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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 ) In the Matter of ) ) Time Warner ) ) Social Contract ) ) ORDER Adopted: November 26, 1997 Released: November 28, 1997 By the Chief, Cable Services Bureau: 1. Adelphia Communications Corporation ("Adelphia") has requested that the provisions of the Time Warner Social Contract (the "Social Contract") which the Commission entered into with Time Warner Cable ("Time Warner") continue to apply to seven cable television systems Adelphia is acquiring from Time Warner. By this Order we grant the Adelphia request. 2. The Commission adopted the Social Contract with Time Warner on November 30, 1995. It is designed to provide rate stability, improved quality of service, and incentives for upgrades and system improvements. Under its terms, Time Warner is investing $4 billion to upgrade its domestic cable systems over the life of the Social Contract, has provided more than $4.7 million in refunds to its subscribers, has capped its regulated programming rate increases at $1 per year plus the recovery of external costs and the costs of inflation, has established "lifeline" basic service tiers priced below basic service tier rates in effect at the time of adoption of the Social Contract, and is providing free cable connections to public schools in its franchise areas. The Commission delegated to the Cable Services Bureau the authority to implement the Social Contract. 3. The seven systems acquired by Adelphia from Time Warner serve 63 communities and 131,042 subscribers in New Hampshire, New York, North Carolina, Pennsylvania, Vermont, and Virginia. A list of the communities is attached as Exhibit 1. Adelphia has requested the continued application of the Social Contract to these seven systems pursuant to Section III.F.6 of the Social Contract. Adelphia asks for no modification of the Social Contract. 4. By its the terms, the Social Contract may continue to apply to a cable system divested by Time Warner only if the acquiring operator agrees to be bound by the Social Contract. Section III.F.6 of the Social Contract provides: In the event of a sale of any system during the period of applicability of this Contract, the purchaser may elect, with the concurrence of the FCC, for the provisions of this Contract to continue to apply to such system. Such FCC concurrence shall be expeditiously decided and not be unreasonably withheld. In the event the purchaser elects not to have the provisions of this Contract apply to any such system, the CPST subscribers to such system shall be eligible for the refunds calculated pursuant to Section III.F.5 in the event the upgrade commitment described in Section III.F.1 has not been completed prior to the consummation of such sale. Adelphia seeks the concurrence of the Commission to continue application of the Social Contract to the seven cable systems Adelphia is acquiring from Time Warner. 5. Adelphia and Time Warner have entered into an agreement pursuant to which Adelphia agrees to be bound to the Social Contract in its entirety with respect to the seven systems it is acquiring from Time Warner (the "Assignment and Assumption Agreement"). The Assignment and Assumption Agreement is attached as Exhibit 2 and its terms are incorporated herein. The Assignment and Assumption Agreement becomes effective upon the release by the Commission of this Order and the consummation of exchange agreements between Adelphia and Time Warner. 6. Pursuant to the agreement and the Social Contract, Adelphia will comply with provisions of the Social Contract that Time Warner has not fulfilled, including, but not limited to (1) upgrading those acquired systems with a capacity of at least 550 MHz to 750 MHZ; (2) upgrading all other of the acquired systems to 550 MHZ; (3) upgrading 50 percent of the subscribers in the acquired systems to 750 MHz; (4) ensuring that at least 60 percent of new analog services in the acquired systems are added to the cable programming services tier ("CPST"); (5) adding at least 15 new channels on average (weighted by CPST subscribers) to the CPST of the acquired systems; (6) expending at least 60 percent of upgrade capital on benefits for basic service tier ("BST") and CPST subscribers; (7) submitting an annual progress report; and (8) assuming the obligation to pay all refunds and penalties imposed under the Social Contract for noncompliance with upgrade requirements not met by Adelphia or Time Warner. 7. The Social Contract imposes an investment requirement on Time Warner, pursuant to which Time Warner has agreed to invest $4 billion in capital costs associated with system upgrades. That financial commitment does not apply to Adelphia. Instead, Adelphia agrees to invest $24,950,984 million in capital costs in connection with the completion of the upgrade of the acquired systems. The $4 billion investment requirement imposed on Time Warner by the Social Contract is hereby reduced by an identical amount. 8. Accordingly, IT IS ORDERED that the request of Adelphia Communications Corporation for the assignment of the rights and the assumption of the obligations of the Social Contract with respect to the seven cable systems being acquired by Adelphia Communications Corporation from Time Warner Cable IS GRANTED, provided that the Commission shall have the benefit of all agreements made between parties in the Assignment and Assumption Agreement and the right to enforce any provision of the Social Contract against the party that has agreed to be responsible for such provisions in the Assignment and Assumption Agreement. 9. This action is taken by the Chief, Cable Services Bureau, pursuant to authority granted by the Commission in Social Contract for Time Warner Cable and pursuant to authority delegated by Section 0.321 of the Commission's rules. 47 C.F.R.  0.321. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau COMMUNITIES SERVED BY SYSTEMS ACQUIRED BY ADELPHIA FRANCHISE CUID NUMBER Chatham, VA VA0214 Brookneal, VA VA0389 Gretna, VA VA0306 Danville, VA VA0029 Casewell County, NC NC0670 Yancyville, NC NC0669 Hurt, VA VA0223 Altavista, VA VA0219 Pittsylvania, VA VA0154 Troutville, PA PA2850 Union Township, PA PA2851 Winslow Township, PA PA2030 Brady Township, PA PA0722 Sandy Township, PA PA0049 DuBois, PA PA0042 Falls Creek, PA PA0044 Washington Township, PA PA1611 Swissvale, PA PA0512 Churchill, PA PA0580 Braddock, PA PA0614 Turtle Creek, PA PA0596 East McKeesport, PA PA0616 North Braddock, PA PA0511 Wilkins, PA PA0598 North Huntington Township, PA PA2522 Trafford, PA PA0631 Monroeville, PA PA1775 Rankin, PA PA0625 North Versailles, PA PA0591 East Pittsburgh, PA PA0583 Lynchburg, VA VA0106 Bedford County, VA VA0185 Campbell County, VA VA0184 Allegany (Village), NY NY0009 Allegany (Town), NY NY0010 Hinsdale, NY NY1025 Olean (City), NY NY0012 Olean (Town), NY NY0011 Portville (Town), NY NY0367 COMMUNITIES SERVED BY SYSTEMS ACQUIRED BY ADELPHIA FRANCHISE CUID NUMBER Portville (Village), NY NY0366 Ceres, NY --------- Eldred Township, PA PA1531 Eldred Borough, PA PA0034 Rockingham County, VA VA0036 Harrisonburg, VA VA0035 Bridgewater, VA VA0032 Broadway, VA VA0033 Mt. Crawford, VA VA0273 Timberville, VA VA0037 Dayton, VA VA0034 Claremont, NH NH0004 Brattleboro, VT VT0027 Hinsdale, NH NH0032 North Walpole, NH NH0025 Chesterfield, NH NH0133 Winchester, NH NH0033 Cornish, NH NH0068 Weathersfield, VT VT0080 Guilford, VT --------- Vernon, VT VT0232 Westminister, VT VT0024 Ascutney, VT VT0129 Bellow Falls, VT VT0022