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" ? ?  ?? ?  ?  ? ?!?!?!??!~???!?!????????????|??? ??  ???? ? ? ???????8?x?x? ? ??? ?? ?? ? ?? ? ? ?  ? ? ?  ??  ?  ?? 0? ?? 8 ?? 8?? ?? ??? ???   @ ? ? ? ! ?!$$?$?$??#??#?8?##?# ??# ?# ?% %~&''?''?'?'''?'*)*?*p*|*~*?*?*?À**?----CCC C ?C ?C E E E ?E E E ?EEEE?EDEEEG?GGG G G ?8 6 6 6 ?6? ?5 5 7 7 7       ?   ?  ?  ? ?? ?  ? ?  ? ?  ?? ??  ?? ??  ?? ??  ?? ?  ??   ?   ?   ?          ǀ      ?              ?  ? ? ?  ?? ? À8 ? ?         ?  ? ?   ?       ?  ?À   À      ??    ? ?? ?   ?    ?  ?  À    ??    ?  ?   ? ?           ?      ? ?        ?     >   ??       ?  ?          ?     ?   ?   ?            ?? ? ??  ? ?   ?            ?        ??  ?  ?    &  '  '        ?       ?            ??  ??  ? ? ?   ?    ?                        ?   ??   ?   ? ?ǀ   ?ǀ  ? ?À  ? ?À   ?À   ?À   ?         ?         ?  ?  π       ?   ?            ?  À ?        ? ? ?      ?    8?       ? ? ~  ?  ? ?  ? ?  ?    ?  ? ??  ?   ?   ? ??  ?   ?  ? ? ? ? ? ? ? ? ?  ? ?   ?   ?   ?  ?  ? ?? ? ? ??? ~?   ? ? ? ?? ? ??  ? ? ??  ?  ?  ?À? ? ?? ?? ?? ? ? ? ?? ?? ??? ? ?? ?? ? ? ?? ? ?? ??  ??  ???  ?  ?  ? ?? ??  ?  ?  >?  ?  ?? - ?: 9 4ǀ? ?4 4 4? 4 4 4 4 5? 5 4 ?4 ?4 5 5 5 ?1? ?1 ?1 ?1 ?0 1x 1 / /? ?/π / / / .? ??.? ?. <. - - - --,,?,,-?----?+?* ??* ?+,>,,,?,?,?,--.?.?.?.%?À%%%%%%?%%?%?%?%&&'''?'?'?''?'())))x)?)?)?))*+++ǀX? π? ? ??? ##?&#&#? %#0%#x?%#?x%#?|%#?%#?%#?%#?%#%#%#%# ?%# $# ?$#?$# $# ?$# $#$#$#$#$#$#$#$###??####?##?##?#$ ?#$'$?'$'*'*'+'++XC X-Ԋ #Xj\  P6G;yoXP# '_   '_ FOR FCC RECORD ONLY $// MO&O, Time Warner Social ContractG'_, MO&OIn the Matter of TCI Communications, Inc., SettlementG, FCC 95478//$ $/ 79.922 Rates for the basic service tier and cable programming services tier /$ $/ 76.942 Refunds /$ $/ 76.950 Complaints regarding cable programming service tiers /$  X-.'_$/ 76.986 A la Carte offerings /$.  Xv- ` ` X XXhh,XVXXppXX  Xxx- FCC 95478(#x  a_<  F #|\  P6G;^P##4  pG;# Before the  FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 lU  X -#|\  P6G;^P##Xj\  P6G;yoXP#In the Matter of hh,V) ` `  hh,V)  Xc -Social Contract for hh,V)  XL-Time Warner` `  hh,V) ` `  hh,V)  X-  MEMORANDUM OPINION AND ORDER l l  X-lUAdopted: November 30, 1995hh,VReleased: November 30, 1995 By the Commission:  XO-<Table of Contents l lU` `  hh,Vpp  xx- X(#(# X -` `  hh,Vpp  Paragraphs: X  X-I.Introduction hh,Vpp  1xx- X(#(#` `   X-II. Background hh,Vpp  2xx- X(#(#` `   X -A.` ` Overview of the Social Contractpp  5   XR"-III.Discussion hh,Vpp    X$$-A.` ` Waiverhh,Vpp  14  X %-B.` ` Preemption of State and Local Notice Requirements  20  X%-C. ` ` Provisions of the Social Contractpp  24   X'-a.` ` System Upgrades and CPS Price Cap Increases  xx- X(#(# X(-` `  i.Terms of the Social Contract  25"(0*0*0*'"Ԍ X-` `  ii.CommentsVpp  28  X-` `  iii.DiscussionVpp  31xx- X(#(#` `  X-b.` ` Equipment and Installation Averaging  X-` `  i.Terms of the Social Contract  37xx-  X-` `  ii.CommentsVpp  38  Xv-` `  iii.DiscussionVpp  40   XH-c.` ` Resolution of Pending Cases  X1-` `  i.Terms of the Social Contract  42  X -` `  ii.CommentsVpp  43  X -` `  iii.DiscussionVpp  45   X -d.` ` Lifeline Basic Tier Rates  X -` `  i.Terms of the Social Contract  52  X -` `  ii.CommentsVpp  54  X-` `  iii.DiscussionVpp  56   Xb-e.` ` Migrated Product Tier  XK-` `  i.Terms of the Social Contract  59  X4-` `  ii.CommentsVpp  62  X-` `  iii.DiscussionVpp  63xx-   X-f.` ` Services to Schools  X-` `  i.Terms of the Social Contract  65xx- X(#(# X-` `  ii.CommentsVpp  68  X-` `  iii.DiscussionVpp  71  X|-g. ` ` Home Wiring hh,Vpp  Xe-` `  i.Terms of the Social Contract  74  XN-` `  ii. CommentsVpp  75  X7-` `  iii. DiscussionVpp  76  X -h. ` ` System Acquisitions and Divestitures  X-` `  i. Terms of Social Contractpp  77  X-` `  ii.CommentsVpp  78  X -` `  iii.DiscussionVpp  79  X"-i.` ` Modification and Termination Provisions  X#-` `  i.Terms of the Social Contract  81  Xh$-` `  ii.CommentsVpp  83xx- X(#(# XQ%-` `  iii.DiscussionVpp  84  X#'-j.` ` Preemption  X (-` `  i. Terms of the Social Contract  85  X(-` `  ii.CommentsVpp  86"(0*0*0*'"Ԍ X-` `  iii.DiscussionVpp  87  X-k.` ` Other Issueshh,Vpp  88  X-IV.Conclusion and Ordering ClausesVpp  92xx- X(#(#` `  X_- I. INTRODUCTION Đ I. A. 1. a.(1)(a) i) a) 1. 1. 1. a.(1)(a) i) a)  1. 1. 1. a.(1)(a) i) a) 1. 1. 1. a.(1)(a) i) a)1. Time Warner Cable (Time Warner) and the Federal Communications Commission ("Commission") have negotiated a Social Contract designed to provide upgrade incentives for Time Warner and to provide rate stability and increased quality of service for its consumers. In addition, the Social Contract resolves over 900 rate cases and provides refunds of approximately $4.7 million plus interest to subscribers. In this Order we approve the Time Warner Social Contract ("Social Contract"), which is attached as Appendix A. The proposed  X -Social Contract was placed on Public Notice and comment periods were established.N  X <ԍ #Xj\  P6G;yoXP#See Public Notice, Social Contract for Time Warner Available for Comment, FCC 95336 (released August 3, 1995). Pursuant to the Public Notice, initial comments were to be filed no later than September 5, 1995 and reply comments no later than September 20, 1995. The deadline for filing initial comments was subsequently extended to September 15, 1995  X-and the deadline for filing reply comments was extended to September 25, 1995. See Public Notice, Cable Services Bureau Announces Extension of Time To File Comments and Reply  X-Comments on the Social Contract For Time Warner, DA 951875 (released August 28, 1995).  The Commission received both initial and reply comments.   Xb- II. BACKGROUND  2. In the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act"), Congress set as one of its policy goals to ensure that cable operators continue to  X-expand the capacity and programs offered over their systems, where economically viable. X<ԍ #Xj\  P6G;yoXP# Cable Television Consumer Protection and Competition Act, Pub. L. No. 102385, 106 Stat. 1460 (1992)  2(b)(3). In Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, MM Docket No. 93215, Report and Order and Further Notice of  X-Proposed Rulemaking ("Cost Order") establishing interim regulations for cost of service  X-filings,gx  X$<ԍ #Xj\  P6G;yoXP#9 FCC Rcd 4527 (1994).g we adopted an upgrade incentive plan on an experimental basis. We noted that the basic outline of this approach would be "to permit an operator to enter into a social contract with its customers under which the operator would be given substantial flexibility in setting rates for new regulated services it introduces, such as new service tiers offering additional"g) 0*((" program channels. In exchange, customers would be guaranteed that rates for current services would be kept stable and reasonable, . . . and that this rate would purchase at least the same program channels, or channels of equivalent value to customers. The operator would also commit to otherwise maintaining or improving its service quality. The contract would be effective for a term of years and would be overseen by this Commission, and reviewed before the end of the term." We also noted that this plan "protects the rates and quality of current cable service tiers, while providing profit incentives for operators to introduce new and improved regulated services, may help carry out the purposes of the Cable Act while also being fair to customers of current services, less burdensome on cable operators and those responsible for their regulation, and more likely to encourage worthwhile investments to upgrade cable service." We recently have approved such a social contract with Continental Cablevision, Inc. (the "Continental Contract"). The Continental Contract was approved by the  X -Commission in an Order adopted on August 1, 1995.  Xe <ԍ #Xj\  P6G;yoXP#Social Contract for Continental Cablevision, FCC 95335 (released August 3,  XN-1995) ("Continental Contract Order").  X -3. On May 4, 1995, pursuant to special ex parte procedures available in certain cable  X -rate proceedings, Time Warner requested relaxed ex parte treatment to enable it to discuss  X-broad rate related matters with Commission officials.d X<ԍ #Xj\  P6G;yoXP#See Modification of Ex Parte Procedures in Certain Cable Rate Proceeding, 9 FCC  X-Rcd 7812 (1994) ("Cable Ex Parte Order"). The Bureau orally approved this  X}-request on May 16, 1995. Consistent with these ex parte procedures the Cable Services Bureau ("Bureau") and Time Warner negotiated the terms of the Social Contract. On August 3, 1995, the Commission approved the release of the draft of the Social Contract for public comment. 4. The Commission has reviewed and considered the comments it received in approving the terms and conditions of the Social Contract and making modifications to it.  X- A. Overview of the Social Contract 5. The Social Contract is for a term of five years. From 1995 through 2000, Time Warner is required to invest $4 billion to rebuild and upgrade all of its domestic cable  Xk-systemsvk Y"<ԍ #Xw PE37}XP#The Social Contract provides that, except as otherwise provided in the Social Contract, the Social Contract covers all of Time Warner's systems as of the August 5, 1995 Publication Date. In view of the fact that there is a pending court decision regarding the transfer of the Laredo,Texas cable television franchise to Time Warner, the Social Contract has been modified so that it will not apply to the cable system serving Laredo,Texas unless  Y&-and until there is a final court decision permitting the transfer.#x6X@`7X@#ы, including deployment of fiber optic technology, increased channel capacity and improved system reliability and signal quality. At least 60% of all capital expended in"T@ 0*((" connection with the upgrade commitment will be applied for the benefit of basic service tier ("BST") and cable programming service tier ("CPST") subscribers. In addition, at least 60% of the new analog capacity added as a result of the upgrade will be used for traditionally regulated CPSTs, and, on average, traditionally regulated CPSTs on the upgraded systems will have at least 15 additional channels. To fund this investment, Time Warner will be allowed to increase the monthly rate for the most highly penetrated CPST in each system by $1 during each year of the Social Contract. If Time Warner fails to meet the upgrade commitment within the time provided for under the Social Contract, subscribers to the cable systems that have not been upgraded will be entitled to refunds equal to the CPST rate increases provided by the Social Contract, with interest, plus a liquidated damages penalty of 15% of such amount. The Social Contract contains a provision that allows Time Warner to average broad categories of equipment and installation and associated costs for all of its systems on a geographic regional basis. 6. The Social Contract will resolve Time Warner's pending CPST cases, including CPST cases against the systems Time Warner recently acquired from Houston Industries, Inc. (KBLCOM) and Newhouse Broadcasting Corporation. Altogether this resolves 946 complaints. To resolve these cases, Time Warner will make cash refunds in the form of bill credits to certain customers totalling approximately $4.7 million plus interest for the period beginning on the date of the applicable complaint and ending with the date of payment. Time Warner cannot implement any rate adjustment for the upgrade of a particular system unless the refund provided for under the Social Contract has been issued to such system or the issuance of the refund begins simultaneously with such rate adjustment. All refunds must be issued within six months of the first rate adjustment implemented with respect to the upgrade for the Time Warner systems. BST cases will not be resolved by the Social Contract. Those cases will continue to be resolved by Time Warner and the local franchising authorities pursuant to Commission rules. 7. Time Warner will create a "lifeline basic tier," priced to enhance the affordability of BST. Time Warner will accomplish this in two ways. First, on systems serving at least 85% of its total subscribers, Time Warner will reduce the price on its BST by 10% within six months of the effective date of the Social Contract, with a revenue neutral increase in CPST rates. Local franchising authorities may elect not to have this reduction by notifying Time Warner and the Commission in writing within 45 days of the effective date of the Social Contract. Second, on the remaining systems where BST rates have not been reduced by 10%, The streamlined lifeline basic tiers will carry only those stations required by law, such as mustcarry stations, public, educational and governmental ("PEG") stations, and local origination. Any additional channels will be moved from the BST to the CPST with a corresponding revenue neutral decrease in the price of the BST and increase in the CPST price. 8. Time Warner will offer a free cable connection to all of the public schools located in the franchise areas where Time Warner provides cable service and that are passed by its systems. Time Warner also will provide a cable connection at cost to all secondary"#'0*((%" private schools whose students receive funding under Title I of the Education and Secondary School Act in such franchises that are passed by its systems. Time Warner will wire additional classrooms in existing schools at cost. For new public schools and existing public schools undergoing extensive rehabilitation, Time Warner will coordinate with the local officials and contractors to wire each of the classrooms in new schools free of charge, if Time Warner is notified of construction. BST and CPST will be provided to each outlet in the connected public and private schools without cost. Time Warner will also provide the connected schools with a monthly educational program guide with curriculum support ideas to assist educators in effectively using the new services. In addition, Time Warner and Time Inc. are developing an online personal computer service. Once this service has been developed and testmarketed, Time Warner will offer this service to each connected school in areas in which the service is generally offered, free of charge, during the school year and will also provide a free modem to access the service. Time Warner will provide schools with additional modems at cost and will provide free service to each additional modem purchased. Time Warner also will sponsor workshops and materials so that teachers have the training necessary to appropriately use the services provided. 9. The Social Contract further provides that, in Time Warner systems where neither Time Warner nor its predecessors have created a la carte packages, Time Warner will be permitted to create Migrated Product Tiers ("MPTs"), consisting of up to four services migrated from the regulated tiers. The migrated channels will be priced at the rate regulated price with increases allowed for inflation and external costs in accordance with the Commission's price cap rules. There will be no limitation on the number of new channels that Time Warner may add to the MPTs at the price of up to $.20 per channel plus license fees. After April 1, 1997, Time Warner may convert any MPT into a new product tier ("NPT"), as defined by Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, MM Nos. 92266, 92215, Sixth Order On Reconsideration, Fifth Report And Order, and Seventh Notice of Proposed Rule  X|-Making, ("Going Forward") provided that the tier is offered without a buythrough  Xg-requirement other than BST.ig X<ԍ #Xj\  P6G;yoXP#10 FCC Rcd 1226, 1228 (1994). "These rules were adopted to provide cable operators with additional incentives to expand their facilities and services in a way that both ensures that cable rates are reasonable and expands the opportunities for cable programmers to reach viewers."i  10. Finally, during the term of the Social Contract, Time Warner will forego its right to use a cost of service justification to support any future rate increases in any franchise area covered by the Social Contract. The Social Contract requires that no later than 90 days following the end of each calendar year during which the Social Contract is in effect, and within 90 days following the end of the last month following expiration of the Social Contract other than calendar year end, Time Warner will provide the Commission and each local franchising authority having jurisdiction over an area covered by the Social Contract with a"!40*(( " progress report outlining the amount of capital investments made, the number of subscribers affected by those investments, improvements in system reliability and service, and projected expenditure and upgrades for the following year.  11. The Social Contract may not be modified or terminated without the mutual agreement of both parties to the Social Contract. Time Warner may petition the Commission to modify or terminate the Social Contract based on any relevant change in applicable laws, regulations or circumstances. In addition, in the event of any changes to the provisions of the 1992 Cable Act or any material changes to the Commission's rules thereunder relating to rates (BST, CPST or equipment) that are favorable to Time Warner, any Time Warner system may  X -elect to be relieved from the relevant rate provisions in the Social Contract, but shall remain bound by all other provisions of the Social Contract.  12. We believe that the Social Contract is consistent with the goals for upgrade  X -incentive plans which were outlined in the Cost Order. The Social Contract benefits subscribers by assuring reasonable and stable rates in all Time Warner systems, improving service offerings and picture quality with state of the art technology, increasing consumer choice by lifeline basic tier pricing and elimination of buythrough requirements, and providing refunds to customers. The Social Contract further benefits subscribers through Time Warner's agreement not to restrict subscribers' ability to remove, replace, or rearrange wiring so long as it does not interfere with TWC's ability to provide services and collect revenues from that subscriber or other subscribers in a multiple dwelling. Local franchising authorities benefit from the opportunity to assist elderly, low income, and basic only subscribers with the lifeline basic pricing. In addition, the Social Contract will reduce the administrative burden and cost of regulation for Time Warner, 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 Warner franchise areas and passed by its systems.   13. The Social Contract will permit a rate structure that will allow Time Warner to focus on its longterm strategic planning and growth, having resolved its outstanding rate complaints. Local franchising authorities will retain their right to regulate rates for basic service, their right to negotiate upgrades and other benefits for their individual franchises, and their ability to comment and participate on any changes in this Social Contract that would affect their localities. The Social Contract ensures that the rights of local franchise authorities and subscribers to seek redress at the Commission will be preserved.  X!- III. DISCUSSION  X"- A. Waiver  14. Upgrade Incentive Plans represent an alternative to the Commission's usual procedures for resolving rate complaints against cable operators. Indeed, the Commission"<&0*(($"  X-recognized in the Cost Order the experimental nature of this type of social contract.v Xy<ԍ #Xj\  P6G;yoXP# Cost Order, 9 FCC Rcd at 4680.v There are several aspects of the Social Contract that do not conform precisely to the Commission's  X-rate regulation rules or to the stated experimental Upgrade Incentive Plan outlined in the Cost  X-Order. We believe that the Social Contract furthers the Commission's policy goals of ensuring that cable operators expand the capacity and programs offered over their systems where economically viable, and reducing regulatory burdens while still ensuring that cable rates are reasonable. As a result, we conclude that special circumstances warrant a deviation from our generally applicable rules and that waiver of certain of the Commission's rules is in  XN-the public interest.H N{ Yz <ԍ #Xw PE37}XP#See, 47 C.F.R.  1.3; see also WAIT Radio V. FCC, 418 F2d 1153,1159 (D.C.  Ye -Cir. 1969); Northeast Cellular Telephone Co. v. FCC, 897 F2d 1164,1166 (D.C. Cir. 1990.#x6X@`7X@#H  15. In particular, Time Warner seeks a waiver of  76.923 to allow equipment cost averaging. This section of the rules sets forth the methodology for determining the rates for equipment and installation used to receive BST service. The intended purpose of the section is to ensure that equipment is charged at cost and that all BST subscribers pay for the  X -equipment.  Y<ԍ #Xw PE37}XP#See 47 C.F.R.  76.923.#x6X@`7X@#ї Waiver of this provision to enable Time Warner to average equipment costs on a regional basis is consistent with the purpose of 76.923 because equipment will continue to be charged at cost; this cost will be spread across all subscribers in a region, rather than a franchise area.  XQ-16. Time Warner also seeks a waiver of  76.961(e), which requires local franchising authorities to reimburse Time Warner for CPST franchise fees that were based on CPST charges that are being refunded to subscribers. Time Warner has agreed to waive its right to reimbursement by the franchising authorities; thus, this waiver provides a benefit to the local franchising authority and subscribers, and we see no reason to deny it. Time Warner also seeks a waiver of  76.309(c)(i)(B) and 76.964 on a onetime basis to allow Time Warner to add service and change lineups on less than 30 days' notice.  X-17. Time Warner seeks a onetime waiver of  76.933 to allow it to implement rate and service restructuring and annual rate adjustments to the BST and the CPST on 30 days' notice, or less, subject to refunds and subject to the further condition that, if a local franchising authority exercises the optout provision after Time Warner commences implementation of the January 1, 1996 rate and service restructuring and adjustment, Time  X&-Warner will restore the 10% reduction in the BST rate in the next billing cycle (i.e. the difference between the new rate and the rate charged under the Social Contract, if a subscriber cancels service during the first month of implementation of the Social Contract). These provisions set forth customer service standards to ensure, among other things, that customers" 0*((" have adequate notice of changes in their service and time to cancel services. The Social Contract further provides that if any subscriber cancels its subscription to the relevant CPST within 30 days after the date of the first bill reflecting the CPST adjustment authorized by the Social Contract, Time Warner will issue a refund to that subscriber for the incremental amount attributable to such increase. 18. We understand the need for a waiver of these provisions if Time Warner is to implement the necessary changes by January 1, 1996. These waivers are on a onetime basis only. Subscribers will be protected if the local franchising authority opts out of the creation of a lifeline basic tier, or if subscribers choose not to receive the restructured service. We conclude that a waiver of these provisions is not inconsistent with the purposes of the provisions. 19. In addition, Time Warner seeks waivers of various Commission rules that it states are necessary to effectuate the terms of the Social Contract. At the core of the Social Contract is the upgrade incentive plan whereby Time Warner will rebuild and upgrade all of its domestic cable systems and in turn will be allowed to recover the costs of the upgrade over time by adding a charge to the highest penetrated CPST during the years of the Social Contract. Consequently, Time Warner seeks a waiver of  76.922 and 76.933 to allow Time Warner to recover the CPST rate increase for the upgrade in lieu of the methodology provided  X-under our Going Forward rules. Time Warner also seeks to waive: 1)  76. 960, requiring that prior approval be sought for rate increases for one year after CPST rate reduction under  76. 933; 2)  76.922(b), 76.930, and 76.956, to allow Time Warner to use a onetime restructuring form in situations where systems become newly regulated; and 3)  76.922 to allow revenue neutral, prorata adjustments rather than adjustments to the maximum permitted rate less previous external costs ("residual rate") where the lifeline tier and/or an MPT are created in accordance with the Social Contract terms. We believe that the Social Contract provides significant overall benefits and that the waiver of these provisions is not inconsistent with the purposes of the provisions and such waiver is in the public interest. Accordingly, we hereby find good cause to waive these provisions of the Commission's rules necessary to effectuate the terms of the Social Contract.   X- B. Preemption of State and Local Notice Requirements  X- 20. Time Warner asked the Commission to preempt, on a onetime basis, those local franchise rules that require advance notice of rates and service charges to subscribers in connection with its initial implementation of the Social Contract. Time Warner asserts that it"" 0*((f!" will otherwise be unable to comply with the January 1, 1996 rate restructuring date contained  X-in the Social Contract and to fulfill 60 or 90 day local notice requirements.@  Yb<ԍ #Xw PE37}XP#As noted in the prior section, Time Warner also seeks a waiver of  76.964, on a onetime basis. This provision requires cable systems to give 30 days written notice both to subscribers and local franchising authorities before implementing any rate or service change. As we noted, this waiver is necessary for Time Warner to implement the provisions of the  Y-Social Contract and we think this onetime waiver is in the public interest.#x6X@`7X@#@ 21. We believe that preemption is appropriate in this case as the state and local notice requirements may hinder Time Warner's ability to implement rate adjustments uniformly pursuant to the terms of the Social Contract by January 1, 1996. Preemption generally is held to be appropriate in cases such as this one where the local law conflicts with  X_-agency regulation or frustrates the purposes of the regulation. _ Y-<ԍ #Xw PE37}XP#City of New York v. Federal Communications Commission, 486 U.S. 57, 64  Y-(1988).#x6X@`7X@# Indeed, many of the goals  XH-regarding upgrade incentive plans outlined in the Cost Order, and met in this Social Contract, could not be achieved if implementation of rate restructuring does not occur by January 1, 1996. For example, many of the programming cost increases occur on January 1 of each year. As such, Time Warner would seek to adjust its rates to account for these increased costs as provided for under our rules. In order to achieve the Social Contract's goal of having a one time rate adjustment, and thus provide rate stability to subscribers, it is essential that Time Warner implement the upgrade surcharge provided for under the Social Contract by January 1, 1996. 22. We further believe that prompt implementation of the Social Contract best serves the public interest. Thus, to allow Time Warner to implement the rate restructuring and MPT provisions of the Social Contract, any local franchise agreement or any state or local law or regulation is preempted on a onetime basis to the extent that it requires Time Warner to give  X-greater than 30 days advance notice of rate and service changes to subscribers.O 3 X<ԍ #Xj\  P6G;yoXP#See Implementation of Sections of the Cable Television Consumer Protection And Competition Act of 1992, 8 FCC Rcd 3652 (1993); Implementation of Sections of the Cable Television Consumer Protection And Competition Act of 1992: Rate Regulation, MM Docket No. 92266, Second Order On Reconsideration, Fourth Report and Order, and Fifth Notice of Proposed Rulemaking, 9 FCC Rcd 4119, 4184 n.182 (1994). The Commission preempted any local and state requirements that required cable systems to give more than 30 days' notice of rate and service changes to subscribers where application of the local and state provisions would serve to prevent a system from bringing its rates into compliance with the new benchmark rules by the end of the refund deferral period. O Such preemption shall be limited to the period prior to February 1, 1996. If Time Warner is unable to commence implementation of such refunds and rate adjustments by January 1, 1996,"  0*((" but commences such implementation between the period January 1, 1996 and February 1, 1996, it shall provide at least 30 days' notice to local franchising authorities and subscribers. 23. The Social Contract further provides that if any subscriber cancels its subscription to the relevant CPST within 30 days after the date of the first bill reflecting the CPST adjustment authorized by the Social Contract, Time Warner will issue a refund to that subscriber for the incremental amount attributable to such increase. Accordingly, the preemption of state and local notice requirements and the waiver of Commission notice comments will not injure subscribers. X -   X - C. Provisions of the Social Contract  X - 24. #Xj\  P6G;yoXP#The Commission received numerous comments on several terms of the proposed Social Contract. This section addresses the concerns of the commenters and sets forth  X -modifications to the proposed Social Contract.   Y <ԍ #Xw PE37}XP#The majority of comments received were in support of the Social Contract. A list  Y -of those commenters is attached as Appendix A.#x6X@`7X@#   Xy- a. System Upgrades and CPS Price Cap Increases ` `  #Xj\  P6G;yoXP#(i) Terms of the Social Contract 25. The Social Contract provides for an investment of $4 billion over a five year period to upgrade all of Time Warner's systems. As part of this investment, each Time Warner system will have a minimum bandwidth capacity of 550 MHz and at least 50% of Time Warner's subscribers will have access to a minimum bandwidth capacity of 750 MHz. In the 750 MHz systems, at least 200 MHz is expected to be used for digital distribution. All Time Warner systems will be deployed to include fiber to the node architecture, which will improve signal quality and reliability for all subscribers. Time Warner's ability to correct outages in a more timely manner will also be improved through the use of telemetry to locate problems within the system. 26. To fund this investment, Time Warner will be permitted to increase the monthly rate for the most highly penetrated CPST in each of its systems by $1.00 during each year of the Social Contract. Further, this increase will serve as the only increase on the CPST with the exception of revenueneutral adjustments provided elsewhere in the Social Contract and adjustments for inflation and external costs permitted under the Commission rules. For the term of this contract, Time Warner waives its right to increase its CPST rates pursuant to the  X!-Commission's #Xh*f9 xr G; rXX#Going Forward # Xj\  P6G;yoXP#rules. Moreover,, Time Warner will add 60% of all new analog services to the CPST offered without any further increase in rates beyond the $1.00 per year permitted by the Social Contract. This will equal an average of 15 new channels to the"# b0*((e"" CPSTs on Time Warner systems. Additionally, 60% of the capital cost of the upgrade will be used for regulated purposes. Time Warner waives its right to file a cost of service showing to justify any rate increases during the term of the Social Contract. 27. The Social Contract mandates that Time Warner's investment in the upgrade of its systems will be conducted without discrimination based on the socioeconomic status of Time Warner's subscribers. If Time Warner fails to upgrade all of its systems as prescribed in the Social Contract, Time Warner will provide refunds (in the form of bill credits) to all subscribers not receiving the upgraded service. The refunds will equal the amount of the total surcharge levied on each subscriber plus interest and a 15% liquidated damages penalty on the refund amount.  X - ` `  hh,(ii) Comments 28. Most commenters express support for the system upgrades, maintaining that subscribers will benefit from more advanced technology, access to the information  X-superhighway, and improved picture quality. X <ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Houston, Texas at 1; Comments of Massachusetts Cable Television Commission at 2; Comments of Richmond, New York at 1. For example, Kern County, California states that Time Warner will bring information superhighway services to a "vast number of its  Xb-residents", a substantial number of whom "are underserved and live in rural areas."zbd Xw<ԍ #Xj\  P6G;yoXP#Comments of Kern County, California at 1.z Many commenters support Time Warner's plan to phase in rate adjustments over a five year period  X4-because it spreads the costs over a period of time and provides for rate certainty.4 X<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of John W. Peavy, Jr., Houston City Council; Comments of Massachusetts Cable Television Commission at 2; Comments of Bessemer, Alabama at 1. 29. Many commenters did not oppose the concept of the system upgrade but nevertheless raised various objections to provisions in the Social Contract. Some commenters claim that the upgrade would be required in any event either because of the efforts of local  X-franchising authorities or competitive requirements. Y# <ԍ #Xw PE37}XP#Comments of Lawndale, California at 4; Comments of Monroe, North Carolina at 1; Comments of Austin and Sunset Valley, Texas at 4. Other commenters claim either that too much or too little of the upgrade is to be dedicated to digital services and that those jurisdictions which had already required upgrades will be disadvantaged visavis those  X|-jurisdictions that previously did not require upgrades.|K  Xx%<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Portland, Maine at 12. Some commenters oppose any CPST  Xe-rate increase that exceeds the limits of the Commission's Going Forward rules. First, these  XP-commenters claim that the rate increase: 1) should be limited to the amount of the #Xh*f9 xr G; rXX#Going"P 0*(("  X-Forward # Xj\  P6G;yoXP#increase which Time Warner could have received during the same period, 2) should not cover the cost of new services which customers have not requested, 3) should not be required for an upgrade which is a settlement concession, or 4) should not include external  X-costs).) X6<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Monroe, North Carolina at 6; Comments of Portland, Oregon at 56; Comments of Austin and Sunset Valley, Texas at 4; Comments of Indian Rocks Beach, Florida; Comments of Roberta S. Tharp. ) Second, these commenters claim that the Commission's costofservice rulings  X-require that the rate increase not be implemented before the upgrade is in service.M Y <ԍ #Xw PE37}XP#Comments of Portland, Oregon at 67.#x6X@`7X@#ћ Finally, some of these commenters state that the rate increase will require users of regulated cable services to subsidize other Time Warner services. Ameritech New Media Enterprises, Inc., Bell Atlantic Telephone Companies and Cincinnati Bell Telephone Company contend that Time Warner will use the revenues from the rate increases to enter the local telephone market. In particular, these companies propose that Time Warner: 1) account for the costs of the upgrade so that those costs can be properly allocated; 2) file an application for a certificate of  X -public convenience and necessity under Section 214 of the Communications Act  X<ԍ #Xj\  P6G;yoXP#Section 214 of the Communications Act requires a certificate of public convenience and necessity from the Commission before a common carrier may undertake the construction of a new line or of an extension of any line, or acquire or operate any line or extension thereof, or engage in transmission over or by means of such additional or extended line.; and 3) be required to adhere to the rules applicable to telephone companies on cost accounting, cost  X -allocation, depreciation, transactions with affiliates, and joint marketing of services. S  X<ԍ #Xj\  P6G;yoXP#Comments of Cincinnati Bell Telephone Company; Reply Comments of Ameritech New Media Enterprises, Inc.; Reply of Bell Atlantic. The City of Gardena 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  X-Social Contract.w  X0<ԍ #Xj\  P6G;yoXP#Comments of Gardena, California at 2. w Finally, some commenters raise questions as to the implementation of the rate increase, and some have misconceptions about the meaning of language in the Social Contract. For example, one community inquired as to how the rate increase will relate to the  XM-increase in the CPST to offset the BST rate reduction. M X"<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Southwest Suburban Cable Commission at 2; Comments of Judith L. Kasper at 23.  X-30. In its reply comments, Time Warner contends that the Social Contract requires all communities it serves to have upgrade benefits. Time Warner further maintains that, even where Time Warner already is committed to making upgrades, the Social Contract provides a" :0*((" firm completion deadline and a federallyenforceable upgrade commitment with meaningful  X-penalties. Xb<ԍ #Xj\  P6G;yoXP#See Time Warner Cable Reply Comments at 29. Time Warner denies that its rate increase includes the cost of any equipment  X-needed to provide telephone service, such as telephone switches, and further contends that the  X-Commission has carefully reviewed Time Warner's costs to preclude crosssubsidies.b{ X<ԍ #Xj\  P6G;yoXP#Id. at 30. b Time Warner states that it believes that it has accomplished the goal of undertaking only those upgrades that are economically justified and best meet customer needs in the most efficient  Xv-manner possible.Zv. VU <ԍ #Xj\  P6G;yoXP#Id.Z According to Time Warner, the purpose of the upgrade is to improve reliability and picture quality, and to allow increased system addressability and interactive  XH-capability.dH X<ԍ #Xj\  P6G;yoXP#Id. at 3031.d Time Warner also argues that phasing in the cost of the upgrade, as provided under the Social Contract, provides predictable, though modest, rate increases, avoiding rate  X -shock. a  X]<ԍ #Xj\  P6G;yoXP#Id. at 35.a Time Warner states that subscribers will benefit because spreading the cost over  X -five years is preferable to paying one large sum once the upgrade is completed.[ E  V<ԍ #Xj\  P6G;yoXP#Id. [ To the extent that commenters argue that the rate increases will exceed the amount allowed by the  X -Going Forward rules, Time Warner argues that those rules provide an incentive to add  X -programming services, not an incentive to add capital for the upgrade of channel capacity.a  Xg<ԍ #Xj\  P6G;yoXP#Id. at 34.a Time Warner also notes that it has agreed to waive any right it may have to take any future  X-increases under the Going Forward rules as of the effective date of the Social Contract.Z!  V<ԍ #Xj\  P6G;yoXP#Id.Z Finally, Time Warner maintains that it has no intention of passing through the cost of any local franchising upgrade requirement that does not exceed the requirements in the Social  XO-Contract.a"OZ XZ!<ԍ #Xj\  P6G;yoXP#Id. at 35.a ` `  hh,(iii) Discussion  X-31. The majority of the commenters have expressed support for the provision of the Social Contract that requires Time Warner to invest $4 billion to rebuild and upgrade Time Warner's cable systems. The commenters support the deployment of advanced technology" "0*((" and improved picture quality. They also support Time Warner's plan to phase in the payments over a five year period to avoid rate shock.  32. We find that the upgrade provision of the Social Contract represents a valuable benefit to subscribers in terms of advanced technology, improved reliability and picture quality, and increased programming choices. Further, we conclude that phasing in the cost of the upgrade, in contrast to a onetime increase when the upgrade is completed, is preferable because it provides predictable rate increases, avoiding rate shock.  33. While Time Warner may have chosen voluntarily to upgrade or have been required by local franchising authorities to upgrade some sections of its system, the Social Contract binds Time Warner Cable to continue to make significant upgrades throughout its systems. Those local franchising authorities that have negotiated upgrade benefits will not be disadvantaged. The Social Contract makes clear that local franchising authorities can enforce local franchise agreements or negotiate future agreements which provide for upgrade benefits exceeding the upgrade benefits of the Social Contract. Section III. J. 2. a. states that "[n]othing herein shall affect the enforceability of any otherwise valid preexisting local franchise agreement, ordinance, local law or regulation which provides benefits which exceed those provided in this Contract relating to system upgrades or the wiring of schools, nor shall local franchising authorities be restricted in their authority to negotiate for such additional benefits after the Effective Date of this Contract." Further, Time Warner has agreed to modify the Social Contract to make clear that, except in those situations where a local franchising authority places upgrade requirements on Time Warner that exceed the requirements of the Social Contract, Time Warner will not seek to pass through any capital costs (other than the surcharge provided under the Social Contract) to the subscribers. !34. The upgrade provision embodies a balance between a guarantee of an average of 15 new analog channels to benefit CPST subscribers and the initiation of digital distribution technology, which will expand the capacity of Time Warner to add programming and improve picture quality. As noted in the Social Contract, Time Warner agrees that at least 60% of all capital expended in connection with the upgrade commitment described in the Social Contract will be applied for the benefit of BST and CPST subscribers. The Commission does not believe that it is in the public interest for it to determine how much digital and analog capacity Time Warner should use for particular programs and markets, since such a requirement might limit the economic feasibility of the upgrade. However, we point out that Time Warner may use digital capacity for the benefit of regulated services. "35. We are mindful of the concerns expressed by some commenters that the rate increases may be used to pay for Time Warner's plans to provide competitive services. We have examined Time Warner's cost data and believe that the costs of the upgrade are reasonable and necessary and that Time Warner has fairly allocated the costs of the upgrade between its current regulated and nonregulated operations. Further, Time Warner has agreed to a modification to the Social Contract which provides that the amount of the capital costs of the upgrade that will be recovered in the rate increases on regulated services will be applied"#'"0*((%" for the benefit of regulated BST and CPST subscribers during the period of the Social Contract. The Commission also has the authority under the Social Contract to audit Time Warner's books and records and to interview Time Warner corporate employees to ensure  X-compliance with this amendment.k# X4<ԍ #Xj\  P6G;yoXP#See Section III.G.3.k Indeed, if it is determined that Time Warner has not complied with the obligations under the Social Contract, we may exercise any of the rights  X-and remedies which are attendant to violations of a Commission order.m${ X<ԍ #Xj\  P6G;yoXP#See Section III.J.2.b.m Under these circumstances, we find it unnecessary to adopt the suggestion of several telephone companies  X_-that Time Warner be required to comply with the rules applicable to telephone companies.%%_. Y> <ԍ #Xw PE37}XP#To the extent that Time Warner uses its cable systems to provide telephone  Y' -service, it would be subject to applicable common carrier regulations. #Xj\  P6G;yoXP#%  X1-#36. The contention that the upgrade increases will exceed the amount permitted under  X -the Going Forward Order is misplaced. The Going Forward Order was intended to be an incentive for operators to add a small number of cable channels to existing systems. The increases under the Social Contract, on the other hand, are intended to enable Time Warner to undertake a major system upgrade, which will modernize facilities to provide improved  X -quality and efficiency and to add new tiers of services and new types of services.&  X9<ԍ #Xj\  P6G;yoXP#See Cost Order, 9 FCC Rcd at 46774680. Consequently, the rate increases are not primarily being paid for new services, but for improved quality of services as a result of modernization. The Social Contract does not change the requirements of the Commission's rules governing the passthrough of external costs and inflation. Finally, the Social Contract provides that the upgrade rate increase is to be assessed annually on all CPST subscribers, in addition to any amount necessary to offset the 10% BST rate reduction.   X- b. Equipment and Installation Averaging ` `  hh,V(i) Terms of the Social Contract  X-$37. Under the Social Contract, Time Warner will be permitted to establish a blended average regional rate for the equipment basket categories of hourly service charge, installations, remote control devices, addressable converters, nonaddressable converters, other leased equipment, and customer tier changes. The geographic regions used for averaging are shown on Appendix B of the Social Contract and essentially correspond with the Areas of Dominant Influence ("ADIs") served by Time Warner. Regional averaging will be accomplished by the filing of a Form 1205 Equipment Form or its equivalent with the Commission on an annual basis beginning no sooner than December 1, 1995. Time Warner may begin charging revised equipment rates upon 30 days' notice to the Commission subject"{&0*((Z" to a refund pursuant to Commission rules. The local franchising authorities will be responsible for reviewing the rates charged to ensure consistency with the rates approved by the Commission. If Time Warner charges rates in excess of those permitted by the Commission, the local franchising authority may order a refund. ` `  hh,V(ii) Comments %38. Commenters who support the equipment and installation averaging contend that it  XH-will streamline the process for review of these rates.'H X <ԍ #Xj\  P6G;yoXP#See Comments of Chapel Hill, North Carolina at 2. On the other hand, some local franchising authorities claim that both Commission regulation of equipment rates and  X -averaging of equipment rates violate the 1992 Cable Act.!( { XF <ԍ #Xj\  P6G;yoXP#See, e.g., Comments of City of Raleigh, North Carolina at 2; Comments of Middletown, Pennsylvania; Reply Comments of New York City Department of Information Technology and Telecommunications at 1820. ! Other local franchising authorities  X -raise specific questions about blending, including whether blended rates will track costs, whether there will be different rates for different types of equipment, whether addressable converters will be subsidizing nonaddressable converters, whether the geographic regions are appropriate for blending, the effect blending will have on the level of rates, and how the Commission and the local franchising authorities will work together under the blending  X-proposal.&) XA<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of the Cable Television Review Commission of San Diego, California at 23; Comments of Jacksonville, North Carolina at 23; Comments of Columbus, Ohio at 2; Comments of John Fitzgerald. &  Xb-&39. In its reply comments, Time Warner notes that, in the Continental Contract  XM-Order, we granted a waiver to permit Continental to aggregate equipment and installation  X8-costs on a state or regional basis.r*8  Xn<ԍ #Xj\  P6G;yoXP#Time Warner Reply Comments at 52.r Time Warner notes that we granted this waiver because it was our belief that equipment averaging will serve the objectives of the Upgrade Incentive Plan and will minimize drastic increases in rates for subscribers as upgrades take place. Time Warner contends that because the Social Contract has a similar equipment averaging  X-provision, the rationale in the Continental Contract Order applies here. Time Warner states that it would be willing to establish separate charges for addressable and nonaddressable converters, due to specific concerns raised regarding converters. Time Warner further explains that, in those situations where any local franchising authority is still reviewing a  X-Form 1205, the process will continue under local franchising authority jurisdiction.Z+6  Vi&<ԍ #Xj\  P6G;yoXP#Id.Z According to Time Warner, after the effective date of the Social Contract, the Commission"k +0*((" will review future equipment rates, but the local franchising authority may order rollbacks and refunds of any rate in excess of that approved by the Commission, subject to the normal  X-Commission appeal process.d, XK<ԍ #Xj\  P6G;yoXP#Id. at 5253.d ` `  hh,V(iii) Discussion '40. We believe that a waiver of our rules to allow Time Warner to average broad categories of equipment and various installation costs for all of its systems on a regional basis is in the public interest. As in the case of the Continental Contract, we conclude that equipment averaging will minimize drastic increases in rates for subscribers as upgrades take place and will reduce the administrative burdens on Time Warner to prepare rates on a franchise by franchise basis. While the rates for particular franchise areas may change, the overall impact will be revenue neutral. We conclude that the geographical regions established in the Social Contract are appropriate because they reflect Time Warner's regional cost centers and therefore would simplify cost tracking. We do note, however, a concern raised by commenters that addressable converters will be subsidizing nonaddressable converters. To address this concern, Time Warner has agreed to a modification to the Social Contract which provides that the prices of addressable and nonaddressable converters will be separately established. (41. We conclude that this provision of the Social Contract does not violate any  X-provision of the 1992 Cable Act. As we recognized in the Continental Contract Order, the 1992 Cable Act does not mandate the level at which equipment and installation rates are  X-established, i.e. the franchise, system, regional or company level.}-{ V<ԍ#Xj\  P6G;yoXP# Continental Contract Order at  30.} Rather, Congress specified  X-that the rates must be based on actual cost.j., X<ԍ #Xj\  P6G;yoXP#47 U.S.C.  623(b)(3).j This provision in the Social Contract is consistent with the 1992 Cable Act's directive that the Commission establish standards by which local franchising authorities establish rates for installation and equipment used to receive basic service. We will review new regional rates submitted by Time Warner for compliance with the requirement that they be true regional averages of the local equipment and installation costs. Notice of our decisions will be provided to local franchising authorities. Through refunds or rate rollbacks, the local franchising authorities will continue to enforce the requirement that Time Warner charge equipment and installation rates which  X"-comply with our standards.,/" X$<ԍ #Xj\  P6G;yoXP#Under the Social Contract, equipment rate cases which are pending before the local franchising authorities at the effective date of the Social Contract will remain within the local franchising authorities' jurisdiction., " ` /0*((y"Ԍ X- c. Resolution of Pending Cases  X-` `  hh,V (i) Terms of the Social Contract   X-)42. Under the Social Contract, Time Warner will settle its existing benchmark CPST cases. Time Warner is required to provide refunds of approximately $4.7 million to customers in the franchise areas shown in Appendix A of the Social Contract. Refunds will continue to accrue interest until the date that the refunds are actually paid. Time Warner is also precluded from making any rate adjustment allowed under the Social Contract prior to the time such refunds are made to affected subscribers. The refunds were determined based upon the Commission's review of Time Warner's rate justifications for the CPST where a complaint had been filed. Pending cases justifying rates for the BST will continue to be resolved with the local franchising authorities. ` `  hh,V(ii) Comments  X-*43. Numerous commenters expressed support for the resolution of the pending Time  Xy-Warner rate cases in the Social Contract as a way to avoid litigation expenses and to conserve  Xb-resources.0b X<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of the New York State Commission on Cable Television at 13; Comments of the Massachusetts Cable Television Commission at 12; Alabama Public Service Commission at 1. However, a number of local franchising authorities raised concerns regarding the settlement of the rate cases in this Social Contract. Among the concerns, some local franchising authorities contended that complainants have the statutory right to have their  X-complaints adjudicated individually on the record, that the Commission violated its own ex  X-parte rules, and that the Commission's proposed procedures for social contracts were not  X-followed.=1M X<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of the Cities of Austin and Sunset Valley, Texas at 12; Comments of Middletown, Pennsylvania at 414; Reply Comments of the New York City Department of Information Technology and Telecommunications at 618. = Others argued that the local franchising authorities should receive refunds and punitive damages, and that the refunds should be paid earlier than provided for under the  X-Social Contract.2 X1!<ԍ#Xj\  P6G;yoXP# See, e.g., Comments of Ithaca City Cable Commission at 45; Comments of Judith L. Kasper at 3. Further, the City of St. Petersburg expressed concern that there was no finding of wrongdoing and that the refund amounts can be recovered by Time Warner's price  X-cap and other increases allowed under the Social Contract.`3W  X%<ԍ #Xj\  P6G;yoXP#Comments of St. Petersburg, Florida. The Town of Brighton claims that it was excluded from the refund list because it set forth an incorrect community unit ID number in its complaint. Comments of Brighton, New York at 2. "q'20*((p'"Ԍ` Some local franchising"y30*((" authorities contend that the finding that the Time Warner rates are reasonable will result in  X-rate increases in the BST rates.4y X<ԍ #Xj\  P6G;yoXP#Comments of Portland, Oregon at 7; Cities of Austin and Sunset Valley, Texas at 45. +44. In its reply comments, Time Warner states that the Commission has stated a general policy "to make every effort possible to resolve appropriate disputes through mediation, arbitration, settlement negotiation, negotiated Rule Making and other means of  Xv-dispute resolution."g5v X: <ԍ #Xw PE37}XP##Xj\  P6G;yoXP#Time Warner Reply Comments at 37 (citing Use of Alternative Dispute Resolution in Commission Proceedings and Proceedings in which the Commission is a Party,  X <6 FCC Rcd at 9 (1991)#x6X@`7X@#).g Citing the Rate Order, Time Warner further contends that the Commission has advocated the use of alternative dispute resolution techniques to decide cable rate cases. Time Warner further contends that each complaint 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 will result if each case is  X -individually litigated.u6  XL<ԍ #Xj\  P6G;yoXP#Time Warner Reply Comments at 3739.u In reply to the City of St. Petersburg, Time Warner states that findings of no wrongdoing are necessary to give operators the incentive to enter into social contracts, and that here there is no evidence of wrongdoing. Time Warner further states that the ability of Time Warner to recover its future costs under the price cap provision is  X -irrelevant to refunds for past overcharges.7 G  X<ԍ #Xj\  P6G;yoXP#Id. at 3940. Time Warner also notes that the Commission staff is investigating whether Brighton and certain other New York communities should be added to the  Xu-communities listed as receiving refunds. Id. at 21. Time Warner has now agreed to provide refunds to these communities as is reflected in the revised Appendix A.  Finally, in response to comments that the  X-Commission's ex parte rules and other social contract procedures were not followed, Time Warner first notes that the commenters fail to specify which particular provisions of the  Xf-Commission's ex parte rules have been violated. In any event, Time Warner states that it has followed the same procedure as the Commission approved with respect to the Continental  X:-Contract, i.e., it has made an initial proposal to the Commission, including an outline of its  X#-objectives. Time Warner notes that in the Continental Contract Order, the Commission  X-waived its requirement8 Xv$<ԍ #Xj\  P6G;yoXP##Xh*f9 xr G; rXX#Cost Order, # Xj\  P6G;yoXP#9 FCC Rcd at 4680. that a company's initial proposal for an upgrade incentive plan include statements from affected local franchising authorities because there are "significant"j80*(("  X-number of franchises with diverse interests and concerns".d9 Xy<ԍ #Xj\  P6G;yoXP#Id. at 4243.d Time Warner argues that given the number of commenters and affected franchising authorities in this case, waiver of this requirement is even more applicable here. Time Warner further notes that the social contract  X-negotiation procedures followed here were announced in the Commission's  Cable Ex Parte  X-Order and that consistent with that Order, (and similar to the case with the Continental Contract), all interested parties have had an opportunity to comment on the Social Contract. ` `  hh,(iii) Discussion ,45. We conclude that proper procedures were followed with respect to the Social Contract. As an initial matter, we address the comments regarding the resolution of the rate complaints as part of the Social Contract. We note that the 1992 Cable Act provides the Commission with broad discretion to resolve cable rate complaints. The 1992 Cable Act directs the Commission to create "fair and expeditious procedures for the receipt,  X -consideration, and resolution of complaints."n: { X<ԍ #Xj\  P6G;yoXP#47 C.F.R.  5443(c)(1)(B).n Under the 1992 Cable Act, the Commission also is charged with establishing "the procedures to be used to reduce rates for cable programming services that are determined by the Commission to be unreasonable and to refund such portion of the rates or charges that were paid by subscribers after the filing of  Xf-such complaint and that are determined to be unreasonable.;f, YC<ԍ #Xw PE37}XP#47 U.S.C.  543(c)(1)(C).#x6X@`7X@#є Pursuant to these statutory provisions, the Commission adopted rules providing for the use of social contracts as one  X8-method of setting cable rates.<8 Y<ԍ #Xw PE37}XP#Cost Order, 9 FCC Rcd at 46774680.#x6X@`7X@#ѡ We believe that the broad language of Congress' mandate allows the Commission to choose the procedures used to resolve complaints. We further believe that Congress' desire to simplify cable rate regulation supports the adoption of the most expeditious means of resolving complaints that will afford adequate protection for the subscribers. Contrary to the claims of some commenters, there is no statutory requirement that each rate complaint be individually adjudicated. Rather, the Commission is required to establish procedures to resolve rate complaints and to provide refunds of excessive charges. A social contract is one such procedure.  Xi--46. We find that the rates provided for in the Social Contract are reasonable. Although past rates are not found to be unreasonable, the Social Contract provides for refunds of amounts paid in excess of rates we find in this Order to be reasonable. Those rates were arrived at after making certain adjustments claimed by Time Warner and after factoring in the public interest benefit to consumers of prompt, certain relief. Moreover, although we do not rule on the merits of each of Time Warner's claims, we believe that it is fully consistent with the 1992 Cable Act to consider the benefits of avoiding the delays and uncertainty of"<0*((;" litigation in setting rates within the range of reasonableness. Further, we believe that it is fully consistent with the 1992 Cable Act, as well as the social contract rules, to consider upgrades and other improvements in service as part of a determination of what constitutes a reasonable rate. Finally, we do not believe that deviation from our usual practice of requiring refunds to subscribers and instead requiring refunds and punitive damages to local franchising authorities is warranted. Our rules provide for refunds to subscribers and do not provide for punitive damages in any case. Further, we do not believe that six months is an unreasonable period for Time Warner to make refunds, in view of the implementation and billing problems involved in a nationwide settlement. Thus, we conclude that the Commission has the authority  X1-to resolve rate complaints in the manner embodied in the Social Contract.  X -.47. In the Cable Ex Parte Order, we noted that "[v]arious cable television system operators have made presentations to the Commission on issues relating to the Commission's cable television rate regulations. These communications have generally been in the nature and context of broad policy discussions regarding the rules as well as the future application of the rules to the operators, but frequently also have focused on the specific economic situation and  X-future prospects of a particular company."= Y <ԍ #Xw PE37}XP#Cable Ex Parte Orde#Xw PE37}XP#r at 3#x6X@`7X@#. We held that relaxed ex parte rules are applicable to such discussions "that are general in nature although they potentially implicate  Xf-specific pending rate proceedings.">f{ Y<ԍ #Xw PE37}XP#Id. at 4.#x6X@`7X@#ч These are the very type of discussions that occurred  XO-here. A party wishing to take advantage of the modified ex parte procedures must: 1) submit to the Cable Services Bureau a written request to meet and, if applicable, a request for relaxed  X#-ex parte treatment; 2) receive Bureau approval to meet and, approval of the relaxed treatment; and 3) in the event of the development of a specific companywide proposal or proposed resolution, serve all parties to each affected pending rate complaint and/or appeal proceeding  X-with the final version of the proposal or proposed resolution. The Cable Ex Parte Order  states that "the Commission will take no action based on any such proposal or proposed resolution without it having first been served on all parties to each affected pending rate compliant and appeal proceeding and without providing not less than thirty days for comment." /48. We conclude that these requirements were complied with here. On May 4, 1995  XA-Time Warner made the necessary written request for application of relaxed #Xh*f9 xr G; rXX#ex parte rules # Xj\  P6G;yoXP#in order to engage in general discussions. This request was subsequently granted by the Cable Services Bureau. All complainants and affected local franchising authorities were served with a copy of the proposed Social Contract and given 40 days to comment. These comments have been reviewed and considered by the Commission and, in many instances, have resulted in  X -changes to the Social Contract. The Commission's #Xh*f9 xr G; rXX#ex parte # Xj\  P6G;yoXP#procedures set forth in the Cable  X!-Ex Parte Order have been fully complied with as to the Social Contract. "".>0*((!"Ԍ049. We further address those comments that the Social Contract procedures set forth  X-in the Cost Order were not followed. In the Cost Order, the Commission stated that it would consider upgrade proposals and directed any interested cable operator to "submit a proposal . . . accompanied by a written statement by any certified franchising authority with jurisdiction  X-over cable systems affected by the plan of its views concerning the proposed agreement."? Y<ԍ #Xw PE37}XP#Cost Order, 9 FCC Rcd at 4680.#x6X@`7X@#Ѣ In  X-the Continental Contract Order, we noted that "given that the initial proposal and subsequent negotiations affected a significant number of franchises with diverse interests and concerns, it is more efficient and has proven more practical for the Commission to negotiate the proposed  XL-Social Contract with Continental." @L{ Xx <ԍ #Xj\  P6G;yoXP#See Continental Contract Order at  70. In the Continental proceeding, we waived, on our own motion and for good cause shown, the requirement that at the time a proposal is made a statement be filed by the local franchising authority. However, consistent with the  X -requirement in the Cable Ex Parte Order, this waiver was conditioned on local franchising authorities and complainants being given the opportunity to express their views after the  X -Public Notice was issued.sA . X<ԍ #Xj\  P6G;yoXP#Id. at  11, 70.s We note here that there are significantly more local franchising authorities affected by the Social Contract than were affected by the Continental Contract and that these local franchising authorities likewise have diverse interests and concerns. We  X-conclude that the rationale stated in the Continental Contract Order for waiving the requirement that statements from affected local franchising authorities be included in the proposal is applicable in this case. As noted above, the comment period and extensions have provided significant opportunity for local franchising authorities to express their views as to the Social Contract. We believe it is appropriate to waive, on our own motion and for good  X%-cause shown, the requirement in the Cost Order that a company's initial proposal for an upgrade incentive plan include statements from affected local franchising authorities.  X-150. The City of St. Peterburg's concern that there is no finding of wrongdoing is misplaced. One of the goals of the Social Contract is to resolve disputed issues without requiring the Commission to spend significant time and resources to make a finding of any wrongdoing as to these issues. We also note that the statement in the Social Contract finding that the CPST rates, other than those resolved in Appendix A to the Social Contract, are reasonable has no bearing on determinations by local franchising authorities as to the  XX-reasonableness of BST rates. Local franchising authorities may continue to make their own determination as to the reasonableness of BST rates without being bound by rates derived as a result of negotiations of the Social Contract.  X-251. Finally, under Sections 76.942(f) and 76.961(e) of the Commission's rules, local franchising authorities are required to return to cable operators an amount equal to that portion of the franchise fee that was paid based on the total amount of refunds, when refunds" A0*((" are ordered by the local franchising authority or the Commission. We wish to clarify that local franchising authorities for Time Warner's systems are not required to return any portion of franchise fees collected from Time Warner pursuant to the terms of the Social Contract. The Commission has not made a determination that Time Warner has imposed unreasonable rates on subscribers in the Social Contract.  Xv- d. Lifeline Basic Tier Rates  XH-` `  hh, (i) Terms of the Social Contract 352. The Social Contract provides that Time Warner will create a "lifeline basic tier" priced to enhance the affordability of basic service. Time Warner will accomplish this in two ways. First, on systems serving at least 85% of its total subscribers, Time Warner will reduce the price of its BST by 10%, with a corresponding revenue neutral increase in CPST rates. In systems where Time Warner proposes to apply the 10% BST reduction, local franchising authorities may elect not to have this lifeline reduction by notifying Time Warner and the Commission in writing within 45 days of the effective date of the Social Contract. Second, on the remaining systems, Time Warner will restructure the BST to create a lifeline type service consisting only of stations required by law to be carried on the BST. All other existing BST channels will be moved from the BST to a CPST with a corresponding revenue  X4-neutral decrease in the price of the BST and an increase in the CPST price. B# 4 Y<ԍ #Xw PE37}XP# With respect to the procedures that should be followed in the event Time Warner incorrectly restructures the BST rates, we note that local franchising authorities should follow  Y-the existing procedures and the new procedures recently adopted by the Commission. In the Matter of Sections of the Cable Television Consumer Protection and Competition Act of 1992:  YS-Rate Regulation, MM Docket No. 92266, Thirteen Order on Reconsideration, FCC 95 Y>-347(released September 22, 1995) ("Thirteenth Reconsideration Order"). Specifically, as provided by our rules, local franchising authorities will have a 30day review period to evaluate the reasonableness of Time Warner's initial restructured basic service tier rate, after Time Warner provides notice of the rate restructuring. We note that each regulated local franchising authority will receive a form from Time Warner illustrating the lifeline restructuring. If the local franchising authority has not reached a decision in the initial 90day review period, the local franchising authority need not issue an accounting order to preserve its right to require a refund after the 90day review period. Thus, a local franchising authority may order refunds with respect to the initial restructured rate for the lesser of the period from the effective date of the restructured rate to the date of its rate order of the 12 month period preceding the date of its rate order. At any time before the local franchising authority issues a rate order, Time Warner may inquire as to whether the local franchising authority is continuing to review Time Warner's initial restructured rate. If Time Warner makes such an inquiry, the local franchising authority must respond to Time Warner within"&A0*((|'" 15 days of receiving the inquiry. If the local franchising authority fails to respond, it will lose its ability to issue refunds with respect to the initial restructured rate after the initial 90 Yb<day review period.#x6X@`7X@# #Xw PE37}XP# We note that under the Social Contract, as part of the initial restructuring of rates, Time Warner is required to reduce the BST rate by 10% to create the lifeline basic tier. Such reduction shall be offset by an adjustment to the CPST rate to create a revenue neutral rate restructuring. Because the initial rates for the BST and the CPST are related, an error in setting the BST or the CPST affects this rate relationship. Therefore, Time Warner may correct the initial BST rate or CPST rate, if Time Warner initially restructures rates incorrectly. We further note that if it is determined that the initial basic service rate has been implemented incorrectly, any refunds ordered are limited to basiconly subscribers. This is because any adjustment to subscribers of both BST and CPST would be revenue  Ye -neutral and thus no refund to those subscribers would be necessary.#x6X@`7X@#х "4NB0*(("Ԍ  X-453. Time Warner will not add any additional satellite channels to the BST for the term of this contract, except as required by law or regulation. Furthermore, in the event that the Commission's mustcarry rules are rendered invalid, Time Warner may discontinue carriage of local broadcast stations but all local broadcast stations that it continues to carry must be carried on the BST. To the extent that Time Warner discontinues the carriage of any broadcast station, Time Warner may substitute any programming service in place of the discontinued station to maintain the size of the BST. This substitution is limited to an average of three services per system over all Time Warner systems and five services for any individual Time Warner system. The Social Contract provides that these substitutions only will affect BST rates and only to the extent there are changes in external programming charges to Time Warner. ` `  hh,(ii) Comments  X-554. Most commenters support the creation of a lifeline BST because low cable rates  Xy-are essential to various groups including the elderly and lowincome persons.CyN Xx<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Pinehurst, North Carolina at 1; Comments of Shakopee, Minnesota at 1; Comments of Endicott, New York at 1. Of those commenters who expressed opposition, the concerns are: 1) a large number of CPST users will be supporting a low rate for a few BSTonly subscribers; 2) BST is not important where the reception of broadcast television is clear; 3) local franchising authorities might prefer other benefits to the creation of a lifeline BST; and 4) the restructuring of the BSTs will enable Time Warner to remove important channels from BST and increase prices for services"C0*((t"  X-that previously were regulated.%D Xy<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Lawndale, California at 2; Comments of Winter Springs, Florida at 12; Comments of St. Petersburg, Florida; Comments of Hawaii at 3; Comments of Ithaca City Cable Commission at 610. % Commenters also raise various questions with respect to the creation of a lifeline basic tier. They question whether the Social Contract permits Time Warner to exclude 15% of its systems from the reduction in BST (in light of the Social Contract provision that at least 85% of Time Warner's systems will be changed to a lifeline basic). They ask whether the restrictions contained in the Social Contract precluding increases in BST rates and the number of BST channels should be changed (either because of the desire of a local franchising authority to make more extensive BST services available or the desirability of promoting low power television). They also raise concerns as to: 1) whether the reduction in BST channels will reduce franchise fees; 2) what effect a local franchising authority's decision to opt out of the lifeline BST provision will have; 3) whether the Commission will review the CPST rate increase that is made to offset the BST price decrease;  X -4) why the discount is 10% instead of 15% as it was in the Continental Contract Order; and 5) whether the Social Contract should contain a date for completion of the restructuring of the  X -BST.iE M X<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Hawaii at 3; Comments of Jacksonville, North Carolina at 23; Comments of the Community Broadcasters Association; Comments of Hillsboro County, Florida at 4; Comments of Los Angeles at 2, 4; Comments of New Jersey State Board of Public Utilities at 7.i  X -655. In its reply comments, Time Warner contends that a low priced BST was one of the goals of the 1992 Cable Act and, in connection with the Continental Contract, the Commission approved that goal and its implementation with minimal crosssubsidization  Xd-(between CPST and BST) in the creation of a lifeline basic tier.{Fd X<ԍ #Xj\  P6G;yoXP#Time Warner Reply Comments at 2021.{ In addition, Time Warner contends that any local franchising authority that does not agree with the creation of a lifeline  X6-BST may optout of this provision of the Social Contract.gG6l  XS<ԍ #Xj\  P6G;yoXP#  Id. at 21.g Time Warner also contends that its right to determine the channels that it will include on the BST, other than mustcarry stations, PEG access stations, and television broadcast stations except for superstations has been upheld by the Commission and the Court of Appeals for the District of Columbia  X-Circuit.H  X#<ԍ #Xj\  P6G;yoXP#Id. at 2223, citing Time Warner Entertainment Company v. FCC, 56 F. 3d 151, 162 (1995). Time Warner states that a local franchising authority's decision to optout will alleviate the need to offset a BST rate reduction with a CPST rate increase, but otherwise will not affect the terms of the Social Contract. Finally, Time Warner explains that services retiered from the BST will not be unregulated, except for those services that are placed on an"H0*((Q" MPT in systems which are eligible for a new MPT under the Social Contract, and that all communities which do not opt out will receive the 10% rate reduction during the term of the  X-Social Contract.dI XK<ԍ #Xj\  P6G;yoXP#Id. at 2325.d ` `  hh,V(iii) Discussion  Xv-756. In the Continental Contract Order, we approved the creation of a lifeline BST noting that there were strong social benefits to the creation of a lifeline BST that furthered the goals of the 1992 Cable Act. In particular, we noted that the creation of a lifeline BST  X3-increases the option of consumers and increases competition for services on the upper tiers.J3{ Y_ <ԍ #Xw PE37}XP#Continental Contract Order at  48.#x6X@`7X@#Ѥ We also noted our belief that any increase in rates for subscribers that receive both the BST  X -and the CPST will be de minimis.K . Y<ԍ #Xw PE37}XP#Id. at  47.#x6X@`7X@#ѓ We find that the same circumstances exist here and thus approve the similar provision in the Time Warner Social Contract. In view of the valuable public benefits brought by the creation of a lifeline BST, as well as the other benefits of the Social Contract discussed elsewhere in this Order, the preference for other benefits cited by the Ithaca City Cable Commission in the Social Contract does not warrant a rejection of the Social Contract. One of the main arguments advanced by commenters opposing the lifeline BST was that it was not necessary because there were so few BSTonly subscribers. However, because there are few BSTonly subscribers the overall impact on the majority of  XM-subscribers who receive both BSTand CPST will be minimal.LM X<ԍ #Xj\  P6G;yoXP#See e.g. Comments of Lawndale, California at 2.#x6X@`7X@#ѭ In addition, we note that the Social Contract contains a provision that allows local franchising authorities to elect not to have Time Warner implement the BST rate reduction and corresponding CPST adjustment in its franchise area. This provision provides subscribers additional protection if lifeline BST is inadvisable in a particular area. 857. Because some Time Warner systems contain only one tier, not all of the Time Warner systems can immediately provide for a lifeline BST. However, Time Warner has represented that those systems that initially are not given the benefit of a 10% reduction will subsequently be restructured and will have the right to a per channel rate reduction after the  Xg-restructuring is accomplished.Mg X#<ԍ #Xj\  P6G;yoXP#See Time Warner Reply Comments at 2425; Social Contract, Section III.A. Because the restructuring is likely to include the upgrading of Time Warner's facilities, we find that a requirement to complete the restructuring by a specific date prior to the termination of the Social Contract would be inconsistent with the Social Contract, which permits Time Warner to upgrade its facilities over the fiveyear term of the Social Contract. We thus reject the suggestion that the Social Contract contain a date" G M0*((" for completion of the restructuring of the BST. We also note that while the restructuring will require Time Warner to shift programming between the BST and the CPST, Time Warner  X-already has that right and can exercise it independent of the Social Contract.N XK<ԍ #Xj\  P6G;yoXP#Time Warner Entertainment Company v. FCC, 56 F.3d 151, 162 (1995). Likewise, Time Warner has the discretion, independent of the Social Contract, not to increase the number of BST channels. We believe that allowing Time Warner to add more channels to the BST, and subsequently increase rates, is contrary to the purpose of creating a lifeline service. Thus, we reject the suggestion by some commenters that these provisions in the Social Contract require modification. However, in order to alleviate some of the concerns raised by the commenters, Time Warner has agreed to modify the Social Contract to ensure that any restructuring (other than for the creation of MPTs) will not result in the shifting of channels from the BST to unregulated tiers. Further, while we note the argument of the New Jersey Board of Public Utilities that a reduction in the BST will reduce franchise fees under New Jersey law, we point out that Time Warner has agreed to waive its right to a credit for the franchise fee paid to a local franchising authority on CPST refund amounts. If a local franchising authority wishes to preserve its rights under New Jersey law to a franchise fee for a more expensive BST, it has the right to opt out of the lifeline BST provision. 958. Finally, we address the effect on the Social Contract of an local franchising authority's decision not to elect the lifeline BST provision. The only effect a local franchising authority's decision to opt out of the lifeline provision is that there will be no reduction in the BST and no offsetting CPST rate increase. For purposes of clarification, Time Warner has agreed to modify the Social Contract to specifically state that the optout provision contained in the Social Contract is limited to local franchising authorities opting out of the creation of a BST lifeline tier.  X- #Xn4  pG;63. In the Continental Contract Order, which contained provisions similar to those  X -in the Social Contract, we waived the channel migration provisions of the Cost Order and the  X -Going Forward Order to the extent that they prohibited the migration of up to four existing  X -services from its cable programming services to an MPT.R  F X<ԍ #Xj\  P6G;yoXP#Continental Contract Order at  65. We found that a waiver was in the public interest in the context of the Continental Contract because the creation of MPTs  X -and NPTs expands the programming choices for subscribers.ZS  F V<ԍ #Xj\  P6G;yoXP#Id.Z We believe that the public interest also will be served and that a similar waiver of the channel migration provisions of these orders is appropriate in the context of the Social Contract. Except in the case of the Newhouse Systems, only four channels can be migrated to a MPT, whether the channels are migrated from the BST, the CPST, or a combination of both. Further, the Social Contract provides that only one MPT per franchise area can be created, except in a limited number of  X'-Newhouse Systems where there will be superstation tiersT'b F X:<ԍ#Xj\  P6G;yoXP# A superstation tier is a tier consisting of lowpriced offerings, containing primarily superstations, at an average price of less than $0.29 per channel, excluding copyright fees. and a second package containing such number of channels as brings the total number of channels on MPTs in the franchise  X-area to six, offered as separate MPTs.U F X"<ԍ #Xj\  P6G;yoXP#See Social Contract, Section III.D13, 5. Similar to the Continental Contract, pricing for the MPT may be increased only if Time Warner adds additional channels to the tier. Like the Continental Contract, the Social Contract also provides that if Time Warner elects to convert the MPT to an NPT, the elimination of all buythrough requirements will ensure that the product offerings and rates on the NPT are competitive with the regulated BSTs and CPSTs. Thus, the MPT option will increase customer choice while maintaining reasonable rates, and warrants our authorization. We do not believe that we should prescribe what channels should"o U\+))1" be in the MPTs, since this might require Time Warner to engage in services that are not economically feasible. In response to the New York State Commission on Cable Television, we clarify that any a la carte packages created on Newhouse Systems between April 1, 1993 and September 30, 1994, from which no channels are required to be returned to a CPST, are MPTs for the purpose of the antibuythrough and price constraining provisions. Finally, under the Social Contract, any adjustments between contiguous Time Warner systems and Newhouse Systems must be accomplished on a revenue neutral basis. ?64. We conclude that the provisions in the Social Contract that allow for the creation of MPTs will bring benefits to subscribers. However, for purposes of clarification, and to alleviate the concern raised that the creation of MPTs will increase the prices of the regulated tiers, Time Warner has agreed to a provision in the Social Contract that states that the rates for any BST or CPST from which channels are moved to create MPTs shall be reduced so that the creation of any such MPT will be revenue neutral to Time Warner.  X - f. Service To Schools  Xy-` `  hh,V (i) Terms of the Social Contract @65. Under the Social Contract, Time Warner has agreed to provide a cable connection free of charge to all public schools in its franchise areas that are passed by Time Warner systems. Time Warner also will provide a cable connection at cost to all secondary private schools having students that receive funding under Title I of the Education and Secondary School Act of 1965 and that are passed by Time Warner systems. BST and CPST cable service will be provided to all connected public and private schools without cost. Time Warner will wire additional classrooms in existing schools at cost, and provide BST and CPST service to each such outlet free of charge. With respect to new public schools and existing public schools undergoing rehabilitation, if Time Warner is notified of new construction or rehabilitation, Time Warner will coordinate with local officials and contractors to wire each of the classrooms in the new or rehabilitated public schools free of charge. A66. Time Warner also will provide a free monthly educational program listing to each connected school and will provide materials explaining the educational applications of Time Warner's broadband cable systems. Each school district will receive one copy of the materials free of charge with the opportunity to purchase additional copies at cost. B67. Time Warner will provide each connected school with a free connection to the Time Warner/Time Inc. online service for personal computers, assuming this service is successfully developed. If requested, each school will receive one free modem to use this service with additional modems provided at cost. Time Warner also will sponsor a workshop in each franchise area to demonstrate the service and its educational uses to teachers. ` `  hh,V(ii) Comments "#'U\+))%"ԌC68. The majority of comments support this provision of the Social Contract because the schools need advanced tools to enable their students to compete in a technological world, and these technological tools can help equalize the gap between affluent and less affluent  X-schools.V F X4<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Palm Bay, Florida at 1; Comments of New Ulm, Minnesota at 1; Comments of Greater Johnstown School District at 1. The Orange County Public Schools state that they would greatly benefit from the Social Contract, commenting that of "special interest to our educators are the educational materials, educational programs and the future online computer service, all of which will  Xv-enable our teachers and students to keep current with the latest information and technology."Wvd F X <ԍ #Xj\  P6G;yoXP#Comments of Orange County Public Schools at 1. The Spring Independent School District, Houston, Texas, praises Time Warner's commitment to supporting the educational process as shown by its "efforts in providing free installation and cable services for educational use in their 'Cable for the Classroom' project'" and further comments that the additional services such as online computer services and technical training  X -are "of tremendous value to our District considering our limited funds."X  F X<ԍ #Xj\  P6G;yoXP#Comments of Spring Independent School District at 1. D69. A number of commenters requested that the proposed services be expanded to colleges and universities, private schools, local governments, and schools which are not passed  X -by Time Warner, but are close to Time Warner facilities. Y  F X<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Cable Television Review Commission of the County of San Diego, California at 45; Comments of Wadsworth, Ohio at 34; Comments of Brookville, Florida at 1.  Some commenters contend that the benefits in the Social Contract are already provided under Time Warner's franchise obligations, and that the Social Contract fails to require equipment in schools which has been  Xb-required by the local franchising authority, such as video distribution amplifiers.+ZbK F X^<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Monroe, North Carolina at 5; Comments of Tompkins County Intermunicipal Cable Commission at 1; Comments of Cable Television Review Commission of the County of San Diego, California at 56.+ Some commenters claim that Time Warner will only incur minimal costs in providing the school  X4-benefits, but will gain through the advertising it will provide.[4 F X!<ԍ#Xj\  P6G;yoXP# See, e.g., Comments of Donald R. LeBlanc at 1. Others comment that these  X-benefits will force schools to spend money on such things as VCRs and maintenance.\ F XQ$<ԍ#Xj\  P6G;yoXP# See, e.g., Comments of Maureen R. Cregg at 1.  X-Finally, some commenters asked that the schools be permitted to do their own wiring.]6 F X&<ԍ#Xj\  P6G;yoXP# See, e.g., Comments of Greenfield, Wisconsin. " ]\+))'"ԌE70. In its reply comments, Time Warner acknowledges that many schools already are connected or are planning to be connected pursuant to franchise agreements, but that in many cases these connections are a new benefit to the schools. Time Warner further states that the Social Contract provides additional benefits not typically contained in the school service clauses of franchising agreements, such as internal wiring at cost, connections to certain private schools, educational training for teachers, program guides, online service, and  Xv-modems.q^v F X<ԍ #Xj\  P6G;yoXP#Time Warner Reply Comments at 18.q ` `  hh,V(iii) Discussion  F71. We believe that the school services to be provided by Time Warner are a  X -significant provision of the Social Contract. While the Social Contract cannot, and is not intended to, provide benefits to every institution that desires them (e.g., universities and hospitals) we note that it does bring new and improved educational opportunities to public and  X -private schools. We note that the cost to Time Warner of these services will be borne by Time Warner, and is not included within the $4 billion upgrade cost that forms the basis for the rate increases authorized under this Social Contract. These benefits will be provided across the economic spectrum, helping many schools that otherwise could not access the  XK-"information superhighway." We believe that the benefits to the schools are significant even  X4-if the schools incur certain secondary costs, such as televisions, VCRs, or maintenance. While  X-we cannot be certain what these costs would be, we note that the schools have the option to  X-accept or reject the benefits being offered by Time Warner and can decide whether or not they should expend any necessary funds. G72. Despite the significant benefits these provisions will provide to students, we are mindful of some of the concerns expressed by some commenters and, as a result, have  X-negotiated some modifications to the Social Contract. In particular, as originally drafted, the Social Contract provided that Time Warner would offer service connections free of charge at one outlet in 100% of the public schools passed by its cable systems and at cost to any private secondary school which receives funding pursuant to Title I of the Elementary and Secondary Education Act and which are passed by its cable systems. In response to requests by commenters that connections be provided to schools which are close to Time Warner facilities, Time Warner agreed to offer free of charge service connections in 100% of public schools and at cost connections to any private 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 within its service area.. In making this modification, Time Warner relied upon the definition of "Standard" installation provided under Section 76.309(c)(2)(i) of the Commission's regulations which defines a "Standard" installation as "those that are located up to 125 feet from the existing distribution system." Time Warner extended the range to 200 feet of its activated plant. Time Warner further agreed to provide such connections at cost to any other public or private schools located beyond 200 feet from its activated plant and within its franchised service areas. In addition,":&!y^\+))%" we agree that schools, like the subscribers themselves, should have the option to do their own wiring. Time Warner has agreed to this request and has modified the Social Contract to state that any such public or private school may elect to install its own internal wiring at its own cost. H73. Some commenters raised concerns that the Social Contract fails to provide some of the benefits already provided under certain Time Warner franchise obligations. We wish to clarify that the Social Contract is not intended to affect any agreements that a franchising authority has otherwise obtained from Time Warner. To make this clear, Time Warner has agreed to modify the Social Contract to state that "[n]othing herein shall affect the enforceability of any otherwise valid preexisting local franchise agreement, ordinance, local law or regulation which provides benefits which exceed those provided in this Contract relating to system upgrades or the wiring of schools, nor shall local franchising authorities be restricted in their authority to negotiate for such additional benefits after the Effective Date of  X -this Contract." Further, the Social Contract provides that to the extent a local franchise agreement contains an obligation to provide connections to schools as agreed to in the Social Contract, Time Warner cannot seek to recover any such costs for these connections as external or other costs. Accordingly, any school benefits obtained outside of this Social Contract will not be affected.  X- g. Home Wiring  X-` `  hh,V (i) Terms of the Social Contract I74. Under the Social Contract, Time Warner will not restrict the ability of a subscriber to remove, to replace, to rearrange, or to maintain any cable wiring located within the interior of a his or her dwelling as long as these actions do not interfere with the ability of Time Warner to collect revenues from that subscriber or any other adjacent subscribers. Subscribers will be responsible for the cost of remedying any improper installation resulting in a violation of the Commission rules. Time Warner will provide high quality home wiring and materials at cost to its subscribers. ` `  hh,V(ii) Comments J75. Some commenters claim that the home wiring provision in the Social Contract  X -merely restates the Commission's preexisting rules._ F X=#<ԍ#Xj\  P6G;yoXP#  See, e.g., Comments of Greenfield, Wisconsin at 1. Other comments relate to the fact that the Social Contract does not specifically extend the subscriber's rights to cable located at least twelve inches outside the subscriber's dwelling; a misconception that there has been a total deregulation of inside wiring and thus no need for the Social Contract provision; a question as to the ownership of the wiring and whether Time Warner has maintenance obligations if the"h$"{_\+))F#"  X-subscriber does not maintain the home wiring. ` F Xy<ԍ#Xj\  P6G;yoXP# See, e.g., Comments of Liberty Cable Company, Inc. at 4; Comments of New  Xd-Jersey State Board of Public Utilities at 9; Comments of Jim and Maureen Watson at 3.  In its reply comments, Time Warner claims that the Social Contract goes further than the Commission's rules because, unlike the Commission's rules, the contractual provisions here apply before a customer terminates cable  X-service.pad F X<ԍ #Xj\  P6G;yoXP#Time Warner Reply Comments at 8.p ` `  hh,V(iii) Discussion  X_-K76. Contrary to the claims of some commenters, the home wiring provision of the Social Contract does not merely restate our existing rules, but rather goes beyond those rules to cover situations prior to the time a customer terminates its cable service. However, the provision does not exempt Time Warner from these rules; therefore, those rules continue to be applicable to cable wiring located at least twelve inches outside the subscriber's dwelling. While telephone rate regulation of inside wiring has been terminated, our cable home wiring  X -rules have not been eliminated.gb  F X<ԍ#Xj\  P6G;yoXP# 47 C.F.R.  76.802.g We find that the home wiring provisions of the Social Contract provide a benefit to subscribers as the provisions enable subscribers to change the location of their cable without incurring additional costs. Further, the provisions provide that Time Warner will inform the customers of their rights to remove, to replace, to rearrange, or to maintain home wiring, as well as their obligations if signal leakage occurs as a result of their installation or rearrangement. This education process will be a public benefit since it will enable customers to make rational choices whether to install or to rearrange home wiring.  X- h . System Acquisitions and Divestitures  ` `  hh,V(i) Terms of the Social Contract  X-L77. Time Warner has a pending contract to acquire cable systems from Cablevision  X-Industries Corporation (CVI).cx F Y !<ԍ #Xw PE37}XP#CVI has forwarded to the Commission a separate Proposed Resolution to settle complaints relating to rates charged by CVI for the period from September 30,1993 through July 14, 1994. This Proposed Resolution is independent of the Social Contract. On October 30, 1995, the Commission approved the release of the draft Proposed Resolution for public  Y$<comment. The comment period ends on December 4, 1995.#x6X@`7X@# #Xw PE37}XP#Cablevision Industries, Inc.,  Y%<FCC 95444 (Cab. Serv. Bur., released October 30,1995)#x6X@`7X@#. The Social Contract provides that at its option, Time Warner may include any cable systems acquired from CVI, provided that the CPST settlement provisions of the Contract will not apply until any applicable settlements are mutually agreed upon between Time Warner and the Commission. The Social Contract further provides that"N# c\+))" the addition of any other newly acquired systems by Time Warner to the provisions of the Social Contract will be subject to Commission approval, which will be expeditiously decided and not unreasonably withheld. Finally, in the event of a sale of any system during the period of the Social Contract, the purchaser may elect, with the concurrence of the Commission, for the provisions of the Social Contract to continue to apply to such systems and the Commission's concurrence shall be expeditiously decided and not unreasonably withheld. In the event the purchaser elects not to have the provisions of the Social Contract apply to any such system, the CPST subscribers to such system shall be eligible for the refunds calculated under the Social Contract in the event the upgrade commitment has not been completed prior to the consummation of such sale.  ` `  hh,V(ii) Comments M78. The comments regarding this provision were from communities served by CVI,  X -contending that they should be part of the Social Contract.3d F X7<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Portland, Maine at 2; Comments of St. Petersburg, Florida; Comments of Oxford, Ohio at 1; Comments of Tompkins County Intermunicipal Cable Commission at 2; Sharon Cable TV Oversight Committee at 1.3 In addition, the City of Los Angeles contends that it should not have to comment on this issue until the acquisition of CVI is finalized, but that CVI systems should not be added to the Social Contract without the  Xy-consent of the local franchising authority.eyM F Xw<ԍ#Xj\  P6G;yoXP# Comments of Los Angeles, California at 2, 89. In its reply comments, Time Warner stated that  Xb-it has no objection to including CVI communities as part of the Social Contract.cfb F X<ԍ#Xj\  P6G;yoXP#  Id. at 53.c ` `  hh,V ` `  hh,V(iii) Discussion  X-N79. In view of the desire of franchising authorities (with the exception of Los Angeles) of CVI systems to be included in the Social Contract and Time Warner's agreement to include all CVI systems in the Social Contract, we find that the inclusion of such systems is in the public interest. The Social Contract is thus modified to state that Time Warner shall include any cable systems acquired from CVI within the provisions of the Social Contract. In addition a provision in the Social Contract has been added providing for 45 days' notice of the Social Contract to the affected local franchising authorities in order to provide them with an opportunity to opt out of the lifeline BST provision of the Social Contract.  X7-O80. Because the upgrade capital costs committed by Time Warner in the Social Contract are tied to the systems it currently owns, any such acquisition or divestiture of systems by Time Warner, as provided for under this section, could change the amount of capital costs expended for the upgrade. As part of our oversight responsibilities with respect to the Social Contract, a provision in the Social Contract has been added that states that the upgrade capital costs set forth in the Social Contract will be adjusted, as mutually agreed to" $f\+))" by Time Warner and the Commission, to reflect any additions or deletion of systems subject to the Social Contract. To address the parties' desire to have the required review and approval of additions and deletions of smaller systems accomplished expeditiously, the Social Contract further provides that the approval from the Commission of such adjustments shall be expeditiously decided and not be unreasonably withheld. In view of the fact that these capital commitment decisions must be made expeditiously and involve a thorough examination of the upgrade plan, we believe that, with respect to acquisitions or dispositions of cable assets involving 400,000 or fewer subscribers, the Cable Services Bureau is in the best position to take any actions contemplated under section III F. 6 of the Social Contract, including approval or disapproval of additions or deletions from the provisions of the Social Contract and the adjustments in the monetary amount of the upgrade which results from such additions or deletions as well as any other actions contemplated under this section. Therefore, on our own motion, we order that the Cable Services Bureau be given delegated authority to take any actions contemplated under section III F. 6 of the Social Contract.  X - i. Modification and Termination  Xy- ` `  hh,V(i) Terms of the Social Contract P81. The Social Contract provides that it may not be modified or terminated without the mutual agreement of both parties. Time Warner may petition the Commission to modify or terminate the Social Contract based on any relevant change in applicable laws, regulations, or circumstances. Any petition to modify or terminate this contract will be served on the local franchising authorities for the affected systems. The Commission will allow 30 days after the release of the Public Notice for interested parties to comment and 15 days for reply comments before acting on any such petition. Q82. In the event of a material change in the 1992 Cable Act or the Commission rules that would favorably impact Time Warner, any Time Warner system may elect not to be bound by the relevant provisions of the contract addressing the BST price cap (III.A.2), additions to the BST (III.A.3), equipment rates (III.B.), MPTs (III.D.), and the CPST price cap (III.F.4). All other provisions of the Social Contract would remain valid and enforceable. ` `  hh,V(ii) Comments R83. Several commenters contend that the provision in the Social Contract permitting Time Warner systems to elect not to be bound by certain sections of the Social Contract is onesided because it allows Time Warner to terminate the Social Contract unilaterally if any  X"-applicable law or regulations change.g" F X%<ԍ#Xj\  P6G;yoXP# See, e.g., Comments of Lawndale, California at 5; Comments of Los Angeles, California at 10. Some commenters also contended that the local  X#-franchising authorities should have input on any modifications or terminations.h#d F X(<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of Los Angeles, California at 10. #Xj\  P6G;yoXP#ѻ In its reply"#%h\+))e"" comments, Time Warner contends that this provision relates only to certain rate provisions in the Social Contract, and that notwithstanding any such changes in the law or in regulations, Time Warner still is required to comply with other nonrate provisions and that Time Warner  X-will be subject to the rate regulation rules in effect at that time.ri F X4<ԍ #Xj\  P6G;yoXP#Time Warner Reply Comments at 48.r ` `  hh,V(iii) Discussion S84. We believe that the provision in the Social Contract allowing Time Warner to take advantage of any changes in the current rate regulations is both justified and necessary. We are mindful of the pending telecommunications legislation and the reality that we could not reasonably expect Time Warner to agree to comply with existing rate regulations in the event they are eliminated. Thus, under the Social Contract, Time Warner, similar to all other cable operators, will be able to take advantage of any changes in either the 1992 Cable Act or the Commission's regulations with respect to the rate provisions in the Social Contract, i.e. Time Warner will be subject to whatever rate regulation is in effect at that time. However, even if the statutory or regulatory provisions concerning rate regulation change, Time Warner is not relieved of any other provisions in the Social Contract. We retain our oversight authority with respect to these nonrate provisions and do not believe further review by local franchising authorities is necessary.   X4- j. Preemption  X-` `  hh,V (i) Terms of the Social Contract T85. The Social Contract provides that to the extent that any state or local law, regulation, ordinance, or franchise is inconsistent with the terms of the Social Contract, the Social Contract preempts those requirements. Additionally, the Social Contract provides that all waivers of the Commission's rules and modifications to the Commission forms necessary to effectuate the terms of the Social Contract are granted. The Social Contract does not preempt the right of local franchising authorities to negotiate upgrades which exceed the scope of the Social Contract. ` `  hh,V(ii) Comments U86. Many local franchising authorities argue that the Social Contract contains language which could be interpreted as precluding them from requiring that Time Warner adhere to the conditions imposed in franchising agreements or from imposing certain  X!-conditions in future franchising agreements.j!y F X%<ԍ #Xj\  P6G;yoXP#See, e.g., Comments of St. Petersburg, Florida; Comments of Hawaii at 2; Comments of Portland, Maine at 2. In its reply comments, Time Warner contends"!&j\+)) " that the language does not preclude any local franchising authority from negotiating with  X-Time Warner for a higher level of upgrades.rk F Xb<ԍ #Xj\  P6G;yoXP#Time Warner Reply Comments at 45.r ` `  hh,V(iii) Discussion V87. In view of the concerns raised by many local franchising authorities, Time Warner has agreed to a modification to the Social Contract that limits the scope of the preemption. In particular, the Social Contract only preempts the local franchising authority from regulating rates or ordering refunds in a manner inconsistent with its terms. As stated in Section III. I. 2. a. of the Social Contract, the provision added specifically affirms the enforceability of any "otherwise valid preexisting local franchise agreement, ordinance, local law or regulation which provides benefits which exceed those provided in this Contract relating to system upgrades or the wiring of schools, nor shall [local franchising authorities] be restricted in their authority to negotiate for such additional benefits after the Effective Date of this Contract." We believe this language sufficiently addresses the concerns raised by various local franchising authorities as it clarifies that the Social Contract is not intended to preempt any preexisting or future franchising agreement that provides for a different or higher level of upgrades or benefits.   X4- k. Other Issues  hh,V  X- ` `  hh,(i) Comments W88. A variety of other issues and questions were raised by commenters. Among the issues raised are that (1) the comment period was too short; (2) the Commission has abdicated its oversight responsibilities over the cable monopoly; (3) local franchising authorities should be permitted to deny franchise renewals for failure to comply with the Social Contract; and (4) the Commission should address the issue of scrambling. Further, a number of comments discuss matters related to Time Warner's behavior in particular communities including claims  Xe-of unfair competition and discrimination.ley F Y<ԍ #Xw PE37}XP#See. e.g., Comments of Elliott Becker, Comments of Liberty Cable  Yz-Company,Comments of Paul E. Champagne.#x6X@`7X@# In its reply comments, Time Warner did not respond to all of these issues, but did contend that it is subject to an increasing amount of competition and that the Commission has ample power to enforce the Social Contract without  X -further harsh penalties being added by local franchising authorities.wm  F X#<ԍ #Xj\  P6G;yoXP#Time Warner Reply Comments at 46.w ` `  hh,(ii) Discussion "'m\+))"ԌX89. We have allowed almost two months for comments and reply comments on the  X-Time Warner Social Contract.;n F Xb<ԍ #Xj\  P6G;yoXP#We have considered reply comments, such as those filed by the New York City Department off Information and Technology and Telecommunications, which essentially oppose the Social Contract and could have been filed as initial comments. ; It is our view that this period of time correctly balances the need for public comment with the need to make the public benefits of the Social Contract available as soon as possible. One of the main goals of the 1992 Cable Act is to protect the  X-interests of subscribers.uoK F X <ԍ #Xj\  P6G;yoXP#Rate Order, 8 FCC Rcd at 5639.u Comments that we have abdicated our oversight responsibilities over Time Warner are without support. To the contrary, the Social Contract is a regulatory mechanism expressly provided for in our rules for cable systems not subject to effective competition. Moreover, under the Social Contract, we have retained oversight responsibilities for Time Warner's compliance with the Social Contract. We believe that the goals of the 1992 Cable Act are being met in this Social Contract. The Social Contract provides reasonable, stable rates to subscribers, as well as various social benefits.  Y90. We find that the Social Contract provides remedies for violations, and, thus, further enforcement procedures by local franchising authorities are not necessary. We note that the Social Contract provides that each local franchising authority will be served with progress reports no later than 90 days following the end of each calendar year that the Social Contract is in effect. The Social Contract provides that any violation of its terms shall be treated as a violation of a Commission order with the corresponding rights and remedies associated with the enforcement of an order. Time Warner will report to the Commission on an annual basis within 90 days following the end of each calendar year of the Social Contract. This report will detail the number of BST and CPST subscribers benefitting from upgraded service, the system reliability and service improvements resulting from the upgrade, and the projected upgrade activities for the following year. This report will be served on each local franchising authority. To verify the accuracy of these reports and ensure compliance, the Commission reserves the right to inspect the books and records of Time Warner and to interview corporate employees. Z91. To the extent that local franchising authorities or other interested parties disagree with Time Warner's interpretation of any provision of the Social Contract, perceive a lack of enforcement of its terms and conditions, or disagree with the remedies we may prescribe, they may seek redress at the Commission. Further, the Social Contract is not intended to resolve every conceivable issue raised with respect to Time Warner's service and operations. There are other avenues available to address concerns regarding such matters as scrambling, alleged discriminatory treatment by Time Warner of its competitors, poor service, billing problems and other disputes with complainants.  X"- IV. CONCLUSION ""(o\+))!"Ԍ [92. The Social Contract negotiated with Time Warner fulfills the objectives of the  X-Incentive Upgrade Plans which were established in the Cost Order. The Social Contract ensures that customers will have reasonable, stable rates for existing services. Additionally, Time Warner will obtain pricing flexibility to upgrade its system in cost effective ways in order to provide customers with increased programming choices and improved quality of service. Furthermore, the Social Contract will reduce the regulatory burdens associated with rate regulation on local franchising authorities, Time Warner, and the Commission. \93. It is our belief that by approving the Upgrade Incentive Plan we encourage upgrades that provide services that are economically justified and that best meet customers' needs. Therefore, we find this plan, to the extend modified above, to be in the public interest and approve the agreement.  ]94. Accordingly, IT IS ORDERED that the Social Contract between Time Warner and the Commission as modified above IS APPROVED. ^95. IT IS FURTHER ORDERED that there is a general waiver of any Commission rule that is necessary to effectuate the terms of this Social Contract including, but are not limited, to the following rules: 47 C.F.R.  76.923; 47 C.F.R.  76.987; 47 C.F.R.  76.961(e); 47 C.F.R.  76.309(c)(i)(B),76.964; 47 C.F.R.  76.960; 47 C.F.R.  76.933; 47 C.F.R.  76.922; 47 C.F.R.  76.956. _96. IT IS FURTHER ORDERED that waiver of any Commission rule or modifications to the Commission's forms necessary to effectuate the terms of the Social Contract IS GRANTED. `97. IT IS FURTHER ORDERED that the Cable Services Bureau is given delegated authority to oversee implementation of the Social Contract, including authority to resolve all pending complaints covered by the Social Contract and to make adjustments in the amount of Time Warner's upgrade commitment on additions or deletions of systems subject to the Social Contract. a98. IT IS FURTHER ORDERED that preemption of any local franchise agreement or any state or local rule or regulation that requires Time Warner to give more than 30 days' notice of rate and service changes to subscribers for the period prior to January 1, 1996, IS GRANTED. b99. IT IS FURTHER ORDERED that the Secretary is instructed to sign the Social Contract, attached as Appendix B, on behalf of the Commission. c100. IT IS FURTHER ORDERED that this Order is effective upon adoption. ` `  hh,FEDERAL COMMUNICATIONS COMMISSION "()o\+))&"Ԍ ` `  hh,William F. Caton ` `  hh,Acting Secretary "*o\+))"  X-APPENDIX A: Comments Expressing Unqualified Support of Time Warner Social Contract  X-#Xj\  P6G;yoXP#  X-Alabama City of Irondale Birmingham Public Schools City of Brighton City of Bessemer Alabama Public Service Commission City of Birmingham  X -California  X- Cathedral City Coronado High School San Bernardino Councilmember Barbara Warden, San Diego Assemblywoman Dede Alpert San Diego County Office of Education International Center for Communications, San Diego San Diego Business Roundtable for Education City of Barstow Congressman Brian R. Bilbray Poway Unified School District San Diego City Schools City of Palm Springs Assemblywoman Susan A. Davis " (+o\+))&"ԌCity of Coronado Coronado Unified School District Jean Farb Middle School, San Diego Kern County San Diego State University Councilmember Randy Rowles, Bakersfield Steve A. Perez, Bakersfield Dianne Jacob, Chairwoman, San Diego County Board of Supervisors San Diego Councilmember Harry Mathis James W. Silva, Supervisor, Second District, Orange County  X4-Connecticut  X-Cable Television Advisory Council  X-Florida  X-National Development Properties of FloridaBay, Inc. Representative John Morroni Town of Melbourne Beach Representative R.Z. Safley School Board of Polk County Manatee County Jaymie G. Carter City of Belleair Bluffs City of Temple Terrace Polk Education Foundation & Business Partnership, Inc. Brevard County" (,o\+))&"ԌTown of Indian Shores Town of Lake Hamilton School District of Hillsborough County City of Auburndale School Board of Manatee County Representative Dennis L. Jones City of Treasure Island City of Palm 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 Town of Malabar School Board of Manatee County City of Bradenton Beach Lake County Information Services City of Cocoa Beach County Commissioner Joe McClash City of Melbourne City of Maitland" (-o\+))&"ԌState Senator David G. Kelley City of Rockledge City of Edgewood State Senator Donald C. Sullivan Dave & Lynn McDaniel Eastside Elementary School, Haines City Osceola High School, Seminole Tamara L. Hager Oak Grove Middle School City of Lakeland School Board of Brevard County Hillsboro Public Schools City of Winter Park Orange County Public Schools Faye C. Roberts, Columbia County Public Library Polk County Richard Fawley  X -Georgia  X!-The Travel Channel  X#-  Xh$-Illinois  XQ%-City of Berwyn Ronald F. Crick " (.o\+))&"ԌVillage of Tinley Park Village of Stickney  X-Indiana  Xv-HOLA, Indianapolis Indianapolis Chamber of Commerce Indianapolis Urban League William G. Mays, Mays Chemical Company Kinder Vision, Peru Congressman Dan Burton Indianapolis Public Schools  X4-Kentucky  X-Tommy Sanders Dr. Robert H. McGaughey, Murray State University  X-Louisiana  X-Caddo Parish School Board Caddo Parish Commission St. John the Baptist Parish Ouachita Parish School System Monroe City Schools  X -Maine  X!-Congressman John E. Baldacci Suzan Nelson, Librarian, Portland High School Donna Crook, Computer Technology Steering Committee, Portland High School  X (-Maryland" (/o\+))&"Ԍ X-Discovery Communications, Inc.  X-Massachusetts  X-City of Melrose City of Medford Lynn Business/Education Foundation Swampscott Public Schools Lynn Business Partnership Salem Public Schools Lynn Public Schools Melrose Chamber of Commerce Central Berkshire Regional School District Patrick J. Markham, Pittsfield Public Schools City of Pittsfield  X-Minnesota  X-City of Shakopee City of Chaska City of New Ulm Bloomington Chamber of Commerce Richfield Chamber of Commerce Edina Public Schools Eden Prairie Chamber of Commerce Eden Prairie Schools Minneapolis Public Schools " (0o\+))&"ԌMinnesota Public Utilities Commission Jackie Cherryhomes, President, City Council, Minneapolis Richfield Public Schools Edina Chamber of Commerce Greater Minneapolis Chamber of Commerce State Senator Steve Novak Susan Ray Euler, Fire Department Hot Spots City of Ranlo State Senator Carl W. Kroening  Xb-Mississippi  XK-Mississippi Economic Council Jackson Public School District Town of Coldwater Supports Contract, especially rate stability, reduced basic rates, and upgrades. City of Ridgeland City of Raymond Hinds County City of Senatobia Madison County Town of Edwards  X"-Missouri  X#-FergusonBerkeley Chamber of Commerce City of Belton City of Parkville " (1o\+))&"ԌVillage of Calverton Park City of Lee's Summit  X-Nebraska  X-City of Auburn City of Lincoln City of York City of Nebraska City City of Superior Lancaster County City of Fairbury  XK-New Jersey  X4-Assemblyman Patrick J. Roma  X-New York  X-East SyracuseMinoa Schools Village of Malone Village of North Syracuse Village of Painted Post FayettevilleManlius Schools Town of Catlin Town of Camillus John P. Almonte and Edgar F. Ames, East SyracuseMinoa Central Schools A & E Television Networks Peyton C. Watkins, Penfield Town of Chili " (2o\+))&"ԌTown of East Rochester Town of Ogden Town of Gates Village of Endicott Town of Perinton Town of Marcellus Rome City School District Town of Newark Valley Town of Kirkwood ESPN, Inc. Town of Richmond Town of Clarendon City of Corning City of Port Dickinson Village of Johnson City Joni Lincoln, Port Byron Central School District Town of Parma Town of Pittsford JamesvilleDeWitt Central School District Town of Kirkwood Town of Conklin Town of Clifton Park "#'3o\+))%"ԌBoard of Cooperative Educational Services of Cattaraugus, Alleghany, Erie and Wyoming Counties City of Rochester Town of Stillwater Town of Fenton City of Elmira Village of Horseheads Town of Webster  X - North Carolina City of Lexington Town of Weddington FTCC Foundation, Inc., Fayetteville University of North Carolina at Wilmington Pembroke State University Cumberland County Schools Town of Emerald Isle Moore County Schools City of Hamlet. Guilford County City of High Point Instructional Technology, CharlotteMecklenburg Schools Centralina Council of Governments County of Moore, Department of Social Services Town of Haw River" (4o\+))&"ԌTown of Landis Cleveland County Carteret County Board of Education Lumberton Area Chamber of Commerce and Visitors Bureau Town of Southern Pines Southeastern University Town of Rockwell Public Schools of Robeson County State Senator Luther H. Jordan, Jr. Town of Chapel Hill Shelby City Schools Asheboro/Randolph Chamber of Commerce & Tourism Bureau Guilford County Schools City of Thomasville City of WinstonSalem Cleveland County Schools Town of Cramerton City of Kings Mountain City of Burlington City of Albemarle Gaston County Schools Town of Matthews County of Jones" (5o\+))&"ԌCabarrus County City of Asheboro Charles F. McCraw, Guilford County Schools Charles M. Lineberry, Jr. Town of Ramseur City of Randleman John G. Redmond, North Carolina Council on Economic Education ArchdaleTrinity Chamber of Commerce City of Shelby J. Parks Todd, Jr., North Carolina State Board of Community Colleges Fayetteville Chamber of Commerce City of Bessemer City Grennsboro Chamber of Commerce  X-Ohio  X-Village of Marble Cliff Norwood City Schools WCET, Cincinnati Museum Center, Cincinnati Marguerite Shurte City of Piqua Municipality of West Milton Immaculate Heart of Mary School, Cincinnati GahannaJefferson Public Schools " (6o\+))&"ԌRudy Forsberg Marian A. Spencer Staff of Canton City School District Elida Local Schools Thomas Worthington High School, Worthington Dick Lehmann, Westerville South High School, Westerville Learning Materials Center, Rutherford B. Hayes High School, Delaware Lara Gianessi, Fort Hayes Metropolitan Education Center, Columbus Village of Obetz S. Julia Deiters City of Grandview Heights Elida Senior High School City of Akron City of Columbus Brenda Jackson, William Henry Harrison Junior School, Harrison Terrace Guild, Cincinnati Literacy Network of Greater Cincinnati Wellness Community, Cincinnati East End Adult Education Center, Cincinnati Camilla S. Huff, St. Veronica School, Cincinnati Green Township Ansonia Local School District Newton Local School District" (7o\+))&"ԌJohn E. Miller, The Troy Schools MiltonUnion Exempted Village Schools Covington Exempted Village Schools City of Bexley Lima/Allen County Chamber of Commerce Wendy E. Webb, Youngstown City School District Eldonna H. Ashley, North Union School District Miami East Junior High School City of Akron West LibertySalem Schools John G. Olds, Northwestern College Carrie Clark, Playhouse in the Park, Cincinnati Kids Voting, Cincinnati All About Kids, Cincinnati Arts Consortium of Cincinnati  XN-Oregon  X7-Kathy AllenKirsch, Gregory Heights Middle School, Portland Karen GaddisPhilips, Sam Barlow High School, Gresham Portland Public Schools  X!-Pennsylvania  X"-City of Reading Tim Smith, Reading Reading Area Community College Alvernia College, Reading" (8o\+))&"ԌReading School District Pottsville Area School District Blue Mountain School District Berks County Intermediate Unit BellwoodAntis School Board Moon Community Access Television Greater Johnstown Committee BT Financial Corporation Moon Area School District Representative Jim Lynch Representative Richard A. Geist Richland Senior High School, Johnstown David Popp, Westmont Hilltop School District, Johnstown Altoona Area School District Bradford Cable Commission United Way of Berks County Representative Sheila Miller Pennsylvania State University Greater Johnstown/Cambria County Chamber of Commerce, Inc. City of Altoona Greater Johnstown School District Franklin Area Chamber of Commerce Franklin Area School District" (9o\+))&"ԌDattey Grove School District Richland School District Representative Samuel E. Rohrer Sugarcreek Borough Valley Grove School District Berks Community Television West Lebanon Township  X -South Carolina  X -Town of Pinewood Sumter School District No. 17 City of Darlington Town of Clover Sumter County Administrator City of Florence  X-Tennessee  X|-Memphis City Schools Germantown Area Chamber of Commerce Collierville Area Chamber of Commerce Randy Houston, First Tennessee Bank, Collierville Beverly A. Holmgren, First Tennessee Bank, Bartlett City of Bartlett City of Lakeland Bartlett Kiwanis Club  X (-Texas" (:o\+))&"Ԍ X-City of Hunters Creek Village City of San Antonio Fort Bend Independent School District T.H. Rogers School, Houston Luling Independent School District City of Elgin Robinson Independent School District Houston Councilman John W. Peavy, Jr. City of Piney Point Village Missouri City City of McGregor City of Round Rock CypressFairbanks Independent School District City of Luling Round Rock Chamber of Commerce El Paso Independent School District Greater Austin Chamber of Commerce City of Meadows FOX 18, Wichita Falls   Ysleta Independent School District, El Paso City of Bastrop Hill Country Village Town of Hollywood Park" (;o\+))&"ԌCity of Castle Hills Greater Houston Partnership Congressman Bill Archer City of Selma City of Helotes City of Bellmead St. Paul's Episcopal Day School, Waco Eanes Independent School District City of Balcones Heights City of Kirby City of Olmos Park Greater Irving Chamber of Commerce Councilwoman Cynthia White, Lewisville City of Cibolo City of Shavano Park Spring Independent School District City of West University Place Helen S. Handler, Paul Revere Middle School Elgin Independent School District City of Converse Late Filing Lewisville Chamber of Commerce Representative Peggy Hamric City of Waco" (<o\+))&"Ԍ X-ԙVirginia  X-Greater Irving Chamber of Commerce Poquoson City Public Schools. Smithville Independent School District  X_-West Virginia  XH-West Virginia Cable Advisory Board  X -Wisconsin  X -Green Bay Area Chamber of Commerce Action, Menasha Joseph A. Rice, Milwaukee Newtec Studio, Green Bay Whitnall Middle School, Hales Corners Oshkosh Area School District Greater Milwaukee Education Trust School District of Beloit Marquette University High School Kaukana, Wisconsin "N=o\+))^"  X-A APPENDIX B ă  Y-#Xw P7}XP# U 1  UU 1 !(x ddUU*> 0* ;Zh` h #3_ p^73#SOCIAL CONTRACT FOR a  ksTIME WARNER CABLEX>o\+))m)3'#C/!>x Document StyleX  Y-   ? &  5\  & TABLE OF CONTENTS ă  Y-`!(#c Page   ׃  Yt-XUI.BACKGROUND AND SUMMARY p>"(#s 1  Y.-XUII.DEFINITIONS p>"(#s 2  Y-XUIII.TERMS AND CONDITIONS OF THE SOCIAL CONTRACT p>"(#s 4  Y-XX` ` A.` ` Basic Service Tier Rate Relief ` p>"(#s 4  Y\ -XX` ` X ` ` 1. Creation of a LowCost, Lifeline Basic Service Tier p>"(#s 4  Y -XX` ` X ` ` 2. BST Price Cap p>"(#s 5  Y -XX` ` X ` ` 3. Additions To Basic Service Tier p>"(#s 6  Y-XX` ` B.` ` Equipment Rates ` p>"(#s 7  YD-XX` ` C.` ` Resolution Of Existing CPST Rate Cases ` p>"(#s 8  Y-XX` ` D.` ` Migrated Product Tiers ` p>"(#s 9  Y-XX` ` E.` ` Customer Refunds and CPST Rate Reductions ` p"(#p 11  Yr-XX` ` F.` ` Infrastructure Upgrade Requirement ` p"(#p 12  Y,-XX` ` X ` ` 1. Upgrade Requirement p"(#p 12  Y-XX` ` X ` ` 2. No Impairment Of Local Authority p"(#p 13  Y-XX` ` X ` ` 3. Reporting Requirements p"(#p 13  YZ-XX` ` X ` ` 4. CPST Rates Subject To Price Cap p"(#p 14  Y-XX` ` X ` ` 5. Failure To Meet Target p"(#p 15  Y -XX` ` X ` ` 6. Adjustments To Systems Subject To Contract p"(#p 15  Y"-XX` ` G.` ` BST And CPST Rate Stability(#` p"(#p 16  YB$-XX` ` H.` ` Additional Consumer Benefits ` p"(#p 17  Y%-XX` ` X ` ` 1. Service To Public Schools p"(#p 17  Y'-XX` ` X ` ` 2. Home Wiring p"(#p 19  Yp)-XX` ` I.` ` Miscellaneous Provisions ` p"(#p 20 "M*?o\+\+\+-"Ԍ Y-XX` ` X ` ` 1. Modification And Termination p"(#p 20  Y-XX` ` X ` ` 2. Authority To Enforce Contract p"(#p 21  Yt-XX` ` X ` ` 3. All Necessary Waivers And Preemptions Deemed Granted p"(#p 23  Y.-XX` ` X ` ` 4. Effect On Other Proceedings p"(#p 24  Y-XX` ` X ` ` 5. No Admission Of Wrongdoing p"(#p 25  Y-XX` ` X ` ` 6. Contract In Public Interest p"(#p 25  Y\ -XX` ` X ` ` 7. Legal Challenges p"(#p 25  Y -XX` ` X ` ` 8. Effective Date And Term p"(#p 26  Y -XX` ` X ` ` 9. Public Notice p"(#p 28  Y-XX` ` X ` ` 10. Force Majeure p"(#p 28  YD-XX` ` X ` ` 11. Severability p"(#p 28  Y-XX` ` X ` ` 12. Entire Understanding p"(#p 29 "@o\+((JJ"  Y-   & \  &X` hp x (#%'0*,.8135@8: