT0569
Yillape of Schaghticoke .Mr0996
Yillape of Stillwater .Mr0637
Valley iallc. .MT1167
Village of Yaterford. .MTQ568
Penfield .Mr0414 .6,662
Gatec. .Mr0415 .5,089
Greece .Mr0416 .21,079
Rochester. .Mr0769 .42,906
Ogden. . Nr 1062 .2,704
~
Brooklynf0ueens• .Mr1340, 1280, 1261, 14021,210,552
I ronoequo i t . . Mr0751 .13,789
Perinton .Mr0413 .9,767
Brighton .Mr0764 .8,071
Cotusaus .ON0239 .32,330
uestervi t le. .OM0517 .3,727
co t uebus .ON0532 .1,703
R esd i rq . . PA0006 34 ,753
Sh i t l ington. .PA0011 .1,821
Monroeville" .PA7775 .25,324
Florence, including: .S00015 .97,072
Darlington. .S00014
Darlington County .SC0115
Florence County .500057
our roy. .SC0191
Tiw~w~sville. .SC0192
S,~eter, including: .500017 .58,020
$nar AFB. .SC0102
Sumter County .SC0116
•~oST rate reduction required.
Pine++ood. .
Mayesville. .
Austin .
Yichita Falls. .
Reston .
williaauburp•. .
Green flay.
Graanfiald .
Mate's Corner. .
Charleston .
. :SC0390
. .SC0431
. .7X0029. .111,633
. .7x0483. 16, 033
. . Tx 1422. .7, 533
. . VA0046 1 T, 421
. . VA0074 23 ,940
. .Y10234 37, 857
. .Yt 0323 .4 ,903
. .Y10420 .1,823
. . YVO104 5 , 762
i.4, 768,081
•CPST rate reduction required.
28381.51
Maine .MT0251
Nanticoke .NY0983
Owego .NT0403
Union .NY0402
Vestal. .NY0260
Mewrk Vty. .NT1650
Endicott. .NT0249
Johnson City. .NY0138
Port Dickinson. .NY0140
Lower Manhattan. .NY023G .180,360
Colonic. .MT0336 .4,219
Albany .NT0338 ,b,14f
E. Syracuse, including:. .NY0329 ,300,822
irutuc. .NT0455
Town of Camillus. .NT0333
Torn of Cato. .NT1501
C i uro. . NT0372
C t ay. . NY0373
Dt Yitt .NY032E
Torn of Elbridpe. .NT08d3
Geddes . . NT0327
Ira .NT1504
laFayette .NT0881
Lysander. .MY1367
Town of Manlius .NT0330
Town of Marcellus .NY08G7
Mentz .NY1366
Onondaga. .NY0707
Ot i cco. .MY1533
Poapey. . NT 1057
Salina. .MY0346
Skaneateles .MT1211
Town of Tully .NT1368
Van iurken. .NTO715
viltape of Camillus .MY0334
viltape of Cato .MT1503
village of Elbridpe .MT0884
Fayetteville. .NY0332
Jordan. . MT08$2
Liverpool .MY0326
Village of Manlius. .NY0369
Villepe of Mareellus. .NT084b
Meridian. .MY1502
w i noa . MT0331
M. Syracuse .MY0546
Phoenix .MY0720
1
APPENDIX 8
REGIONAL EQUIPMENT AREAS
I
u
Appleion/Grem Bay, YI
Bakersfield, Ca
Birwirgham, AL
Boston, MA
Eastern Pemsylvania Division
Florida Divisions
Maw ii Division
Illinois/]rdiana Division.
Indianapolis, 1M
Jackson/Nonroe, NS
Kansas City, MO
Lincoln, ME
Los Angeles, CA
Meaphis, TM
Nflrauket, YI
Ni meapolis, NM
National Division - East
National Division - Pest
Maine Division
Meti York City Division
N!Y Tort State Divisions
North Carolina Divisions
Ohio Divisions
Portland, OR
San Diego, CA
Shreveport, LA
Tcxas Divisions
Yestern Pemsylvani• Division
E?~HIBIT C
P.4RAG~~ CABLE L'~TTL4L PROGRAI'~Z1iL~ G
1
n
RESOLUTION NO. X07
RESOLUTION APPROVING SUMMARY PUBLICATION OF AN
AMENDMENT TO APPENDIX E OF THE RICHFIELD CITY CODE
WHEREAS, the City has adopted the above-referenced amendment to the Richfield City
Code; and
W1"~REAS, the verbatim text of the amendment is lengthy, and the expense of
publication of the complete text is not justified.
NOW TI~REFORE, BE IT RESOLVED by the City Council of the City of Richfield
that the following summary is hereby approved for official publication:
***
SUMMARY PUBLICATION
BII,L NO. 1996-27
AN ORDINANCE ANTENDING APPENDIX E OF THE RICHFIELD
CITY CODE BY REPEALING SECTION E2, THE CABLE
COMMUNICATIONS FRANCHISE ORDINANCE, AND
SUBSTIT'TJTING THEREFORE A CABLE TELEVISION FRANCHISE
AGREEMENT ORDINANCE BETWEEN THE CITY OF RICI~IELD
AND KBL CABLE SYSTEMS OF THE SOLI7CHWEST, INC.
(SUMMARY PUBLICATION)
The above referenced actions have been taken pursuant to the authority of Minnesota
Statutes, section 462.357. This summary of the amendment is published pursuant to section 3.12
of the Richfield City Charter.
The Cable Television Franchise Agreement Ordinance ("Agreement Ordinance") grants
a cable franchise to KBL Cable Systems of the Southwest Inc. d/b/a Paragon Cable ("Grantee")
for 15 years. It also provides the effective date for the renewal.
The Agreement Ordinance specifies that Grantee will upgrade the current cable system
to a capacity of 750 MHz with 550 MHz reserved for providing the delivery of up to 79 analog
cable channels (the present system has a capacity of 58 analog channels). The technical
operations of the system shall also be upgraded and the Grantee shall provide standby power for
the cable system. Grantee agrees to extend service to any residences receiving City water and
sewer services. Parental controI~ ~r~visions shall be available to subscribers upon request.
Under the Agreement Ordinance, Grantee shall provide a free connection and specified free
cable services to public schools and municipally owned buildings. Free installation and service
shall also be provided to private schools until the year 2000.
A provision in the Agreement Ordinance allows the City to engage the Grantee in a
periodic review process to determine whether the cable system is state-of--the-art. Such a review
includes at least two public hearings to obtain public comment. Provisions in the Agreement
Ordinance also permit the City to require subscriber surveys.
The Agreement Ordinance requires the Grantee to provide four public, educational and
governmental access channels. Grantee shall also provide leased access channels and Metro
Cable Network, Channel six, as required by law.
Under the Agreement Ordinance, Grantee will combine the three existing public,
educational and governmental access facilities into one Large facility located in Eden Prairie.
The Grantee is required to file a transition plan with the City describing this process. The
combined facility will feature a studio with audience participation capacity, two separate editing
suites, storage space, regular hours including evening and weekend hours, and it will be
wheelchair accessible.
Grantee will provide at least $200,128 in funding for the facility during the first year.
After the first year, the Grantee shall provic~e'~tt'1~rCient financial and in-kind support to maintain
a substantially equivalent level of services, facilities and equipment in the remaining years of the
Agreement Ordinance.
The Agreement Ordinance requires the Grantee to assist the City in providing live City
Council meetings, reruns of government access programming and character generated _
programming on the government access channel. Grantee shall also assist the City in replaying
tapes in pre-arranged time slots and it will switch to C-SPAN 2 or other comparable
programming when the government access channel is not carrying live or taped government
access programming.
The Agreement Ordinance requires Grantee to pay a franchise fee of five percent.
Grantee must maintain a bond of $300,000 until the system upgrade is complete and then the
City may reduce the bond to $100,000. Several provisions specify penalties in the event of non-
compliance with the franchise and the procedures to enforce those penalties.
In consideration of the Grantee's investment of $20 million to rebuild the systems for the
Cities of Eden Prairie, Edina, Minnetonka, Hopkins and Richfield, MN, the Agreement
Ordinance contains a competition adjustment provision that relieves the Grantee of certain
franchise fee and public, educational and government access obligations within a city if a wired
competitor offers video programming services in that city.
The amendment will be effective January 1, 1997, except that the amendment will be null
and void if the City's existing cable franchisee does not execute a Franchise Agreement
Resolution No. 8407
Ordinance by December 25, 1996.
Copies of the amendment are available for public inspection in the office of the city clerri;
during normal business hours.
Dated; 11 / 2 5 / 96
BY ORDER OF TAE CITY COUNCII.
Thomas P. Ferber, City Clerk
***
Passed by the City Council of the City of Richfield, Minnesota this 25th day of (November
1996.
~t ~
Martin J. Kirsch,- Mayor
I~~
ATTEST:
~-~'; ~ '
Thomas P. Ferber, City Clerk
City of Richfield
(Official Publication)
BILL NO. 1996-27
AN ORDINANCE AMENDING APPENDIX E OF
THE RICHFIELD CITY CODE BY REPEALING
SECTION E2, THE CABLE COMMUNICATIONS
I
M
N
N
E
S
O
TA FRANCHISE ORDINANCE, AND SUBSTITUTING
THEREFORE A CABLE TELEVISION FRANCHISE
C
'
,
N AGREEMENT ORDINANCE BETWEEN THE CITY
~
J
~
J
PIJ~ATIO~ OF RICHFIELD AND EBL CABLE SYSTEMS OF
THE SOUTHWEST, INC.
~''a"°" ~ Sc~rvoK s""'S'~0r (SUMMARY PUBLICATION)
AFFIDAVIT OF PUBLICATION tl't
uLl ~~ rY `
;
`'i~~~~5„r`sr`;t~
al
;'ee
~~sk`~°
r° ~~
sna
a
c
f
o
l
t
~
4G2.357. Phis summary of the amendment is publishad
pursuant to soction :3.12 of the Richfield City Charter.
.S'TAT'E OF MINNESOTA)
/ The Cable Television Franchise Agreement Ordinance
"
"
(
Agreement Ordinance
) grants a cable franchise to KBL
Cable Systems of the Southwest Inc.dA,/a Paragon Cable
SS. ("Grantee") for 15 years. It also provides the e(Tiactive date
for the renewal.
COUNTY OF HENNEPIN) The Agreement Ordinance specifies that Grantee will
upgrade the current cable system tv a capacity of 750 MHz
Denis L . M 1 n d 8 IC
,being duly sworn on an oath says that he/she is with 550 MHz reserved tirr providing the delivery pf up to
79 analog cable channels (the present system has a capac-
ity of 58 analog channels). The technical operations oCthe
the publisher or authorized agent and employee of the publisher of the newspaper known as system shall also be upgraded and the Grantee shall pro-
videstandby power for the cable system. Grantee agrees to
.S U n - C U r r e n t
and has full knowledge of the facts extend service to any residences receiving City water and
sewer services. Parental control provisions shall be avail-
able to su bscr~bers upon request. Under the Agreement Or-
which are stated below dinance, Grantee shall provide a free connection and speo-
. iced free cable services to public schvols and municipally
(A) The newspaper has complied with all of the requirements constituting qualification as a owned buildings. Free installation and service shall also be.
provided to private schools until the year 2000.
A provision in the: Agreement Ordinance allows Che
qualified newspaper, as provided by Minnesota Statue 331 A.02
331 A.07
and other applicable City to engage the Grantee in a periodic review process to
,
, determine whether the cable system is state-of-the!-art.
IaWS
aS amended Such a review includes at ]east two public hearings to ob-
,
. tain public comment. Provisions in the Agreement Ordi-
(B) The printed B i I I N o . 19 9 6 - 2 7 nance also permit the City to require subscriber surveys.
The Agreement Ordinance requires the Grantee to
provide four public, educational and governmental access
channels. Grantee shall also provide leased access chan-
nels and Metro Cable Network, Channel six, as required
1>y law.
which is attached was cut from the columns of said newspaper, and was printed and published Under the Agreement ordinance, Grantee will com-
bine the three existing public, e<Iuc.rCional and govern-
once each week, for one successive weeks; it was first ublished
p mental access facilities into one large facility located in
Eden Prair-ie. The Grantee is required to file a transition
Wednesday 4 D e e e m b e r 96
on .the day of , 19 ,and was thereafter plan with the city describing this prncess. The cnmb;ned
facnity win feature a stud;n With aud;ence participatio„
capacity, two separate editing suites, storage space, rvgu-
printed and published on every to and including lar hours includ;ng evening and weekend hnnrs, aml it wdl
be wheelchair accessible.
the day of . 19 :and printed below is a copy of Grantee will provide at bast $200,128 in funding for
the facility during the first year. After the first year, the
Grantee shall provide sufficient financial and in-kind sup-
the lower case alphabet from A to Z, both inclusive
which is hereby acknowledged as being the Port to maintain a substantially equivalent level of ser-
, vices, facilities and equipment in the remaining years of
size and kind of used in the com osition and ublication of the notice:
tyl~ p p the Agreement ordinance. -
The Agreement Ordinance requires the Grantee to as-
sisC the City in providing live City Council meetings, re-
abedefghijklmnopgrstuvwxyz runs of government access programming and character
generated programming on the government access chan-
r nel. Grantee shall also assist the City in replaying tapes
BY: in pre-arranged time slots and it will switch to C-SPAN 2
or other comparable programming when the government
Publisher access channel is not carrying live or taped government ac-
rammin
cess
ro
TITLE: g.
p
g
The Agreement Ordinance requires Grantee to pay a
Aeknowled ed before me on this '
g franchise fee offive percent. Grantee must maintain a bond
of $300,000 until the system upgrade is complete and then
' 4 y D e ce rrh b e r 9 6
da of 19
' the City may reduce the bond to $100,000. Several provi-
lions specify penalties in the event ofnon-compliance with
the franchise and the procedures to enforce those penal-
~!~ }~ ~-'^ ties.
In consideration of the Grantee's investment of $l0
I
"'~ 1 p, million to rebuild the systems for the Cities of Eden
iI ~~. ~ ~ 1 C~~ ~ ~( ~ = ~t ~ .2 ~ ~V~ } Prairie, Edina, Minnetonka, HopMns and Richfield, MN
PUbI1C t
NOt the Agreement Ordinance contains a competition adjust-
~ry ment provision that relieves the Grantee of certain fran-
chise fee and public, educational and government access
obligations within a city if a wired competitor offers video
programming services in that city.
The amendment will be effective January 1, 1997, ex-
cept that the amendment will be null and void if the City's
existing cable franchisee does not execute a Franchise
Agreement Ordinance by llecember 25, 199G.
Passed by the City Council of the City of Richfield,
Minnesota this 25th clay of November 199(1.
RATE INFORMATION Martin J. Kirsch, Mayor
1) Lowest classified rate paid by commercial users
for comparable space
(2) Maximum rate allowed by law for the above matter
ATTEST:
$ 2.15 per line Thomas P. Ferber, City Clerk
(Dec. 4, 199G) Cty Rich Ord 199G-27
$ 5.95 per line
(3) Rate actually charged for the above matter $ 1.09 per line