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Horvitz, Esq. to Magalie Roman Salas, Secretary, Federal Communications Commission (Nov. 20, 1997). By this Order we grant the Marcus request.  S- ` #x2.` ` The Commission adopted the Social Contract with Time Warner on November 30, 1995.r"f {O-ԍSocial Contract for Time Warner, 11 FCC Rcd 2788 (1995).r  xIt is designed to provide rate stability, improved quality of service, and incentives for upgrades and system  S- ximprovements.yf yO-  wԍIn the Cable Television Consumer Protection and Competition Act of 1992, Congress stated its intent to ensure   Ythat, where economically justified, cable operators continue expanding the capacity and programs offered over their   hsystems. Cable Television and Consumer Protection and Competition Act of 1992,  2(b)(3), Pub. L. No. 102385,   Y106 Stat. 1460, 1463 (1992). Subsequently, the Commission adopted an upgrade incentive plan which would permit   xan operator to enter into a social contract with his customers under which it would be given substantial flexibility   in setting rates for new regulated services. Implementation of Sections of the Cable Television Consumer Protection   xand Competition Act of 1992: Rate Regulation; and Adoption of a Uniform Accounting System for Provision of   Regulated Cable Service, MM Docket No. 93215 and CS Docket No. 9428, Report and Order and Further Notice of Proposed Rulemaking, 9 FCC Rcd 4527, 4678 (1994).y Under its terms, Time Warner is investing $4 billion to upgrade its domestic cable  x?systems over the life of the Social Contract, has provided more than $4.7 million in refunds to its  xsubscribers, has capped its regulated programming rate increases at $1 per year plus the recovery of  xexternal costs and the costs of inflation, has established "lifeline" basic service tiers priced below basic  xservice tier rates in effect at the time of adoption of the Social Contract, and is providing free cable  xMconnections to public schools in its franchise areas. The Commission delegated to the Cable Services Bureau the authority to implement the Social Contract.  Sp- ` x3.` ` The five systems acquired by Marcus from Time Warner serve 32 communities and 67,894"p ,))II"  xjsubscribers in Illinois, Indiana, and Wisconsin. A list of the communities is attached hereto. Marcus has  xrequested the continued application of the Social Contract to these five systems pursuant to Section III.F.6 of the Social Contract. Marcus asks for no modification of the Social Contract.  S`- ` _x4.` ` By its the terms, the Social Contract may continue to apply to a cable system divested by  xzTime Warner only if the acquiring operator agrees to be bound by the Social Contract. Section III.F.6 of the Social Contract provides:  _XxIn the event of a sale of any system during the period of applicability of this Contract, the  2purchaser may elect, with the concurrence of the FCC, for the provisions of this Contract  pto 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  S -consummation of such sale.xX  yO-  ԍSection III.F.5 provides that Time Warner will refund the increases taken in CPST rates, plus interest and a   damages penalty, in the event Time Warner fails to fulfill its upgrade commitments to cable systems under the terms of the Social Contract. Section III.F.1 establishes the upgrade requirements. x   xMarcus seeks the concurrence of the Commission to continue application of the Social Contract to the five cable systems Marcus is acquiring from Time Warner.  S- ` x5.` ` Marcus and Time Warner have entered into an agreement pursuant to which Marcus agrees  xyto be bound to the Social Contract with respect to the five systems it is acquiring from Time Warner (the  xj"Assignment and Assumption Agreement"). The Assignment and Assumption Agreement is attached as  xExhibit 1 and its terms are incorporated herein. The Assignment and Assumption Agreement becomes  xeffective upon the release by the Commission of this Order and the consummation of exchange agreements  S-between Marcus and Time Warner. yO-ԍTime Warner and Marcus are exchanging cable systems, hence the reference to "exchange agreements."  S- ` #x6.` ` Pursuant to the Assignment and Assumption Agreement and the Social Contract, Marcus  xLwill comply with provisions of the Social Contract that Time Warner has not fulfilled, including, but not  xlimited to (1) upgrading those acquired systems with a capacity of at least 550 MHz to 750 MHZ; (2)  x\upgrading all other of the acquired systems to 550 MHZ; (3) ensuring that at least 60 percent of new  xanalog services in the acquired systems are added to the cable programming services tier ("CPST"); (4)  x=adding at least 15 new channels on average (weighted by CPST subscribers) to the CPST of the acquired  xsystems; (5) expending at least 60 percent of upgrade capital on benefits for basic service tier ("BST") and  xCPST subscribers; (6) submitting an annual progress report; and (7) assuming the obligation to pay all  xrefunds and penalties imposed under the Social Contract for noncompliance with upgrade requirements not met by Marcus or Time Warner.  S - ` x7.` ` In addition, the Social Contract contains a requirement that at least 50 percent of all Time  xWarner subscribers will be served by a system with a capacity of at least 750 MHz of which at least 200  x.MHz is expected to be allocated to digital distribution. For purposes of measuring compliance by Time"!x,_(_(IIF#"  xWarner with the 50 percent requirement at the expiration of the Social Contract, subscribers in the  xcommunities listed in Appendix B to the Assignment and Assumption Agreement will be counted as Time Warner subscribers.  S`- ` x8.` ` The Social Contract imposes an investment requirement on Time Warner, pursuant to  xwhich Time Warner has agreed to invest $4 billion in capital costs associated with system upgrades. That  xfinancial commitment does not apply to Marcus. Instead, Marcus agrees to invest $13,500,000 in capital  x?costs in connection with the completion of the upgrade of the acquired systems. The investment requirement imposed on Time Warner by the Social Contract is hereby reduced by an identical amount.  Sp- ` A x9.` ` Accordingly, IT IS ORDERED that the request of Marcus Cable Partners, L.P. for the  x.assignment of the rights and the assumption of the obligations of the Social Contract with respect to the  S - xfive cable systems being acquired by Marcus Cable Partners, L.P. from Time Warner Cable IS  S - xGRANTED, provided that the Commission shall have the benefit of all agreements made between parties  xin the Assignment and Assumption Agreement and the right to enforce any provision of the Social  xContract against the party that has agreed to be responsible for such provisions in the Assignment and Assumption Agreement. x  S0- ` ox10.` ` This action is taken by the Chief, Cable Services Bureau, pursuant to authority granted  S- xby 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. x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@Meredith J. Jones  S-x` `  hh@Chief, Cable Services Bureau