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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: September 29, 1998 Released: October 5, 1998 By the Chief, Cable Services Bureau: 1. MediaOne of Eastern Michigan, Inc. ("MediaOne"), has requested that the provisions of the Time Warner Social Contract (the "Social Contract"), which the Commission entered into with Time Warner Cable, continue to apply to two cable systems that MediaOne is acquiring from Cablevision Industries Limited Partnership, a wholly owned subsidiary of TWI Cable Inc. ("Time Warner"). The systems are located in Dearborn and Wayne, Michigan ("Dearborn and Wayne Systems"). By this Order we grant the MediaOne request. 2. The Commission adopted the Social Contract on November 30, 1995. It is designed to provide rate stability, improved quality of service, and incentives for upgrades and system improvements. Under the terms of the Social Contract, 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. By its 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. Pursuant to Section III.F.6, MediaOne seeks the concurrence of the Commission to continue application of the Social Contract to the Dearborn and Wayne Systems. MediaOne does not seek modification of the Social Contract. 4. MediaOne and Time Warner have entered into an agreement pursuant to which MediaOne agrees to be bound by the Social Contract with respect to the Dearborn and Wayne Systems (the "Agreement"). The Agreement is attached, and its terms are incorporated herein. The Agreement becomes effective upon the release by the Commission of this Order and the closing of the system acquisition agreement between MediaOne and Time Warner. 5. Section III.F.1 of the Social Contract provides that systems having a capacity of at least 550 MHz as of the Social Contract effective date must be upgraded to 750 MHz within five years. In addition, at least 60 percent of new analog services added to upgraded systems during the term of the Social Contract must be added to the CPST; upgraded systems must offer at least 15 new analog channels on the CPST as compared to the channels offered on the Social Contract effective date; and at least 60 percent of the capital expended to complete the required upgrades must be applied for the benefit of basic service tier and CPST subscribers. Media One and Time Warner represent in the Agreement that Time Warner has already upgraded the Dearborn and Wayne Systems to 750 MHz and has complied with all other terms of Section III.F.1 as they apply to the Dearborn and Wayne Systems. 6. Section III.F.1 of the Social Contract also 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. This financial commitment will not apply to MediaOne, since it is acquiring only a portion of the systems that are subject to the Social Contract, and Time Warner has completed the required upgrades of the Dearborn and Wayne Systems. 7. Accordingly, IT IS ORDERED that the request of MediaOne of Eastern Michigan, Inc., to assume the rights and obligations of TWI Cable Inc. under the Social Contract with respect to the Dearborn and Wayne Systems IS GRANTED, provided that the Commission shall have the benefit of all agreements made between the parties to the 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 Agreement. 8. This action is taken by the Chief, Cable Services Bureau, pursuant to authority granted by the Commission in Social Contract for Time Warner and pursuant to authority delegated by Section 0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION Deborah A. Lathen Chief, Cable Services Bureau