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Federal Communications Commission
Washington, D.C. 20554
File Number EB-09-SE-006
In the Matter of )
NAL/Acct. No. 2009332100028
Time Warner Cable, Inc. )
NOTICE OF APPARENT LIABILITY FOR FORFEITURE AND ORDER
Adopted: January 19, 2009 Released: January 19, 2009
By the Chief, Enforcement Bureau:
1. In this Notice of Apparent Liability for Forfeiture and Order ("NAL
and Order"), we find that the Time Warner Cable Inc.'s cable system,
serving Placentia, California ("Time Warner") apparently willfully
violated Section 76.1603(b) of the Commission's Rules ("Rules").
Specifically, Time Warner failed to provide the requisite thirty (30)
day advance written notice to its customer, before implementing a
change in rates, programming services or channel positions as required
under the Rules. We conclude, pursuant to Section 503(b) of the
Communications Act of 1934, as amended ("Act"), that Time Warner is
apparently liable for a forfeiture in the amount of seven thousand
five hundred dollars ($7,500). We also order Time Warner, within
ninety (90) days of this NAL and Order, to issue refunds to the
customers affected by the change in rates, programming services or
channel position as explained more fully below.
2. On December 1, 2006, the Commission received a complaint from a
customer living in Placentia, California asserting that Time Warner
had removed channels from complainant's basic cable service. According
to the complainant, this change was made without any notice.
A. Time Warner Apparently Violated Section 76.1603(b) By Failing To
Provide Proper Notice to its Customers.
3. Based on the record before us, we find that Time Warner apparently
willfully violated Section 76.1603(b) by failing to notify its
customers before implementing a change in rates, programming services
or channel positions as required under the Rules.
4. Section 76.1603(b) of the Rules provides, in relevant part, as
Customers will be notified of any changes in rates, programming services
or channel positions as soon as possible in writing. Notice must be given
to subscribers a minimum of thirty (30) days in advance of such changes if
the change is within the control of the cable operator. In addition, the
cable operator shall notify subscribers 30 days in advance of any
significant changes in the other information required by S: 76.1602.
5. We find that the migration of each channel constitutes a change in
rates, programming services or channel positions under the Rules. We
also find that the migration was a change within the control of Time
Warner because we are unaware of external forces that would have
required the Time Warner to make such a change, particularly without
giving 30 days notice. In our Letter of Inquiry issued to Time Warner
on October 30, 2008, we asked for a range of information related to
the migration of channels, including evidence that consumers were
provided with the notice required under our rules. Unfortunately, Time
Warner failed to produce any evidence on this point in response to our
request, including any evidence that the requisite notice was provided
of the migration that is the subject of this NAL and Order.
6. Therefore, for the reasons stated above, we find that Time Warner
apparently violated Section 76.1603(b) by failing to provide its
customers at least thirty (30) days notice of a change in rates,
programming services or channel positions.
B. Forfeiture Calculation
7. Under Section 503(b)(1)(B) of the Act, any person who is determined by
the Commission to have willfully or repeatedly failed to comply with
any provision of the Act or any rule, regulation, or order issued by
the Commission shall be liable to the United States for a forfeiture
penalty. To impose such a forfeiture penalty, the Commission must
issue a notice of apparent liability and the person against whom such
notice has been issued must have an opportunity to show, in writing,
why no such forfeiture penalty should be imposed. The Commission will
then issue a forfeiture if it finds by a preponderance of the evidence
that the person has violated the Act or a Commission rule. Based on
the analysis set forth below, we conclude that Time Warner is
apparently liable for a forfeiture in the amount of seven thousand
five hundred dollars ($7,500) for its willful violation of Section
76.1603(b) of the Rules.
8. Under Section 503(b)(2)(A) and Section 1.80(b)(1) of the Commission's
Rules, we may assess a cable television operator a forfeiture of up to
$32,000 for each violation or each day of a continuing violation, up
to a statutory maximum forfeiture of $325,000 for any single
continuing violation. In exercising such authority, we are required to
take into account "the nature, circumstances, extent, and gravity of
the violation and, with respect to the violator, the degree of
culpability, any history of prior offenses, ability to pay, and such
other matters as justice may require."
9. The Commission's Forfeiture Policy Statement and Section 1.80 of the
Rules do not establish a specific base forfeiture for violation of
Section 76.1603's notice requirements. Based on the totality of
circumstances here and the Commission's past precedent, we find that
$7,500 is an appropriate base forfeiture for the failure to notify its
customers of Time Warner's change in service. Accordingly, we conclude
that Time Warner is apparently liable for a $7,500 forfeiture for its
willful violation of Section 76.1603(b) of the Rules.
C. Time Warner Must Issue Refunds To Customers Harmed By Its Failure To
10. Time Warner's change in rates, programming services or channel
positions without the required notice has harmed its customers who
purchased services based on the reasonable assumption that Time Warner
would not be moving significant portions of programming from standard
service tiers to digital cable tiers without providing the notice
required under our Rules. In effect, Time Warner's movement of
programming to a digital tier without any reduction in subscriber fees
has substantially diminished the value of the programming complainant
receives. The complainant must now pay the same monthly rate for cable
service even though complainant can view fewer channels.
11. Thus, we order Time Warner, within ninety (90) days of this NAL and
Order, to issue refunds to all affected customers who did not receive
the required notice as of the date of the programming change.
Specifically, Time Warner must provide refunds as follows:
Time Warner must refund the customer's subscriber fees of all affected
customers who did not receive the required notice based on the diminished
value of their service following the movement of programming without
proper notice by $0.10 per channel moved per month and reduce
complainant's rates on a going-forward basis accordingly until the notice
required under our rules has been provided.
12. In addition, we order Time Warner to submit to the Bureau within 30
days of the issuance of refunds a report in the form of a letter
advising the Bureau that such refunds have been paid and that affected
subscribers' fees have been reduced as directed.
IV. ordering clauses
13. Accordingly, IT IS ORDERED, pursuant to section 503(b) of the
Communications Act of 1934, as amended, 47 U.S.C. S: 503(b)(5), and
section 1.80 of the Commission's rules, 47 C.F.R. S: 1.80, and under
the authority delegated by sections 0.111 and 0.311 of the
Commission's rules,47 C.F.R. S: 0.111, 0.311, Time Warner is NOTIFIED
of its APPARENT LIABILITY FOR A FORFEITURE in the amount of seven
thousand five hundred dollars ($7,500.00) for willful violation of
Section 76.1603(b) of the Rules.
14. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the Rules,
within thirty days of the release date of this Notice of Apparent
Liability for Forfeiture and Order, Time Warner SHALL PAY the full
amount of the proposed forfeiture or SHALL FILE a written statement
seeking reduction or cancellation of the proposed forfeiture.
15. IT IS FURTHER ORDERED that, pursuant to sections 1, 4(i), 4(j), 601,
and 629 of the Communications Act of 1934, as amended 47 U.S.C. S:S:
151, 154(i), 154(j), 521, 549, Time Warner must take the steps set
forth in paragraphs 10, 11, and 12 of this Notice of Apparent
Liability for Forfeiture and Order.
16. Payment of the forfeiture must be made by check or similar instrument,
payable to the order of the Federal Communications Commission. The
payment must include the NAL/Account Number and FRN Number referenced
above. Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000.
Payment by overnight mail may be sent to U.S. Bank - Government
Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101. Payment by wire transfer may be made to ABA Number 021030004,
receiving bank TREAS/NYC, and account number 27000001. For payment by
credit card, an FCC Form 159 (Remittance Advice) must be submitted.
When completing the FCC Form 159, enter the NAL/Account number in
block number 23A (call sign/other ID), and enter the letters "FORF" in
block number 24A (payment type code). Requests for full payment under
an installment plan should be sent to: Chief Financial Officer --
Financial Operations, 445 12th Street, S.W., Room 1-A625, Washington,
D.C. 20554. Please contact the Financial Operations Group Help Desk
at 1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with any questions
regarding payment procedures. Time Warner will also send electronic
notification on the date said payment is made to Kathy.Berthot@fcc.gov
and to JoAnnLucanik@fcc.gov.
17. The response, if any, must be mailed to the Office of the Secretary,
Federal Communications Commission, 445 12th Street, S.W., Washington,
D.C. 20554, ATTN: Enforcement Bureau - Spectrum Enforcement Division,
and must include the NAL/Acct. No. referenced in the caption.
18. The Commission will not consider reducing or canceling a forfeiture in
response to a claim of inability to pay unless the petitioner submits:
(1) federal tax returns for the most recent three-year period; (2)
financial statements prepared according to generally accepted
accounting practices; or (3) some other reliable and objective
documentation that accurately reflects the petitioner's current
financial status. Any claim of inability to pay must specifically
identify the basis for the claim by reference to the financial
19. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture and Order shall be sent by first class mail and
certified mail return receipt requested to counsel for Time Warner
Cable, Inc., Matthew A. Brill, Esq., Latham & Watkins LLP, 555 11th
Street, NW, Suite 1000, Washington, DC, 20004.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief, Enforcement Bureau
47 C.F.R. S: 76.1603(b).
47 U.S.C. S: 503(b).
47 C.F.R. S: 76.1603(b).
Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, Federal Communications Commission to Matthew A. Brill,
Counsel for Time Warner Cable, Inc. (Oct. 30, 2008) ("LOI").
47 U.S.C. S: 503(b)(1)(B); 47 C.F.R. S: 1.80(a)(1).
47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80(f).
See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
47 U.S.C. S: 503(b)(2)(A), 47 C.F.R. S: 1.80(b)(1). The Commission has
repeatedly amended Section 1.80(b)(1) of the Rules to increase the maximum
forfeiture amounts, in accordance with the inflation adjustment
requirements contained in the Debt Collection Improvement Act of 1996, 28
U.S.C. S: 2461. Most recently, the Commission raised the maximum
forfeitures applicable to cable operators, broadcast licensees, and
applicants for such authority from $32,500 to $37,500 for a single
violation, and from $325,000 to $375,000 for a continuing violation. See
Inflation Adjustment of Maximum Forfeiture Penalties, 73 Fed. Reg. 44663,
44664 (July 31, 2008). The new forfeiture limits will take effect
September 2, 2008 and do not apply to this case.
47 U.S.C. S: 503(b)(2)(E). See also 47 C.F.R. S: 1.80(b)(4), Note to
paragraph (b)(4): Section II. Adjustment Criteria for Section 503
See The Commission's Forfeiture Policy Statement and Amendment of Section
1.80 of the Rules to Incorporate the Forfeiture Guidelines, Report and
Order, 12 FCC Rcd 17087, 17115 (1997), recon. denied, 15 FCC Rcd 303
(1999) ("Forfeiture Policy Statement").
The Commission has substantial discretion, however, in proposing
forfeitures. See, e.g., InPhonic, Inc., Order of Forfeiture and Further
Notice of Apparent Liability, 22 FCC Rcd 8689, 8699 (2007); Globcom, Inc.
d/b/a Globcom Global Commun., Order of Forfeiture, 21 FCC Rcd 4710,
4723-24 (2006). We may apply the base forfeiture amounts described in the
Forfeiture Policy Statement and the Commission's rules, or we may depart
from them altogether as the circumstances demand See 47 C.F.R.
S:1.80(b)(4) ("The Commission and its staff may use these guidelines in
particular cases [, and] retain the discretion to issue a higher or lower
forfeiture than provided in the guidelines, to issue no forfeiture at all,
or to apply alternative or additional sanctions as permitted by the
statute.") (emphasis added).
See also Northland Cable Television, Inc., Memorandum Opinion and Order
and Notice of Apparent Liability for Forfeiture, 23 FCC Rcd 7865 (Media
Bur. 2008) (proposing $20,000 forfeiture for apparent violations of
Section 76.1603 and other rules); Northland Cable Television, Inc.,
Memorandum Opinion and Order and Notice of Apparent Liability for
Forfeiture, 23 FCC Rcd 7872 (Media Bur. 2008) (same).
Thus, for example, if the Time Warner migrated a channel and did not
provide proper notice for nine months, it must refund $0.90 to each
affected customer. $0.10 is our best estimate of the relevant license fee
per channel. We note that Time Warner did not provide actual per channel
license fees as required by the LOI. The Bureau will reconsider the
appropriate license fee per channel should Time Warner submit a petition
for reconsideration that includes evidence that the license fees of the
affected channels are lower than $0.10 per month.
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Federal Communications Commission DA 09-127
Federal Communications Commission DA 09-127