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PCancel2m@%7777777777>>>1eOIIOC=OO%+OCbOO=OI=COOhOOC%%47%17171%777V7777%+77O77155<%%%%,-%77O1O1O1O1O1bII1C1C1C1C1%%%%O7O7O7O7O7O7O7O7O7O7O1O7O7O7O7O7=7O7O1O1I1I1I1C1C1C1O7O7OO7O7O7O7,7%7%%%7+O7CC-O7O7O7bOI%I-=+=+N&27%177777"SS7!TT7S!%%117n%%77ln%1n%!t%<<<<>l[O6Wls[77TTTH_%7777777777>>>1eOIIOC=OO%+OCbOO=OI=COOhOOC%%47%17171%777V7777%+77O77155%T7,OOOOOO=7111111I111117777777<7777777"5@^!)22SN!!28!2222222222888-\HCCH=7HH!'H=YHH7HC7=HH^HH=!!/2!-2-2-!222N2222!'22H22-006!!!!()!22H-H-H-H-H-YCC-=-=-=-=-!!!!H2H2H2H2H2H2H2H2H2H2H-H2H2H2H2H272H2H-H-C-C-C-=-=-=-H2H2HH2H2H2H2(2!2!!!2'H2==)H2H2H2YHC!C)7'7'N#-2!-22222KK2LL2K!!--2d!!22bd!-d!t!77778c7(>(IIe""Ԍ S- ` ԙx4.` ` The first prong of the competing provider test requires that at least two unaffiliated  x[multichannel video programming distributors ("MVPDs") each offer comparable programming to at least  S- x50 percent of the households in the communities at issue.\ yO- xiԍThe Commission has stated that, for purposes of effective competition, the term "households" has the same  {O- xmeaning as found in the 1990 Census, Implementation of Cable Act Reform Provisions of the Telecommunications  {O-Act of 1996 Third Order on Reconsideration, FCC 9440, 9 FCC Rcd 4316, 4324 (1994). Time Warner argues that it and WANTV each  S- xoffers comparable programming to at least 50 percent of households in the Communities. yO- x,ԍSection 76.905(e) of our rules state that, for purposes of effective competition, service by an MVPD is deemed  xoffered "when the [MVPD] is physically able to deliver service to potential subscribers, with the addition of no or  xxonly minimal additional investment by the distributor, in order for an individual subscriber to receive service; and  x(2) [w]hen no regulatory, technical or other impediments to households taking service exist, and potential subscribers  x.in the franchise area are reasonably aware that they may purchase the services of the [MVPD]," 47 C.F.R.  76.905(e). With regard  S`- xto WANTV, Time Warner states that the Communities lie within 35 miles of WANTV's transmitter site.6`d  yOd-ԍPetition at 3.6  xTime Warner further states that the Commission has determined that wireless cable is deemed to be  S- x.offered anywhere within a 35mile interference free contour zone.\  {O- xKԍPetition at 4 citing Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996  xx(Section 301 of the 1996 Telecommunications Act; Section 623 of the Communications Act of 1934), Order and  {O6-Notice of Proposed Rulemaking, FCC 96154, 11 FCC Rcd 5937 (1996) ("Cable Reform Order") at  10.  Time Warner submits that WANTV  xclearly offers service to more than 50 percent of the households in the Communities because WANTV,  xas a wireless cable operator, is presumed to offer programming to all residents within 35 miles of its  S-transmitter site.: X yOP- x<ԍPetition at 4. The Commission's rules provide that the zone in which an MMDS licensee is protected from  xharmful electrical interference is a circle with a radius of 35 miles centered on the MMDS transmitter site. 47 C.F.R.  21.902(d). :  SH - ` x5.` ` With regard to whether Time Warner meets the 50 percent threshold, Time Warner states  xjthat in 1990 there were 3,385 households in the City of Auburndale; 651 households in the City of Eagle  S - xyLake; 29,656 households in the City of Lakeland; and, 494 households in the Town of Polk City.  8 {O- xԍId. at Exhibit G. Time Warner attached a copy of data from the 1990 Census of Population and Housing Characteristics for the communities at issue. Time  x/Warner calculates that it currently offers service to 4,074 households in the City of Auburndale; 855  xhouseholds in the City of Eagle Lake; 28,726 households in the City of Lakeland; and, 765 households  S - xyin the Town of Polk City.2 Z  {O"- xyԍId.at 89. Time Warner notes that, in some cases, the current number of households served exceeds the  xnumber of households as reported by the 1990 Census and attributes the excess to housing growth since the Census was taken. 2 Thus, even allowing for considerable growth in the Communities since 1990,  xTime Warner asserts that it clearly offers service to more than 50 percent of the households. Time  S0- xWarner notes that, in any event, the 50 percent threshold prong of the test could be met by considering  x]the presence of direct broadcast satellite services which the Commission has found to be available" ,>(>(II"  S-nationwide.N  {Oh- xiԍId. at 22 citing Reexamination of the Effective Competition Standard for the Regulation of Cable Television  {O2-Basic Service Rates, MM Docket No. 904, 6 FCC Rcd 4545 (1991) at  42, n.52 and Report and Order at  32.N  S- ` px6.` ` The first prong of the competing provider test also requires that the two competing  xproviders offer comparable programming. Time Warner argues that WANTV's programming is  x>comparable to that of its own since WANTV currently offers 36 channels of programming, including  S8- xseveral channels of nonbroadcast programming 8$ {O- xxԍId. at 67. Time Warner states that WANTV offers the nonbroadcast services of ESPN, Home Box Office and CNN. and several local television broadcast stations.xZ8~ {OV - xԍId., see also Exhibit E. Time Warner states that WANTV offers local television stations such as WFLATV  xi(NBC, Channel 8, Tampa, FL), WTSP (CBS, Channel 10, TampaSt. Petersburg, FL), WTVT (Fox, Channel 13, TampaSt. Petersburg, FL), WFTS (ABC, Channel 28, Tampa, FL) and several others. x Time  S- xWarner further states that it offers a channel lineup that is similar to WANTV's.v {OP-ԍId. at Exhibit F. Time Warner attaches a copy of its channel lineup. v Time Warner argues  xthat, because of the similar channel lineups offered by itself and WANTV, the Communities are being served by at least two unaffiliated MVPDs each of which offers comparable programming. x  Sp- ` `x7.` ` The second prong requires at least 15 percent of the households in the Communities to  SH - xbe subscribers to the smaller of the two MVPDs.DH 2  yO-ԍ47 C.F.R.  76.905(b)(2).D Time Warner argues that WANTV, the smaller of the  xtwo MVPDs, meets that requirement. Time Warner submits data from the 1990 Census to show that  x[WANTV serves 23 percent of the households in the City of Auburndale; 18.1 percent of the households  xin the City of Eagle Lake; 19.4 percent of the households in the City of Lakeland; and, 67.2 percent of  S - xthe households in the Town of Polk City.:  yO -ԍPetition at 1011.: As a result of satisfying the requirements of the competing  xprovider effective competition test, Time Warner argues that its request for deregulation of rates for its  xbasic service tier, cable programming service tier and other forms of rate regulation specified in Section  S0-543 of the Communications Act should be granted._0R  {O"- xԍTime Warner also argues that WANTV meets the requirements specified in the Cable Reform Order concerning  {O- xthe definitions of "offer" and comparable programming" Petition at 25. The Cable Reform Order discussion of  xeffective competition is limited to the context of the new effective competition standard applicable to local exchange  xcarrier ("LEC") competition. Time Warner fails to allege that WANTV is offered by, or over the facilities of, a LEC or its affiliate. _ h ",>(>(II "Ԍ S- ` nx8.` ` Finally, Time Warner requests that the Commission modify application of Social Contract  S- xto its service in the Communities. The effect of Time Warner's request would be that Time Warner  S-would:  Sb-  Xx(1) no longer be subject to a price cap on either its basic service tier ("BST")Qb {O-ԍSocial Contract at Section III.A.2.Q or its cable  S:-programming service tier ("CPST");E:Z {O4-ԍId. at Section III.F.4.E(#  S-Xx(2) be permitted to add additional channels to its BST at any time;G {O -ԍId. at Section III.A.3. G(#   |Xx(3) be permitted to establish its equipment rates without regard to regional equipment costs or  S-blended rates;C~ {O -ԍId. at Section III.B.C(#   $x(4) no longer be subject to price caps or a limit on the number of channels migrated to  Sr-Xxits Migrated Product Tiers ("MPT");r {O"- xԍId. at Section III.D. The Social Contract defines an MPT to mean "(a) a tier consisting of up to four services  xmoved from a system's existing BST or CPST(s) ... or (b) any Superstation Tier or any tier consisting of those  {O- xservices remaining on a Preferred Tier ... after any excess channels have been shifted to CPST."  Social Contract  xKat 3. A Superstation Tier is defined as "lowpriced collective offerings, containing primarily superstations, at an  {OF- xKaverage price of less than $0.29 per channel, excluding copyright fees". Id. at 9. A Preferred Tier is defined as  xJ"a lowpenetrated collective offerings predominately containing channels which had been affirmatively marketed as  {O-a separate tier before offered on an  a la carte basis." Id.  and,(#   Xx(5) not be required to comply with any regulations established by the Commission governing  S" -annual adjustments to BST or CPST rates;C" X  {O-ԍId. at Section III.G.C (#  xTime Warner states that, regardless of its request for modification, it will remain bound by all other  S -applicable provisions of the Social Contract, including the infrastructure upgrade requirement.:  yO4-ԍPetition at 1112.:  S\-x IV.` ` DISCUSSION  S -x` ` A. Effective Competition  S-  S- ` x9.` ` In the absence of a demonstration to the contrary, cable systems are presumed not to be  S- xLsubject to effective competition,>z yO$-ԍ47 C.F.R.  76.906.> as that term is defined by Section 76.905 of the Commission's rules.>  yO>&-ԍ47 C.F.R.  76.905.>  xThe cable operator bears the burden of rebutting the presumption that effective competition does not exist"l,>(>(II"  xwith evidence that effective competition is present within the relevant franchise area. Pursuant to the  S- xZcompeting provider effective competition test, the cable operator must show that the two competitors each  xoffer comparable programming to 50 percent of the households in the area and that at least 15 percent  xof the households in the area subscribe to service from an alternative provider offering a comparable video  xprogramming service. We conclude that Time Warner is subject to effective competition in the  xMCommunities and therefore exempt in those communities from the Commission's rules governing rate  S- x>regulation of cable systems. With regard to the Social Contract, we find that Time Warner is exempt  xfrom those provisions which impose rate regulation on its cable systems serving the Communities and,  S-in all other respects, remains bound to the terms and conditions of the Social Contract.  St- ` x10.` ` With regard to the first portion of the competing provider test, Time Warner introduced  xevidence from the 1990 Census to show that it and WANTV each offers comparable programming to at  S$ - xleast 50 percent of the households in the Communities.-"$  yO - xxԍTime Warner properly employed a "housing multiplier" as a means of correlating the number of households  xto the number of housing units in the Communities to determine the proper percentage of households served by each  xKMVPD. The Commission has previously recognized this method of correlating the number of households to the  {O-number of housing units. Petition at 8 citing Falcon TeleCable, DA 9523, 10 FCC Rcd 1654 (1995) at  8.- Time Warner's calculations indicate that it  xcurrently serves a greater number of households than existed in the Communities in 1990 but that that  S - xLdiscrepancy can be attributed to housing growth in the intervening years.1  {O&-ԍId.1 Thus we conclude that Time  xWarner offers its service to at least 50 percent of the households in the Communities. With respect to  xthe availability of service within the franchise area from a competing provider, it appears that WANTV  xoffers comparable service to at least 50 percent of the households in the City. Time Warner has  xintroduced evidence showing that the Communities are within WANTV's transmission service area and  xthat service is being provided to subscribers in the Communities. In any event, as Time Warner argues,  x{the 50 percent threshold of the competing provider effective competition test is met, regardless of  xWANTV's service, because of the availability of DBS service in the City. The Commission concluded  S- x\in the Rate Order that DBS providers that provide nationwide service are presumed to satisfy the 50  Sn- xpercent threshold.OnD {OR-ԍRate Order, 8 FCC Rcd at 565960.O Accordingly, whether by virtue of the service WANTV provides or because of the  xDBS service presumed to be available, we conclude that, in addition to the MVPD service being offered  xMby Time Warner, at least one other entity is providing MVPD service to more than 50 percent of the  S-households in the City.   S- ` x11.` ` We also find that Time Warner and WANTV each meets the Commission's definition of  x["comparable programming" contained in Section 767.905(g) because each offers "at least twelve channels  SV-of programming, including at least one channel of nonbroadcast programming."V {O"- xԍId. at 6 and Exhibit F. Time Warner's channel lineups indicate that it is offering more than the minimum number of channels of both broadcast and nonbroadcast programming in the City.  S- ` ox12.` ` The second part of the competing provider test requires that the number of households  x\subscribing to WANTV, the smaller of the two MVPDs, exceeds 15 percent of the households in the  xCommunities. Time Warner submitted a table which shows the percentage of households which subscribe"0 ,>(>(II"  S- xto WANTV's service in various Florida communities.  yOh- xԍPetition at Exhibit C. The table is contained in a letter dated August 15, 1996 from the General Manager of American Telecasting of Central Florida, Inc. According to the table, WANTV serves 23 percent  xof households in Auburndale; 18.1 percent of households in Eagle Lake; 19.4 percent of households in  S- xLakeland; and 67.2 percent of households in Polk City.D!  yOp-ԍPetition at 9 and Exhibit C.D We find that Time Warner has demonstrated  x=that WANTV's penetration rate in the Communities satisfies the requirement of the second prong of the  xcompeting provider test. We conclude that Time Warner has established that both prongs of the  xcompeting provider effective competition test have been met and, accordingly, we grant Time Warner's petition for a change in its regulatory status.  S-x` ` B. Social Contract  S-  Sp- ` 3x13.` ` The Commission and Time Warner negotiated the Social Contract in order "to provide  xupgrade incentives for Time Warner and to provide rate stability and increased quality of service for its  S" - x.consumers."""  {Or- x<ԍSocial Contract, 11 FCC Rcd at 2790. The Social Contract also resolved numerous rate cases and provided refunds to subscribers. The Social Contract provides that Time Warner may, in the event of any relevant change  x>in applicable laws, regulations or circumstances, petition the Commission to modify or terminate the  S - xjSocial Contract."#$  {O~- xԍId. at 2824. Time Warner may also elect not to be bound by the relevant portions of the Social Contract  xishould there by any material change in the 1992 Cable Act of the Commission rules that would favorably impact  xZTime Warner. However, even if the statutory or regulatory provisions concerning rate regulation change, Time  {O-Warner remains bound to the nonrate provisions of the Social Contract.  Time Warner is required to serve any such petition to modify or terminate the Social  S -Contract on the local franchising authorities for the affected systems.3$  {OD-ԍId. 3  S`- ` x14.` ` Time Warner's petition for a change in regulatory status is based upon a change in  xcircumstance, i.e., the presence of effective competition in the Communities. We have found that Time  S- xWarner has demonstrated that its cable systems serving the Communities face effective competition from  xWANTV, a competing provider of wireless cable service. Under the Commission's rules governing rate  x?regulation, the rates of cable systems that are found to be subject to effective competition are not  S- xregulated.>%  yO -ԍ47 C.F.R.  76.906.> Time Warner has requested the Commission to waive certain rate provisions of the Social  Sr- xContract, namely, Sections III.A.2 (price cap on the BST); III.A.3 (additions to the BST); III.B  xL(equipment rates); III.D (price caps on the MPT); III.F.4 price cap on the CPST); and III.G (annual rate  S$- xadjustments to the BST and CPST). Each of those provisions of the Social Contract pertain to regulation  xof service and equipment rates on a regulated tier of cable service. We find that Time Warner's systems  S- xserving the Communities has experienced a change in circumstance, i.e., the presence of effective  xcompetition, which has relieved Time Warner of its duty to comply with the rate regulation provisions  S- x!of the Social Contract in the Communities. We further find that Time Warner has met the notice"%,>(>(II"  S- x requirement contained in the Social Contract by serving its petition on each local franchise authority  S- xaffected by its actions.T& {OB-ԍ See Petition, Certificate of Service.T In light of the foregoing, we grant Time Warner's request to be relieved of  S- xSections III.A.2, III.A.3, III.B, III.D, III.F.4, and III.G of the Social Contract with regard to the  S- xCommunities.>'Z {O-ԍSupra at  8.> All other provisions of the Social Contract remain valid and enforceable and the  Sf-Commission retains oversight authority with regard to these nonrate provisions.S(f {O-ԍSocial Contract, 11 FCC Rcd. at 2825.S  S-x V. ` ` ORDERING CLAUSES  S-  S- ` x15.` ` Accordingly, IT IS ORDERED that the Petition for Change in Regulatory Status filed by  xParagon Communications and Time Warner EntertainmentAdvance/Newhouse Partnership d/b/a Time  xWarner Communications, CSR4871E, pursuant to Section 76.905(b)(2) of the Commission's rules, 47 C.F.R.  76.905(b)(2), IS GRANTED.  S - ` #x16.` ` IT IS FURTHER ORDERED that, for purposes of the Social Contract for Time Warner,  S - x>Time Warner's request to be relieved of compliance with certain provisions therein, namely, Sections  xyIII.A.2, III.A.3, III.B, III.D, III.F.4, AND III.G governing cable rates offered in the Cities of Auburndale, Eagle Lake, Lakeland, Florida and the Town of Polk City, Florida IS GRANTED.  S8- ` ax17.` ` This action is taken pursuant to delegated authority under Section 0.321, 47 C.F.R. 0.321, of the Commission's rules.  S- x x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhMeredith J. Jones x` `  hhChief, Cable Services Bureau