HomeMy WebLinkAbout20 CONT. CABLEVISION 05-01-95i
ATE:
MAY 1, 1995
Inter-Corn
NO. 20
TO:
FROM:
SUBJECT:
WILLIAM' A. HUSTON, CITY MANAGER
PUBLIC WORKS DEPARTMENT/ENGINEERING DIVISION
FRDERAl` COMMUNICATIONS COMMISSION SOCIAl, CONTRACT WITH
CONTINENTAl, CABLEVISION, INC.
RECOMMENDATION
Receive and file.
FISCAL IMPA CT
Undetermined at this time.
,:
BACKGROUND AND DISCUSSION
The Federal Communications Commission (FCC) has negotiated a social contract with Continental
Cablevision, Inc. A social contract is an alternative form of regulation that has been used with
telephone and electric utilities, but this will be the first time it has been used to regulate the cable
television industry. · The contract was negotiated in accordance with the Federal Communications
Commission's authority to consider and adopted social contracts as alternatives to other regulatory
approaches applicable to cable television rates. The proposed contract will be' considered for approval
after the Commission evaluates the input received during the public comment period. The Cable
Services Bureau has established May 22, 1995 as the deadline for filing comments on the proposed
contract and June 6, 1995 as the deadline for filing reply comments.
The proposed contract is approximately forty pages in length and is designed to assure fair and
reasonable rates for Continental's cable service customers, improve Continental's cable service by
substantially upgrading the channel capacity and technical reliability of its United States Cable Systems,
and reduce the administrative burden and costs of regulation for local governments, the FCC, and
Continental. The contract resolves and terminates all of Continental's approximately 350 rate cases
without any finding by the FCC of wrong-doing on Continental's part. Continental has agreed to make
in-kind refunds to affected customers totaling apprOximately $9.5 million and invest $1.35 billion to
rebuild and upgrade all of its domestic cable system during the six Year term of the contract. As none
of the rate cases involve Tustin customers, Continental does not anticipate any Tustin customer being
entitled to refunds. Additionally, the regulated basic service tier wil l con form to FCC rules and will
be reduced by 15 % in order to provide a lifeline service in all communities. The lifeline service is a
low cost service that includes all changes currently carried on Continental's basic broadcast service tier.
A draft copy of the contract, along with information in a question/answer format provided by
Continental Cablevision is attached for your review. Ms, Cheryl Smith, General Manager of
Continental Cablevision for this area, will be in attendance at the Council meeting to provide
information and respond to questions.
Tim D. Serlet
Director of Public Works/City Engineer
TDS:ccg:soeialct
Attachments: Continental CableviSion Question & Answer
Draft Contract
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What is a Social Contract az~d what aJ~ Re principaJ benef-rts? -
Social Contracts ~re a fairly common eJtemative form of recjulaZion
especially for telephone and electric utilities, but this agreement is the
first, the FCC ha~ negotiated for'the cable television industry.
This ~:d~l Contract will provide Iong-tem~ rate.st_~__~lity, incr~
prog~m~ choices, improved technology, greater system reliabirRy
and reduced regulatory burdens and costs for local governments, the
FCC arid Continental.
The Contract resolves and terminaze~ all of Continentai% rate cases
before .the FCZ:; and provides for res~ution of complex cost of service
~. S~ly it resolves 14B pending basi~ s~ tier and cable
programming service tier cost of service cases and 229 cable
programming service tier benchmark cases.
As part of this resolution, Obntlnental will make In-kind ~s to affected
subscribers totaling approximately $9.5 ml31ion. The Contract covers all
systems, regu~ aJ~d unregulated, and limits future increases to
ad]usl~ents allowed by FCC regulations. Long term mm st~_ hii'Ry will be
achieved, but in a manner that gresthj reduces the heav~ admin~
burdens and high costs of regulation. Most importantly, having resolved
all pending cost of service cases, continental has agreed not to file any
in the futura. ·
The Conuact prOVides for substantial cable system imProvements,
tnclucrmg inc~easecl channel capacEy and system reliabaity. FmaJly, it
permits and encourages the addition of new cable programming services
for subsmlbem.
What is the effect of the contract on regulated basic service rotes?
·
Regulated baslo service tier rates tn all cases, whether benchmaxk or
cost of servi~ will.conform to the FCC's benchmad( roles and then will
be reduced by 15% in order to provide a "Ffl'er~ie ~' In all
commUnities. In .the flJture basio service tier rderme ~ may only be
Increased by inflation and externals and them is e-limitation on adding
new product to this tier so the price will remain stable ove~ time.
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SOCIAL CONTIRACT_Q & _A
.
What is the effect on regulated cable programming Service tier
Continenta/justified its regulated cable programming servk~ rates by
filing either a cost of service case or a benchmark case. Current ~ of
service rates have been upheld but are limited in the future by, the FCC's
rules for inflation, extemaJ Cost adjustments a~d the 'Going Forward'
procjmmming addition rules. Where rates were set a .c~ording to. the
Commission's benchma_r~cs~, they must fully co_nform to thosp benchmarks
and in the future wfll be limited by existing FCC reguf~tfons.
~ ls ~he effect on unregulated rates?
The existing prices in unre~_ulated_franchise areas are c~pped ~nd may
not be Increased In the future by an amount greater than that perm~
by ~ rules in regulated areas. SpecificaJ[y, Continental ms, y only
adjust rotes by inflation, extemais (prog~m~ fees, franchise costs,
cable related ~xes and feeS), and the FCC's 'Going Forward' rules
relating to channel additions.
.
What is the 'iifeEne service'?
The lifeline service is a Iow cost service which includes all channels
currently carded on Continentals be~c broadcast servic~ tier. It wiU be
priced a/15% below the FCC's benchma~c price in regulated
communities axed at 15% below current prices in unregui~tecl
communities.- ConUnentaJ will be permitted to offset basic service tier
revenue reductions on its cable programming service tiers. After this
conversion. Continental will not add any additionaJ programming to the
lifeline basic tier further protecting this price.
Who ~n'll benefit from the rfleline service?
Customers who want clear reception of all broadcast channels and a
more limited selection of chan~ va'Il .be amacted to this level of service.
People on f0cecl incomes or who want only the off-alr broa~ service
· will benefit from this Iow cost offering.
o
Will the lifeline service be offered in unregulated communities?
Even where rates are unregulated the Contract provides that ConfinentaJ
will offer its lifeline basic service at 15% below the current price with the
offset added to the cable programming service rate. "
2
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SOCIAL CONTRACT O & A
[~1] 006
When must rates be restru~ur~?
Rates which reflect the 15% lifeline Service reducti°n must be in place no
later than January 1, 199~. Other rotes, including the benchmark Cable
Programming Se~ Tier rates must also conform by that date.
.
10.
What are the restrictions on' rates prospectively?. ,
As noted previously, in ail cases rate increases are iimRecl to those
allowed by the FCC rules. Specifi~ly, Continental may taY, e inflation
and 'Going Forward' chan~ addition Incr~ and must adjust u.p and
down in accordance with the rules governing program, fees, franchase-
related cos~, cable-rela~ed fc~..s and taxes. Continental ha~ also agrcx:x:i
to forego its right to file a cost of service justirmation to support any future
rate increases in franchises covered by this Contract..
·
How ~vil[ equipment and Installation rates be se.t? ....
Continental ~n'l! be permitted to average broad categories of equipment,
such as addressable and non-addressaJ31e corlverters and remote, s, and
various installation rates on a state or region-wide basis. This will
minimize fluctuations in price; inclucrmg spikes In costs when system.
upgrades occur and new converters are introclucecL That tn turn will
facilitate acceptance of new products and services. It also reduces
regulatory costs since only one accounting form, rather than hundreds,
w~ll ~.ccd to be prepared. It also more accurately reflects the fact that
Continental Orders equipment and me'retains Its inventory and repair
facilities on a regional basis, rather than franchise by f~anchlse. It also
helps to avoid consumer confusion and ciaJrns of unfair rate
discrimination when customem compe~e rates for equipment end
installation in nearby communities.
Starting In 1996, Continental will file regional or ~t~'wide Form 1205's
with the FCC for review. Continental must give sLrbsc, n'bers 30 days
notice of any changes In equipment and instaJl~tion' prices and must
issue refunds if.the FCC later determines a lower rate is required.
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$OCIAL_.CONTRACT Q & A
11.
VVhaz kinds of refunds will consumers receive?
Under the Soc~aJ Contract. C, on~ will provide an in-kind refund to
elig~le subscn'bers under the following scenarios:
a) For basic service tier cost of service ~. ContinentaJ will
provide an in-kind refund with s minimum retail vaJue of $5.00 to
approximately 509,000 subscribers, unless a franchise authority
decides to opt out of the plan.
b) For cable programming service tiei' cost of service cases,
Conttnenta] will provide an in-kind refund with a minimum retaj'l
value of at least $4.50 to ap'proximately 818.000 subsora3ers.
c) For pre-May 15, 1994. cable programming service tier benchmark
c~ases, Continental. will provide an in-kind refund with a minimum
ret~'l value of $2.00 (o approximately 231,000 subscq73ers who
quaJify for the refund.
d) For post-MaY' 15, 1.994 cable ~mlng service tier benchmaJt<
~, Continental vaqi provide an in-kind refund equal to $8.00 to
appm~ate~ 351,000 of its subsc~'bers who quaJ'[fy for the refund
The ~ has determined which franchise areas are entitled to the
various refund amounts. In all sittrati~s descn~3ed above, Continental
will give subscribers at least three tn-ldnd refund options and at least 180
days to use the option of their choice.
12.
What' is the 'opt out' provision and how does it work?
Local franchise authorities have a right to opt'out of the $5.00 cost of
service refund requirement for basio service rates. However, .if a, c~y
chooses to opt'out, it may not use the FCC's agreed upon refund as
evidence of any liability on Continentals ~ Rather, refund liabirrty, If
any, can only be established through a rate proceeding which w'l[ be
subject to appe~l.
4
SOCIAl.. CONTRACT Q & A
--
~4~} 008
.
13.
What is the Migrated Product Tier?
The Social Con,ct allows-Continental to create one Migrated 'Procl~
T'~r. The Migrated Product Tter ~ consist initially of a maximum of four
~xisting services migrated from' cable programming service tiers.
Because the Migrated Product Tier at the outset will cx~sist of exf~ng
sen~ices, Continental v~'li not be required to re-market the tier to existing
...',subscribers. Continental will be-allowed to add new services, with no
limit on the number, to this tier.
Are there any limitations on the .channels which can be placed on the
Migrated Product Tier, or the Migrated Product Tiers rates?
Continental systems are limited to movfng fOUr existing ~
programming servfces to the Migrated Product Tier. Further. the rate for
these migrated services will not change; they will be set at the'same level
as the rates set by the Soc~aJ Contract for Con~tal's cable
programming service tiers.' However; the ~ rate for the
Migrated Product Tier may increase when new sendces a~e added. The
rate for the add'~al channels ~anql be i-whited to' $.20 per channel, plus
license fees. Continental also is prohibited from requlring the
subscription to any tier, other than ~e basic tier, as a oond?don for
subscrroing to the.Mkjrated Product 'i-~-, and may not require the
purchase of the'Migrated Product.'l"~.r as a condition for subscn'bing to a
cable progr~ming service tier.
Unffi January 1. 1997, rate increases for services on the Migr~ed
Product Tier will be r~nited to inflation and e0aemal cost Increases on the'
4 migrated channels. No increase Is allowed on ~ new channels
during that period. Beginning in 1997~ .Continental may convert the
Migrated Product Tier into an New Product 'i-~r, to be treated like any
other New. Product T~_.r under the FCC'$ regulations. However.
Continental may not require purohase of any tier other than basi~ as a
precondition of purchasing the converted Migrated Product Tier, even ff
them are ~ological limitations to me.etir~ this requirement_
oo
5
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P. 1~/16
.SOCIAL_CONTRACT Q & A
15.
16.
How will the Social Contract be enforced?
The FCC's and the local franchise authorities' ability to review
Contlnental's raze adjustments for'regulated services is not affected .by
this agreement. The FCC wgl continue to exercise jur'.~-diction over any
valid compla'mts concerning Continental'$ cable programming service
rote increases reflecting.inflation, channel changes, programming cost
-changes, and regulatory fee in~. Local franchise autho~e~
continue to monitor' and approVe any changes in basic service rates.
Continental, like any other cable operator, will be required tb justify any
regulated rate increases.
In addition, Contingnt~J will file annual progress reports with.the FCC ·
outlining its compliance w~th the capital inv~ent requirements of the
ag~,.~--ment, ff for some reason Continental were to raj[ behind In its
I:momised investment schedule, the FCC could seek further refunds. The
FCC also hss the right to inspect Continentals records and conduct
interviews to verify compl' ,~nce.
May other syn. ems which Continental acquir~ in the future be brought.
into the Social Contract?
Cable syste~ that Continental acquires after April 3, 1995 may be
brought into the Social Contract only after the acquisition has closed and
both the Commission and Continental have agreed on an amendment to
include such systems unde% the Soc~l Contrac~ -
17.
When does the Social contract take effect and for how long will i~ last?
The Social Contract will take effect when the Commission Issue~ an
order approving it and will continue in effect through December 31, 2000.
There is a thirty (30) day initial comment period which will close on May --
3. '1995 and reply comments must be filed no lair than May 18, 1995.
-lB.
Whst options are avagable to Continental If there is a change in law?
If du6ng the term of the Social Contract, any change in ~aws or
regulations would provide a material f~vorable financial Impact on the
company, Continental may petition the FCC to terminate the contract.
The FCC must act exped'~~, and cannot unreasonably refuse to
'gra~t the petition.
..
l PUBLIC NOTIC
:~,.".,,,,.~'~.,,,:F FEDERAL COMMUNICATIONS COMMISSION
1919 U STREET, N.W.
WASHINGTON, D.C. 20554
News media information 202/418-0500 Recorded listing of releases and texts 2~
FCC 95-137
Apdl 3, 1995
SOCIAL'CONTRACT FOR CONTINENTAL CABLEViSlON, INC.
AVAILABLE FOR COMMENT
THE CONfM/SSION SEEKS COMA4~N'T ON A PROPOSED SOCIAL CONTRACT WTI/-I
CONTINENT~ CABLEVISION THAT RF~OLVF. S RATE CASES, ASSURES RATE
STABIIATY, AND PROVIDES INCREASED INVESTM~.NT 'IN CABLE TV
INFRASTRUCTURE; REFUNDS oF UP TO APPROXIMATELY $9.5 MILLION TO BE
PROVIDED TO AFFECTED sUBSCRIBERS
Continental Cabievision, Inc. ("Continental") and the Federal Communications Commission
("Commission') have negotiated a social contract. The Commission is considering the proposed
Contract pursuant to its authority to regulate cable services under Tide VI of the Communications
Act and thc Commission's February 22.~ 1994 decision that it would consider social contracts as an
alternative form of regulation for cable oPerators..Thc proposed Contract will be considered for
approval.after evaluating public comment on the proposed agreement. This notice and the
proposed Contract arc being mailed to e. ach Person who has filed a rate complaint with reSPect to
one of Contincntal's systems, and to all franchising authorities that have granted a cable franchise
to Continental. This notice contains a stinmmry description of thc Contract. The terms of the
proposed Contract will be controlling and interested Persons should read the proposed Contract in
its entirety.. Copies of the proposed Contract can.be obtained in the manner described below.
·
The proposed Contract is designed to (I) assure fair and reasonable rates for Continental's
cable service customers; (2) improve Contincntal's cable service by substantially upgrading the
channel .capacity.and .technical reliability .of its united States cable systems; and (3) reduce the
admi~tivc'burdcn and 'costs of regulation for local governments, the commission, and
c°ntinental.
The proposed'six-year Contract covers both basic and cable programming service tiers in
all of Continental's cable franchises, including those that are currently um'egulated because no
franchising authority has been certified to regulate basic rates, or because, no complaint has been
filed against the cable programming services tier. Franchise areas where 'the franchise authority
has not certified to regulate rates contain approximately 1.8 million subscribers to Continental's
basic service tiers and approximately 1.3 million subscribers to Contincn~al's cable programming
services tiers. Overag, Continental serves approximately 3 million subscribers.
Under the 1992 Cable Television Consumer Protection and Competition Act, a basic service
tier is the tier of programming that contains local broadcast stations. Cable programming services
tiers are all other cable services, except those sold on a per-channel or per program basis.
Specifically, the proposed Contract provides for investment of at least $1.35 billion to
rebuild and upgrade all of Continental's domestic cable systems from 1995-2000, including
deployment of fiber optic technology, increased channel capacity and improved system reliab:.lity
and picture quality. ,
The proposed Contract provides for the resolution and termination of Continental's 148
pending basic service and cable programming services cases where Continental had justified its
rates using cost of service fflings ("cost of service cases") and 229 pending cable programming
services cases where it had used the Commission's benchmark formula to justify rates ('benchmark
cases'). As part of the resolution of these cases, Continental will make in-kind refunds to affected
customers totalling approximately $9.5 million and conform all of its basic service benchmark and
cost of service rates to 15% below the Corr!mission's benchmark formula as described below. In
unregulated franchise areas, basic rates will be reduced 15 % below the current rates.
· In settlement of Continental's cost of service cases:
Continental will provide each of its approximately 509,000 subscribers to
basic service tiers with an in-kind refund with a minimum retail value of
$5.00. These refunds will have a minimum aggregate retail value of
approximately .$2,545,000.
Continental will provide each of its approximately 818,000 subscribers to
cable programming services tiers with an in-kind refund with a minimum
retail value of $4.50. These refunds will have a minimum aggregate retail
value of approximately $3,681,000.
· In settlement of Continental's benchmark cable programming services caseS:
For pre-May 15, 1994 cabl/:, programming services benchmark cases
Continental will 'provide each of'the approximately 231~000 subscribers, who
the Commission has determined qualify for a refund, with an in-kind refund
having a minimum retail value of $2.00. These refunds will have a
minimum aggregate retail value 0f $462,000.
For post-May 15. 1994 cable programming services.-benchmark cases
currently pending before the Commission~ Continental will provide each of
the approximately 351.000 subscribers, who the Commission has determined
qualify for a refund, with an im.t'-ind refund having a minimum retail value of
5;8.00. The.~ reftmds will 'trove a minimnm aggregate retail value of
approximately 5;2,808,000.
The resolution of pending rate cases is w:'hout any finding by the Commission of any
wrongdoing by Continental.'
Basic service tier benchmark ~ currently pending before ~ authorities will be
resolved by Continental and the franchise authority pursuant to Commission rules.
Francl~se authorities will have the ability m opt out of the basic service tier cost of service
refunds specified by the proposed Contract and to resolve with Continental any amounts owed to
customers pursa,ant to Commission rules. To opt out of the proposed Contract provisions,
franchise authorities must provide written notice to the Commi~ion of its decision to do so no
later than forty-five (45) days following the publication date of this notice.
Continental will forego its right to use cost of service justificatiOns to support any future
rate increases in any f-canchis~ covered by this proposed Contract during the period that the
Contract remains in effect. ,'
.,
Continental will-reduce its existing basic service tier rates in all franchises, creating- a
'lifeline basic' tier. To accomplish thi_~, Continental will reduce its basic service tier rates for all
reguhted franchises, including franchises where benchmark and cost of service cases have been
filed, to .15 % below the Commission's benchmark rate formula. Continental will reduce its basic
service tier rates for all unregulated franchises w 15 % below their current rate levels. Continental
will be Pemaitted to offset each of the 15 % reductions by increasing the rate for its cable
programming services-tier.' After thi_~ conversion, which will be implemented no later than
January 1, 1996, Continental will not add any additional progranmaing to its lifeline basic tiers.for
the term of the proposed Contract. except as specifically required by franchise authorities or as
required by law.
Cable programming services tier rates for franchises for which Continental justified its rates
under cost of service principles will be set at current rates. By January 1, 1996, the cable
programming services rates for all Continental franchises that established their rates pursuant to the
Commission's benchmark formula will comply with the Commission's benchmark rules. Cable
programming services tiers rates that are currently unregulated will be set at current levels. In
each case, Continental will be perminecl to adjust its cable programming services rates to offset the
15 % reductions in its basic service tier and to allow for external cost increases, inflation and
channel additions Permitted by the Commission's Going-Forward rules. Under the Going Forward
rules, Continental is permitted, subject to limits prescribed in those roles, to add new services and
to reflect the cost of those new services by an amount not to exceed $.20 per added channel, plus
the actual license fees for the added channels. Continental will be permitted to conduct a second
round of channel additions from 1998-2000 under the same terms.
Continental will be .permitted to average broad categories of equipment and various
installation costs for all its systems on a state-wide or region-wide basis.
Continental will be permitted on each system to move not more than four existing services
on cable programming services tier(s) to a single Migzated Product Tier, provided the Migrated
Product Tier is offered without requiring customers to purchase any tier other than the basic
service tier. The rates of the Migrated Product Tier will be regulated in accordance with price
'limits contained in the proposed Contract until January 1, 1997, at. which point Continental systems
may elect to convert their Migrated Product Tic, s into New Product Tiers, as defined by the Going
Forward roles, provided that the tier continues to be offered without requiring customers to
purchase any tier other than-the basic service tier. The rates for the New Product Tiers are
regulated by market forces.
The Commi~ion will treat thix prig as a non-restricted p~ing. 47 C.F.R.-
§§ 1.1206, 1.1200(a). Parties wishing to comment on the.proposed Contract should do so by
filing with the Secretary no later than May 3, 1995 an original and four copies of their comments.
Replies may be fried no later than May 18, 1995. All such pleadings should reference the file
number noted above. All comments will be available to any of the .parties upon request.
Franchise authorities that wish to.opt out of the basic service tier cost of service refunds
specified by the Contract, must provide written notice to the Commi~ion of its decision to do so
by May 18, 1995. Ail such notifications should referenced.the file number noted above.
The contract is available for reference in the Cable Services Bureau's public reference
room, Room 333 at 2033 M Street, N.W., Washington, D.C. Copies are available from the
Commission's copy contractor, International Transcription Services, at Room 246, 1919 M Street,
N.W., Washington, D.C., 20554, telephone number (202) 857-1433. The contract is also
available' via Imemet at ftp~fec, gov. For further ixfformation, contact JoAnn Lucanilc; Jerome
Fowllces. or Lenworth Smith, Jr. (202) 416-0800.
Media contacts: Audrey Spivack (202) 41.8-O500 and Morgan Broman (202) 416-0852.
-FCC-
TABLE OF CONTENTS
PAGE NO.
I. BACKGROUND AND SUMMARY ................. 1
II. DEFINITIONS ..................... 5
III. TERMS AND CONDITIONS OF THE SOCIAL CONTRACT ...... 6
A. Customer Refunds ............. ~ .... 6
1. Cost-of-Service Franchises .......... 6
a. BST Cost-of-Service Cases ........ 6
b. CPST Cost-of-Service Cases . . .... . . 7
2. Benchmark Franchises .. ............ 8
a. .BST Benchmark Cases' . . . . . ....... 8
· b. CPST Benchmark Cases ........ - . 8
·
B. Creation of a Low-Cost, Lifeline Basic Service
Tier and Rate Stability Plan ........... 9
1. Creation of a Low-Cost, Lifeline Basic
Service Tier ................. 9
2. Rate Stability Plan ............. 10
a. Benchmark Franchises .......... 10
I). BST Rate .............. 10
2). CPST Rate ............. 1D
b. Cost-of-Se.rvice Franchises ........ 11
1). BST Rate .. ............. 11
2). CPST Rate - - -. .......... 11
c. Unre~lated.Franchises .. ........ 11
1). BST Rate ...... ~' . .... 11
2).. CPST Rate .......... 12
C.
De
Se
Fe
Go
I o
Je
Ko
Lo
do
Limina~ions on Rate Increases .
Equipment and Installation Rates for Ail
Systems . . .
BST Rates .
·
· ·
2. CPST Rates ........
· ·
·
3. Equipment and InstallatiOn Rates
·
4. Waiver of Right to File Cost-of-Service Cases
for Future Rate Increases
Resolution of Existing Rate Cases ........
· 15
Infrastructure Upgrade Commitment ......... 18
1. Infrastructure Upgrade: Financial .
- - . 18
2. Infrastructul~ Upgrade: Technical .
..... 19
3. Infrastructure Upgrade: Non-Discrimination . 20
4. Infrastructure Upgrade: Failure to Meet
Investment Target ......
........ 20
Migrated Product Tiers and New Product Tiers - - 21
1. Migrated Product Tiers . . .
· - . 21
2. New Product Tiers ......
...... . '22
Franchises Subject to Effective or Price-
Constraining Competition .....
........ 23
Acquired Systems .........
L~cal Franchising Authority Ri.h ........ 23
the Cos - _ - g t to Opt Out of
t of Service Refund Settlement
....... 23
1. Right to Opt Out ........
2. Effect of 'Optin~ Out .....
....... 24
Reporting Requirements . .
· ' ' - - . 24
.o
Modification and Termination
' 25
All Necessary Waivers and Preemptions Deemed
Granted .
13
13
- . 13
. 14
- 14
25
M. Ter~ ...................
N. Service of Contract and Public Notice on
Interested Parties ............
O. Public Notice .....
P. Entire Agreement .......
26
. 26
26
27
Q. Severability ................. 27
SOCIAL CO~I~RACT FOR
CONTINENTAL CABLEVISION, INC.
I. BACKGROUND AND SUMMARY.
The "Social Contract" set out in this document (the
"Contract") relates to services ~nd equipment offered by
Continental Cablevision, Inc. ("Continental") and its
subsidiaries actually or potentially subject to regulation under
the terms of the applicable provisions of Title VI of the
Communications Act of 1934, as amended ("Act").
The Commission believes that this Contract will advance the
public interest by: (1) assu~ing fair and reasonable rates for
Continental's cable service customers; (2) improving
Continental's cable service by substantially upgrading the
channel capacity and technical reliability of its United States
cable systems; and (3) reducing the administrative burden and
costs of regulation for local governments, the' Federal
Communications Commission ("Commission"), and Continental.
The Contract has been negotiated by Continental and the
Commission in accordance with the Commission's authority to
consider and adopt "social contracts" as an alternative to other
regulatory, approaches applicable to cable television rates, ~ee
gost-of-serVice Order, 9 FCC.Rcd. 4527, ¶¶ 295-304 (1994), and
its authority to regulate Continental's cable services under the
Act.
.,
This Contract covers all of Continental's cable systems
owned as of the Publication Date, including those franchises that
are unregulated either because no Local Franchise Authority
DRAFT
("LFA") has certified and/or no complaint has been filed. Those
unregulated franchises serve approximately 60% or 1.8 million of
Continental's basic service tier ("BST") subscribers and
approximately 46% or 1.3 million of Continental's cable
programming service tier ("CPST") subscribers. Thus, the
Contract will provide rate stability and other benefits for
Continental customers regardless of their regulatory status.
The principal terms of the Contract are:
· The resolution of 148 cost-of-service cases and 229
benchmark cases. ~he 148 coSt-of-service cases
consist of 73 BST and 75 CPST cases filed between
September 1, 1993 and the Publication Date. The 229
CPST benchmark cases consist of 129 Form 393 cases and
100 Form 1200 cases filed between September 1, 1993 and
the Publication Date.)
· As part of the resolution of these cost-of-service
and benchmark cases, Continental will make in-kind
Refunds to its affected customers totalling
approximately $9.5 million.
The rates for BST cost-of-service cases resolved
pursuant to this Contract will be reduced as necessary
from their current levels, which Continental submitted
under cost-of-service principles, to le~els calculated
pursuant to Commission Form 1200. Future BST increases
for these franchises will be based solely on inflation
, DRAFT
and external cost'increases, as permitted by 47 C.F.R.
§ 76.922(d), including all-subsequent clarifications
and amendments.
LFAs will have the abixity to "opt out" of BST cost-of-
service Refunds and elect to resolve any amounts owed
to customers with Continental pursuant to-Commission
rules. Also, BSTbenchmark cases currently pending
before LFAs will be resolved by Continental and the
LFAs pursuant to Commission rules.
Continental will c6nvert its existing BSTs in all
franchises into "Lifeline Basic" tiers so that
customers who.only can afford or who only wan~ the most
basic local programming may purchase it for a low
monthly fee.' To accomplish this, Continental will
reduce its BST rates for all re~qulated franchises to
15% below the rates required byCommission Form 1200
and'will reduce its BST rates for all unrequlated
franchises to 15% below Current Rates.
Continental will forego its right to use cost-of-
service justifications to support, any future rate
increases in any franchises covered by this Contract
during the period that the Contract remains in effect.
On a going-forward basis., Continental's..BST and CPST
rates for all subscribers will be limited by the
Commission's rules for inflation and external cost
, DRAFT
adjustments and by the "Going-Forward" rules. In order
to fund the six-year capital spending program required
as part of this Contract, Continental will be permitted
to conduct a second round of "Going-Forward" channel
additions over the three-year period from'1998-2000.
Continental will be permitted to migrate up to four
existing CPST services on each system to a single
"Migrated Product Tier" ("MPT"), provided the tier is
offered without a buy-through requirement of any tier
other than the BST.,' Initially, the MPT will be capped
at current CPST levels for the migrated channels on the
tier, and increases will be based on inflation and
external costs, pursuant to Commission rules. However,
there will be no limitation on the number of new
channels that Continental may add to this tier at the
price of $.20 per channel Plus license fees. After
January 1, 1997, Continental may convert the MPT into a
New Product Tier ("NPT"), provided the tier is offered
without a buy-through requirement of any tier other
than the BST.
Continental agrees to spend at least $1.35 billion from
1995 through 2000 to rebuild and upgrade its domestic
cable facilities. This represents an annual investment
..
that is 120% of Continental's average annual capital
expenditures from 1990 through 1994.
DRAFT
· This Contract or any settlement contained herein does
not constitute an admission by Continental of any
violation of, or failure to conform to, any law, rule,
or policy.~
II. DEFINITIONS.
For the purposes of this Contract, the following definitions
will apply:
(a) "Current Rates" means those Continental system rates
that are in effect as of the Publication Date, or rates
that will become e~fective after the Publication Date
.
and for. which notice was given to subscriberD on or
before March 1, 1995.
(b) "Effective Date" means the date on which the Commission
issues an order approving this Contract..
(c) "Eligible Subscribers- means those subscribers 'who the
Commission has determined qualify for a Refund in
continental franchises where there is a pending CPST
benchmark'case.
(d) "Going-Forward rules" means the Commission's rules
adopted in the Sixth'Order on Reconsideration, 76
R.R.2d (P&F) 859 (1994), including all subsequent
clarifications and amendments.
(e) "Lifeline Basic" means a Continental BST that has had
its rates reduced 15% pursuant to section III.B. below.
, DRAFT
(f) "Migrated Product Tier" or "MPT" means a tier
consisting of up to four services moved from a system's
existing CPST(s) and to which other services may be
added (as described in section III.F. below).
(g) "Publication Date" means the date on which this
Contract was placed on public notice by the Commission.
(h) "Refund" means an in-kind service off~ring in lieu of a
cash amount. Such Refunds may include premium
services, pay-per-view services, additional outlet and
~VCR installations, ~iewing guides, and other services
or items having an established retail value.
III. TERMS AND CONDITIONS OF THE SOCIAL CONTRACT.
A. Customer Refunds.
Pursuant to the settlement of Continental's.existing
benchmark and cost-of-Service cases as described in this section,
Continental will provide customer Refunds, which in the aggregate
'total approximately $9.5 million, as set forth below. The
Refunds required pursuant to this section are listed in Exhibits
1-5.
1. CoSt-of-Service Franchises.
a. BST Cost-of-Service Cases.
1). In settlement of Continental's pre- and
post-May 15, 1994 BST cost-of-service cases on file as of the
Publication Date, Continental will provide each of its
approximately 509,000 cost-of-service subscribers with an in-kind
DRAFT
Refund with a minimum retail value of $5.00. This Refund has a
total consolidated retail value of approximately $2,545,000.
Continental will ensure that all of.these cost-o.f-~ervice
Subscribers have at least three in-kind Refund options and at
least 180 days to use the option{s) of their choice. Within 30
.days of the Effective Date, Continental will submit to the
Commission for its approval a-list of proposed in-kind Refund
options.
2). Where an LFA elects to "opt out" of BST
cost-of-service settlements ~nder section III.I. below, the
consolidated Refund value shall be reduced by the prodhct of the
number of subscribers in the BST cost,of-service franchises for
which LFAs have "opted-out" times the per subscriber Refund
amount.
b. CPST Cost-of~Service Cases.
In settlement of Continental's pre- and post-May 15, 1994
CPST cost-of-service cases on file with the Commission as of ~he
Publication Date, Continental will provide each of its
approximately 818,000 cost-of-service.subscribers with an in-kind
Refund with a minimum retail value of at least $4.50 This
Refund has a total consolidated retail value of approximately
$3,681,000. Continental will ensure that all of these cost-of-
service subscribers have at least three in-kind Refund options
and at least 180 days to use the.option(s) of their'choice.
Within 30 days of the Effective Date, Continental will submit to
DRAFT
the Commission for its approval a list of proposed in-kind Refund
options.
2. Benchmark Franchises.~
a. BST Bencb~rk Cases.
Continental will resolve any pending BST benchmark rate
matters, including any possible refUnds, with the affected LFAs,
pursuant to Commission rules. Nothing in this Contract,
including Continental's commitment to reduce BST rates to a level
15% below the applicable Form 1200 rate, shall empower LFAs to
order refUnds beyond any tha~ would be required pursuant to
commission rules.
b. CPST Benchmark Cases.
1). In settlement of 'Continental's pre-May
15, 1994 CPST benchmark cases on file with the Commission as of
the Publication Date, Continental will provide each of
approximately 231,000 Eligible Subscribers with an in-kind Refund
with a minimum retail value of $2..00. This Refund has a total
consolfdated retail Value of $462,000. continental will ensure
that these Eligible subscribers have at least three in-kind
Refund options and 'at least 180 days to use the option(s) of '
their choice. Within 30 days of the Effective Date, Continental
will submit to the Commission for its approval a list of proposed
in-kind Refund options. ..
2). In settlement of Continental's post-May
15, 1994 CPST benchmark cases on file with the Commission as of
DRAFT
the Publication Date, Continental will provide each of
approximately 351,000 Eligible Subscribers with an in-kind Refund
equal to $8.00. This Refund has a total consolidated retail
value of approximately $2,808,000. Continental will ensure that
these Eligible Subscribers-have at least three in-kind Refund
Options and at least 180 days.to use the option(s) of their
choice. Within 30 days of the Effective Date, Continental~will
submit to the Commission 'for its approval a list of proposed in-
kind Refund options.
o
·
B. Creation of a Low-Cost, Lifeline Basic Service Tier and
Rate Stability Plan.
o
No later than January 1, 1996, Continental shall lower all
of its BST rates. The rate reductions shall be implemented as
set forth below:
1, Creation of a Low-Cost, Lifeline Basic Service
Tier.
In order to provide its customers with the option to
purchase a iow-cost basic service tier, Continental will create a
Lifeline Basic tier by reducing the rates for its BSTs 15% as set
forth in the next section. This conversion to Lifeline Basic
service will be implemented no later than January 1, 1996. After
this conversion, Continental will not add any additional
programming to the Lifeline Basic tier for the term of this
Contract, except, with prior notice to the Commission, as
specifically required by LFAs or as required by law.
DRAFT
2. Rate Stability Plan.
a. Benchmark Franchises.
1). BST Rate.
By January 1, 1996, the BST rate for all Continental
franchises that establ£shed their BST rate Pursuant t? the
Commission's benchmark formula will be reduced 15% below the FOrm
1200 level, as of the Publication Date, and then adjusted at
Continental's option, pursuant to Commission rules, for any
previously unrecovered inflation and external costs that have
accrued through the most recently completed'calendar quarter
prior to such Lifeline Basic rate. reduction.
2). CPST Rate.
--.
By January 1, 1996, the CPST rate for all Continental
franchises that established their rates pursuant to the benchmark
formula will be set in accordance with Commission Form 1200, as
of the Publication Date, and then adjusted at Continental's
option for: (a) any channels added pursuant to the Commission's'
Going-Forward rules; (b) an. amount which yields the total.
revenues foregone by the 15% Lifeline Basic rate reduction; and
(c) pursuant to Commission rules, any previously unrecovered
inflation and external costs that have .accrued through the most
recently completed calendar quarter prior to such Lifeline Basic
rate reduction. ..
10
'DRAFT
b. Cost-of-Service Franchises.
1). BST Rate.
By January 1, 1996, the BST rate for all Continental
franchises that filed a BST cost-of-service justification will be
reduced 15% below the level that would be allowable ~ased on the
Form 1200, as of the Publication Date, and then adjusted at
Continental's option, pursuant to Commission rules, for any
previously unrecovered inflation and external .costs that have
accrued through the most recently completed calendar quarter
prior to such Lifeline BasicYrate r~duction.
2). CPST Rate.
By January 1, 1996, the CPST rate for all Continental
franchises that filed a CPST cost-of-service justification will
be maintained at the Current Rate, and then adjusted at
Continental's optio~ for: (a) any channels added pursuant to the
.Commission's Going-Forward rules; (b) an amount which yields the
total revenues foregone by the 15% Lifeline Basic rate reduction;
and (c) pursuant to Commission rules, any previously unrecovered
inflation and external costs that have accrued through the most
recently completed calendar quarter prior to such Lifeline Basic
rate reduction.
c. Unregulated Franchises.
1). BST Rate. .-
i. By January 1, 1996, the BST rate
for all.franchises that are unregulated as of the Publication
' DRAFT
Date will be reduced 15% below the Current Rate, and then
adjusted at Continental's option, pursuant to Commission rules,
for any previously unrecovered inflation and external costs that
have accrued through the most recently completed calendar quarter
prior to such Lifeline Basic rate reduction.
ii. Since approximately 60% of
Continental's BST customers are in unregulated franchises, this
provision will assure rate stability and provide other benefits·
for approximately 1.8 million Continental customers whose rates
are unregulated as of the Publication Date.
iii. The order approving the Contract
shall affirmatively find that rates set pursuant to this
paragraph are reasonable under the Act and the Commission's
rules.
2).
CPST Rate.
i. By January 1, 1996, the CPST rate
for all franchises that are unregulated as of the Publication
Date will-be maintained at the Current Rate, and then adjusted at
Continental's option for: (a) any channels added pursuant to the
Commission's Going-Forwardrules;.(b) an amount which yields the
total revenues foregone by the 15% Lifeline Basic rate reduction;
and (c) pursuant to Commission rules, any previously unrecovered
inflation and external costs that have accrued through the most
recently completed calendar quarter prior to such Lifeline Basic
rate reduction.
12
DRAFT
ii. Since approximately 46% of
Continental's CPST customers are in unregulated franchises, this
provision will assure rate stability and provide.other benefits
·
for approximately 1.3 million Continental customers whose rates
are unregulated as of the Publication Date.
iii. The order approving the Contract
shall affirmatively find that rates 'set pursuant to this
paragraph are reasonable under the Act and the Commission, s
rules.
d. Equipment and Installation Rates for All
Systems.
In order t° reduce accounting and regulatory costs, minimize
fluctuatiOns in consumer equipment prices, and eliminate large
increases in such prices as system upgrades occur pursuant to the
terms of section III.E., Continental will be permitted to average
broad categories of equipment -- such as addressable and non-
addressable converters, and remotes -- and various installation
costs for all its systems on a state-wide or region-wide basis.
For purposes of this Contract, "region-wide- refers to
Continental's five operating regions, described in Exhibit. 6 to
this Contract, and any reasonable modifications tO Such regions.
C. Limitations on Rate Increases.
1. BST Rates.
..
After a Continental franchise's rates are restructured as
required under the "Rate Stability Plan" described in the
]3
, DRAFT
previous section, future BST rate increases will be governed by.
the Commission's rules regarding the pass through of external
cost increases and inflation.
2. CPST Rates.
After a Continental franchise's rates are restructured as
required under the "Rate Stability Plan" as described in the
previous section, future. CPST rate increases will be governed by
the Commission's rules regarding the pass through of external
cost increases and inflation and by the Going-Forward rules,
except as modified herein. S~ecifiCally, Continental will be
entitled to conduct a second'round of channel additions'over'the
three-year period from 1998 through 2000 in accordance with the
existing Going-Forward rules.
3. Equipment ~d Installation Rates.
Beginning on January 1, 1996, Continental will file annual
updates to its Form 1205 equipment and installation rates with
the commission. The Commission shall review each updated Form
1205. continental may begin charging revised equipment and
installation rates to customers based upon the updated Form 1205
upon thirty (30) days notice. These revised equipment and
installation rates wilI be subject t° refund if the Commission
later concludes that lower state-wide or region-wide rates are
called for by the Form 1205 and applicable rules...
~ DRAFT
4. Waiver of Right to File Cost-of-Service Cases for
Future Rate Increase~o
Upon the Effective Date of the Contract, Continental agrees
not to file cost-of-service-based rate justifications for any
future, rate increases in any franchise covered by this Contract
during the period that the Contract remains in effect.
D. Resolution of Existing Rate Cases..
1. Ail CPST benchmark and BST and CPST cost-of-
service cases currently pending, before the Commission are
resolved and finally terminated as part of the adoption of this
I°
Contract.
2. All BST cost-Of-service cases currentl~ pending
before an LFA are resolved and fully 'terminated as part of the
adoption of this Contract, subject to the right of LFAs to "opt
out" of BST cost-of-service Refund settlements under the terms of
section III.I. below.
3. Continental accepts the jurisdiction of the
Commission over it and the subject matter of these rate
settlements for purposes of this Contract and the order approving
this Contract.
4. The Commission has reviewed Continental's CPST
benchmark and BST and CPST coSt-of-service filings. In light of
this review, the covenants and representations contained in this
Contract, and in express reliance thereon, and i~ order to
conserve Commission resources, avoid litigation costs, and
15
DRAFT
achieve the other benefits to the public contained in'the
Contract, the Commission agrees to resolve and terminate all
cases involving Continental currently pending before it and all
pending BST cost-of-service cases currently pending before LFAs,
subject to the right of LFAs to "opt out" of the BST cost-of-
service Refund settlement under the terms of section III.I below.
5. This settlement is without a finding by the
Commission of any wrongdoing by Continental. Further, the
Commission agrees that it will not institute, on its own motion,
any proceedings against Continental based upon the information
obtained during the consideration of the Contract. In addition,
in the absence of additional facts, the Commission agrees that
any allegations and other circumstances involved in consideration
of this Contract or settlement of the pending rate cases will not
be.used against Continental with respect to any future
proceedings at the Commission. Nor may they be used against
Continental.as evidence of any refund liability due subscribers
in any proceeding conducted by any LFA that elects to opt out of
the BST coSt-of-service Refund settlement pursuant to section
·
III.I. below.
6. Similarly, neither the Contract, nor any
settlement contained herein, constitutes an admission by
Continental of any violation of, or failure to conform to, any
.,
law, rule, or policy.
16
DRAFT
7. In consideration for the Commission's agreement to
enter into this Contract and resolve and terminate pending
benchmark and cost-of-service cases in accordance with the terms
of this Contract, Continental hereby agrees to the terms,
conditions, and procedures contained in the Contract, which
Continental and the Commission believe will facilitate a fair and
expeditious resolution of these.cases in a manner that serves the
public interest.
8. Continental waives any rights it may have to
judicial review, appeal, or rights otherwise to challenge or
contest the validity of any order adopting this Contract, or to
use this Contract as evidence in any such proceeding.
Continental agrees that the provisions of this Contract shall be
incorporated by reference in the order formally approving this
Contract Continental and the Commission agree that they will
each actively defend any order adopting the provisions of the
·
Contract against any appeal' of or other legal challenge to such
an order by any third party. Continental and the Commission each
agree that they will reasonably cooperate withthe other in any
such defense of the Contract.
9. Continental agrees that any violation of this
Contract or the order approving this Contract shall Constitute a
violation of a Commission order, entitling the Commission to
..
exercise any rights and remedies attendant to the enforcement of
a COmmission order.
17
DRAFT
10. The Commission and Continental further agree that
the effectiveness of this Contract is expressly contingent upon
resolution and termination of Continental's CPST benchmark and
BST and CPST cost-of-service proceedings (except as LFAs may
elect to oPt out of the BST cost-of-service Refund settlement
· .
under section III.I. below), issuance of an order approving the
Contract, and Continental's compliance with the terms,
conditions, and procedures set forth in the Contract. If this
Contract is not approved by the commission and accepted by
Continental, or if the Contra~t is otherwise rendered invalid, in
whole or in part, by final order of any court of competent
jurisdiction, the Contract or such part may not be used in any
fashion in any legal proceeding.
11. If the Commission, or the United States on behalf
of the Commission, brings an action in any United States District
Court to enforce the terms of the order approving the terms of
this Contract, Continental agrees, subject to the terms of the
previous paragraph, that it will not contest the validity of the
order, and will consent to a judgment inCorporating the terms of
this Contract.
E. Infrastructure Upgrade Co---~tment.
'1. Infrastructure Upgrade: 'Financial.
Continental commits to invest at least $1.35 billion from
.,
January 1, 1995 through December 31, 2000, to substantially
upgrade all of its cable systems nationwide so as to meet the
DRAFT
technical upgrade commitment specified in the next paragraph.
Continental will make an annual investment for rebuilds and
upgrades of' its'United States cable systems, which is at least
120% of its average aggregate annual capital expenditures from-
1990 through 1994. Accelerated expenditures will be credited
toward future years during the Contract period. Ail of the $1.35
billion will be dedicated to Continental cable systems within the
United States.
2. Infrastructure Up~rade: Technical.
The investment commitment described in the previous
·
paragraph will be used to upgrade and rebuild Continental's U.S.
cable systems so that, by December 31, 2000, the following
minimum conditions will be met:
· For each Continental cable system less than 550
MHz, channel capacity will increase by a minimum
of 20% of. its capacity, measured in MHz.
· Ail Continental subscribers will be served by a system
with a capacity of at least 550 MHz;
· At least 50% of Continental subscribers Will be
ser~ed bY a system with a capacity of at least '750
Systems serving at least 85% of Continental
subscribers will utilize fiber optic t~chnology to
transport signals from the system headend to
neighborhood nodes;
19
· Ail Continental systems will utilize
addressability or other suitable technology
to make interactive services available to
subscribers and to enhance the ability of
consumers to make service choices.
Continental will use its best efforts to
deploy new technology in a manner that is not
disruptive to consumers; and
· System reliability and picture quality will be
improved thrOugh %he replacement 'of active
components (amplifiers) with passive conductors
(fiber).
3. Infrastructure Upgrade: Non-Discrimination.
Continental will distribute its system upgrade efforts so as
not to discriminate among subscribers based on socio-economlc
status.
DRAFT
4. Infrastructure Upcjrade: Failure to Meet
Investment Target.
If, at the end of.any calendar year, Continental has failed
to invest at least 85% of the annual amount committed to
infrastructure upgrades, taking into consideration accelerated
payments from previous years as described in paragraph 1 of this
section, Continental will be required to make an in-kind Refund
.o
equal to the amount by which.that year's capital expenditure
falls short of its required annual investment. Any Refund
20
DRAFT
applicable to a given year may be stayed, at.Continental's
option, for one year to allow Continental to meet its upgrade
investment commitment by the end of the following year. If by
the end of the following year Continental has met. its investment
'commitment for the previous year, then no Refunds shall be due.
Refunds shall be structured so as to compensate those customers
who have not benefitted from the technical upgrade requirements
set out in paragraph 2 of this section.
F. Migrated Product'Tiers and New Product Tiers.
1. Migrated Product Tiers.
a. .On.each of its systems, ContinentaL'may move
a maximum of four CPST services to a single "Migrated Product
Tier" ("MPT"). Because the MPT will initially consist of
services subscribers have already asked to receive, Continental
will not be required to re-market the MPT to existing
subscribers. These migrated channels may also be offered on an ~
~a carte basis. Continental may not require the subscription to
any tier, other than the BST,' as a condition for subscribing to
an MPT, and may not require subscription to an MPT as a condition
for subscribing to a CPST.
b. Initially, Continental will set the rate for
a franchise's MPT at the same level, on a per channel basis, that
~ The purchase of the BST will continue to be required
pursuant to Commission rules. See Act, § 623(b) (8) (A); ~ate
Order, 8 FCC Rcd. at ¶ 165.
.DRAFT
is set for that franchise's CPSTs under section III.B.2. above.
There will be no limitation on the number of .new services
Continental may add to an MPT. Continental may increase the
price of an MPT to reflect new services added to the MPT by an
amount not to exceed $.20 per added channel, plus th~ actual
license fee(s) for the added channel(s).
c. Because customers will be able to subscribe-
to CPST(s) and an MPT on a stand-alone basis, the Commission will
regulate MPT prices as of January 1, 1997 in the same manner in
which the Commission currently regulates NPT prices. Prior to
January 1, 1997, previously unrecovered inflation and ~xternal
cost increases will be permitted on the migrated services in the
manner permitted by the Commission's rules for CPSTs.
2. Mew Product Tiers.
On or after January 1, 1997, Continental may convert the MPT
in each system into an NPT, as defined in 47 C.F.R. § 76.987,
including subsequent clarifications or amendments. These NPTs
will be treated as all other NPTs under the ~Commission's rules,
provided the tier is offered without a buy-through requirement of
any tier other than the BST. Also, nothing in the Contract shall
be construed to prevent Continental from creating other NPTs
and/or offering ~ la carte channels pursuant to Commission rules.
·
G. Franchises Subject to Effective or Price-Constraining
Co~petition.
DRAFT
The rate regulation terms of this Contract shall not apply
to those Continental.franchises that the Commission has found to
be: (1) subject to effective competition under the Act; or
(2) price constrained by competition. However, Continental's
upgrade commitments set out in section III.E. continue to apply
to such franchises.
H. Acquired Systems.
Cable systems acquired by Continental after the Publication'
Date may be incorporated into this Contract only after the
acquisition has closed and t~e Commission and Continental have
agreed on an amendment to include such systems under this
Contract. Notwithstanding the foregoing, Continental Will not be
permitted to create an MPT pursuant to this Social Contract for
acquired systems if NPTs already'exist in those systems as a
result, of ~ ~a garte packaging by the prior owner(s) of such
systems.
I.
Local Franchising Authority Right to Opt Out of the
Cost-of-Service Refund Settlement.
1. ~igbt to o~t Out.
LFAs with pending BST cost-of-service cases will have the
opportunity to "opt out" of the BST cost-of-service Refund
settlement provisions of this Contract and resolv~ any amounts
owed to customers in such franchises with Continental pursuant to
..
Commission rules. To opt out of such provisions, an LFA must
provide written notice to the Commission of its decision to do so
23
· DRAFT
no later than forty-five (45) days following the Publication
Date.
2. Effect of Opting Out.
a. In any franchise area where the LFA has opted
out, Continental shall not be required to provide any Refunds to
BST customers, as provided for in section III.A.l.a.
Additionally, an LFA may not use the facts or circumstances of
this Contract, including any Refunds agreed upon by Continental
or Continental's agreement to reduce rates and to create a
Lifeline Basic tier, as evidence in any rate Proceeding of any
refund liability due BST subscribers.
b. In any franchise Where the LFA opts out under
this section, Continental retains the right to pursue any and all
legal remedies regarding the decisions of the LFA, including
appeals to the Commission and/or to appropriate state, local,
and/or federal courts.
J. Reporting Requirements.
1. No later than ninety (90) days following the end
of each calendar year that the Contract is in effect, Continental
will provide an annual progress report to the Commission
outlining the amount of capital investment Continental has made
in compliance with section III.E.1.; the number of subscribers
affected by such capital investment; system reliability and
service improvements resulting from' upgrades completed during the
14
previous calendar year; and Continental's projected expenditures
and upgrades for the following year.
2. The Commission shall have the right to inspect the
books and records of Continental to verify compliance with the
terms of this Contract and to interview corporate employees.
K. Modification and Termination.
1. The COntract may not be terminated or modified
without the mutual agreement of Continental and the Commission.
The Commission's consent to any such modification shall be
·
demonstrated by an order issued by the Cable Services Bureau or,
at the CommisSion's option, by the commission itself.'
2. If the laws or regulations applicable to any
services offered in any Continental franchise change during the
term of the Contract in a manner that Would provide a material
favorable financial impact on Continental, then at any time after
such change has occurred, Continental may petition the Commission
to terminate this Contract. The Commission shall act
expeditiously on such Petition, and grant of the petition will
not be unreasonably withheld.
L. All Necessary wa~vers and Preemptions Deemed Granted.
In addition to the specific waivers of the Commission's
rules identified in the Contract, the order approving the
Contract shall affirmatively state that any and all waivers of
the Commission's rules, and any modifications to Commission
forms, necessary to effectuate the terms of the Contract are
° DRAFT
deemed to be granted. The Commission will not assert in any
proceeding that Continental's compliance with the terms of the
Contract violates any Commission rule or order, and, in any
proceeding before the Commission brought by a third party, a
showing by Continental that it ~as complied with the terms of the
Contract shall constitute a defense to any claim that
Continental's actions in meeting the terms of the Contract
constitute a violation of any applicable Commission rule or
order.
M. Term.
This Contract shall become effective when the Commission
issues an order approving the Contract and shall continue in
effect through December 31, 2000, subject to section III.K. above
regarding modification and termination.
N. Service of Contract and Public Notice on Interested
Parties.
Continental .will serve a copy of this Social Contract and
the Public Notice announcing this proposed resolution on all
Continental LFAs and also will serve all parties to any pending
Continental cost-of-service or benchmark rate proceeding.
O. Public Notice.
The Commission will promptly issue a public notice in which
the Commission proposes to adopt the Contract as a final order
..
governing Continen[al's provision of cable services, and shall
provide interested parties with thirty (30) days to comment on
26
DRAFT
the Contract and an additional fifteen (15) days in which to file
reply comments.
P. Entire Agreement.
This Contract and its exhibits, as either or both may be'
amended in accordance with the terms herein, constitute the
.entire agreement between Continental and the Commission with
respect to the subject matter.of this Contract and supersede all
prior agreements and understandings, whether oral or written,
between Continental and the Commission with respect to the
subject matter of this Contract. No representation, warranty,
promise,.inducement, or statement of intention has been made by
Continental or the Commission which is not embodied in this
Contract, and neither party shall be bound by, or be liable for,
any alleged representation, warranty, promise, inducement, or
statement of intention not embodied in this Contract or its
exhibits.
Q. Severability.
If any provision, clause, or part of this Contract is
invalidated, the remainder of this Contract shall not be affected
thereby and shall remain in effect; provided, however, that if
such invalidation is material to this Contract, the parties shall
negotiate in good faith to reconstitute the Contract in a form
·
that is, to the maximum extent possible, consistent with the
original intent of Continental and the Commission.
27
IN WITNESS WHEREOF, this Contract has been duly executed and
delivered by or on behalf of the parties hereto as of the
Effective Date as defined herein.
CONTINENTAL CABLEVISION, INC.
By:
Name:
Title:
FEDERAL COMMUNICATIONS COMMISSION
By:
Name:
Title:
EXHIBIT 1
COST OF SERVICE PJEFUNDS
BASIC SERVICE TIER
$5.00 PER SUBSCRIBER
PAGE 1 OF 2
CALIFORNIA
I BALDWIN HILLS; CA0937
2 CARSON, CA0439
3 CITY OF LA - AREA I, CA0808
4 CITY OF LA - AREA J. CA0775
5 CULVER CITY, CA0807
12_/31/94
BST SUBS
7,609
12,562
112,964
13,995
7,594
154,724
6 LAUDERHILL, FL0185
7 OAKLAND PARK, FL0503
8 PLANTATION, FL0008
9 TAMARAC, FL0153
12,991
469
23,257
17,248
53,965
10 BUFFALO GROVE, IL0515
11 ELK GROVE VILLAGE, IL0518
12 HOFFMAN ESTATES, IL0522
13 ' PALATINE, IL0491
o.
14 ROLLING MEADOWS, IL0521
10,802
8,532
11,184
10,066
5,685
46,269
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
MASSACHUSETTS
BERKLEY, MA0266
BERNARDSTON, MA0088
BEVERLY, MA0124
BILLERICA. MA0079
BOXFORD, MA0327
BURMNGTON. MA0080 ·
CAMBRIDGE. MA0280
CHESTER. MA0342
CENTON, MA0175
CONWAY, MA0325
DEERFIELD. MA0090
DIGHTON. MA0265
EASTHAM, MA0110
FREETOWN, MA0264
HAMILTON, MA0239
HOLLAND, MA0321
HUNTINGTON, MA0341
LAKEVILLE, MA0278
LANCASTER, MA0237
MARBLEHEAD, MA0263
MARION, MA0104
MARLBOROUGH, MA0122
MATTAPOISETT, MA0105
1,275
680
11,~3
9,864
1,795
6,368
20,108
259
4,562
2~
1,626
1,534
2,96
2.176
1.9~
705
463
2.339
1.552
6,562
1,555
10,608
2,140
38
39
4O
41
42
43
44
45
46
47
48
49
5O
51
52
53
54
55
56
57
58
59
6O
61
62
63
64
65
EXHIBIT 1
COST OF SERVICE REFUNDS
BASIC SERVICE TIER
$5.00 PER SUBSCRIBER
PAGE 2 OF 2
MASSACHUSETTS
MIDDLEBOROUGH, MA0254
NEEDHAM, MA0199
NEWTON, MA0117
NORTHFIELD, MA0089
ORLEANS, MA0095
PHILLIPSTON, MA0340
PROVINCETOWN, MA0193
ROCHESTER, MA0283
SHERBORN, MA0310
SPRINGFIELD, MA0168
STONEHAM, MA0042
SUNDERLAND, MAO091
TOPSFIELD, MA0288
TRURO, MA0284
WAREHAM, MA0106
WATERTOWN, MA0130
WAYLAND, MA0267
WELLESLEY, MA0241
WELLFLEET, MA0194
WENHAM, MA0240
WESTHAMPTON, MA0322
WESTON, MA0268
WILMINGTON, MA0078
WINCHENDON, MA0213
12/31/94
BST SUBS
5,330
6,565
17,492
828
3,349
424
2,249
1,052
882
40,556
6,573
1,199
1,637
411
6,721
8,311
2,903
5,392
1,071
· 994
376
2,389
5,262
2,660
217,418
BELLEFONTAINE NEIGHBORS, MO0341
BRENTWOOD, MO0374
RIVERVIEW, MO0345
UNIVERSITY CITY, MO0370
2,728
2,426
646
8,314
14,114
NEW YORK
66 BRIARCLIFF MANOR, NY0734
67 CROTON-ON-HUDSON, NY1086
68 NEW CASTLE, NY0732
69 NORTH TARRY'TOWN, NY0735
70 PEEKSKILL, NY0284
71 PHILIPSTOWN, NY1208
72 PLEASANTVILLE, NY0737
73 TARRYTOWN, NY0738
1,867
1,869
4,391
2,022
6,390
934
1,901.
3,109
22,483
TOTAL.. 508,973
EXHIBIT 2
COST OF SERVICE REFUNDS *
CABLE PROGRAMMING SERVICE TIER
$4.50 PER SUBSCRIBER
PAGE 1 OF 3
CALIFORNIA
1 CARSON, CA0439
2 CITY OF LA - AREA I, CA0808
3 CITY OF LA- AREA J, CA0775
4 DOWNEY, CA0922
5 LA MIRADA~ CA0853
6 ORANGE COUNTY, CA0811
7 POMONA, CA0810
8 DEERFIELD BEACH. FL0281
9 JACKSONVILLE, FL0398
10 PLANTATION, FL0008
11 POMPANO BEACH, FL0302
12 SUNRISE. FL0207
13. TAMARAC, FL0153
14 WILTON MANORS, FL0280
12J31/94
CPST SUBS
12.548
109,529
13,857
13.773
7.701
4.104
13.082
174.594
13,231
163,328
22,835
24,797
22.264
16,741
3.880
267,076
15 BUFFALO GROVE. IL0515
16 ELK GROVE VILLAGE, IL0518
17 HOFFMAN ESTATES, IL0522
18 MASCOUTAH, IL0834
19 PALATINE, IL0491
20 PEOTONE, IL0542
21 ROLLING MEADOWS, IL0521
22 UNINCORPORATED VV1LL COUNTY, IL1077, IL1080
10,757
8.511
11,143
1.361
10,018
1,002
5.667
17,934.
66,393
MASSACHUSETTS
23 BERKLEY, MA0266
24 BEVERLY, MA0124
25 BILLERICA~ MA0079
26 BURLINGTON. MA0080
27 CAMBRIDGE, MA0280
28 CHESTER. MA0342
29 CONWAY. MA0325
30 DEERFIELD. MA0090
31 DIGHTON. MA0265
32 EASTHAM. MA0110 ·
33 FREETOWN. MA0264
34 HAMILTON. MA0239
35 LAKEVILLE. MA0278
36 MARBLEHEAD. MA0263
1.250
11,556
9.466
6.111
18.870
240
254
1.580
1.519
2.380
2,153
1,877
2,298
6,337
37 MARION, MA0104
38 MARLBOROUGH, MA0122
39 MA'i-i'APOISETT, MA0105
40 MIDDLEBOROUGH, MA0254
41 NEEDHAM, MA0199
42 NEWTON, MA0117
43 NORTHFIELD, MA0089
44 ORLEANS,~MA0095
45 PROVINCETOWN, MA0193
46 ROCHESTER, MA0283
47 SPRINGFIELD, MA0168
48 STONEHAM, MA0042
49 SUNDERLAND, MA0091
50 TOPSFIELD, MA0288
51 TRURO, MA0284
52 WAREHAM, MA0106
53 WELLFLEET, MA0194
54 WENHAM, MA0240
55 WESTON, MA0268
56 WILMINGTON, MA0078
57
EXHIBIT 2
COST OF SERVICE REFUNDS
CABLE PROGRAMMING SERVICE TIER
$4.50 PER SUBSCRIBER
PAGE 2 OF 3
MICHIGAN
WEST BLOOMFIELD, MI0868
12/31194
CPST SUBS
1,467
10,492
2,039
5,213
6,432
17,106
799
3,101
2,041
1,045
40,161
6,375
1,146
1,585
386
6,389
~ 931
966
2,.340
5,058
180,963
MINNESOTA
58 ST. PAUL, MNO424
16,246
45,591
MISSOURI
59 CLAYTON, MO0373
60 LAKE ST. LOUIS, MOO490
61 MOLINE ACRES, MO0344
62 UNIVERSITY CITY, MO0370
3,124
2,530
587
8,260
14,501
NEW HAMPSHIRE
63 DURHAM, NH0085
64 KENSINGTON, NH0168
65 NEWMARKET, NH0072
1,750
445
2,445
4,640
EXHIBIT 2
COST OF SERVICE REFUNDS
CABLE PROGRAMMING SERVICE TIER
$4.50 PER SUBSCRIBER
PAGE 3 OF 3
NEW YORK
66 CROTON-ON-HUDSONi NY1086
67 MOUNT PLEASANT, NY0731
68 NEVV CASTLE, NY0732
69 NORTH TARRYTOWN, NY0735
70 OSSINING TOWN, NY0733
71 OSSINING VILLAGE, NY0736
72 PEEKSKILL, NY0284
73 PLEASANTVILLE, NY0737
74 TARRYTOWN, NY0738
12/31/94
CPST SUBS
1,849
6,296
4,364
1,990
1,714
5,319
6,318
1,878
3,078
32,806
15,609
~qRGINIA
75 JAMES CITY COUNTY, VA0270
TOTAL 818,419
EXHIBIT 3
FORM 393 REFUNDS ONLY
CABLE PROGRAMMING SERVICE TIER
$2.00 PER SUBSCRIBER
PAGE 1 OF 1
CONNECTICUT
I EAST GRANBY, CT0132
2 EAST WINDSOR, CT0135
3 ENFIELD, CT0129
4 GRANBY, CT0131
5 HARTLAND, CT0130
6 SOMERS, CT0136
7 STAFFORD, CT0137
8 SUFFIELD. CT0133
9 UNION, CT0138
10 WINDSOR LOCKS, CT0134
11
12
1'3
14
15
16
17
18
-19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
12131/94
CPST SUBS
1,329
2,868
12,944
2.673
326
2,196
3.336
3,257
161
3,790
32,880
MASSACHUSETTS
ARLINGTON, MA0115
DEDHAM. MA0238
EAST BRIDGEWATER. MA0253
GRANBY. MA0118
GRANVILLE, MA0326
HANOVER. MA0244
HANSON, MA0215
HINGHAM. MA0251
HOLBROOK. MA0190
HOLYOKE, MA0034
IPSWICH. MA0142
LONGMEADOW. MA0138
MILTON. MA0163
NATICK, MA0141
NORTH ANDOVER, MA0102
NORWELL. MA0206
QUINCY. MA0126
RANDOLPH, MA0212
REVERE. MA0032
WEST BRIDGEWATER, MA0235
WEST NEWBURY, MA0188
WHITMAN, MA0200
11,536
5,827
3,228
1,568
379
3,380
2,488
5,353
2,968
11,584
3.446
4,722
6,141
7,835
6,746
2,601
27,085
8,764
13,616
1,790
970
3,627
135,654
MICHIGAN
HAZEL PARK, MI0627
4,681
TOTAL 173,215
EXHIBIT 4
FORM 1200 REFUNDS ONLY
CABLE PROGRAMMING SERVICE TIER
$8.00 PER SUBSCRIBER
PAGE I OF 2
CALIFORNIA
I LIVE OAK, CA0700
2 SUTTER COUNTY, CA0011,CA0663, CA1170
3 YUBA CITY, CA0012
IOWA
4 KEOKUK, IA0019
ILLINOIS
5 QUINCY, IL0057
MICHIGAN
6 BLACKMAN TOWNSHIP, MI0037
7 DEARBORN HEIGHTS, MI0806
8 DELTA TOWNSHIP, MI0259
9 DEWITT TOWNSHIP, M!0370
10 GRAND LEDGE, MI0342
11 JACKSON, MI0038
12 LANSING, MI0242
13 LANSING TOWNSHIP, MI0335
14 WATERTOWN TOWNSHIP, MI1825
15 WESTLAND, MI0910
16 WINDSOR TOWNSHIP, Mi1826
.
NEW HAMPSHIRE
17 BOW, NH0082
18 CONCORD, NH0020
19 PORTSMOUTH, NH0029
20 SALEM, NH0037
12/31/94
CPST SUBS
1,214-
7,123
10,987
19,324
4,-137
12,267
,..
4,044
16,124
8,620
2,751
2,397
10,770
34,868
3,117
154
23,356
13
106,214
1,550
13,089
8,030
8,317
30,986
EXHIBIT 4
FORM 1200 REFUNDS ONLY
CABLE PROGRAMMING SERVICE TIER
$8.00 pER SUBSCRIBER
OHIO
21 BEAVERCREEK(KE~-FERING), OH1350
22 BELLBROOK, OH0767
23 CENTERVlLLE, OH0497
24 ELYRIA, OH0693
25 FAIRBORN, OH0295
26 HUBER HEIGHTS, OH0372
27 KETTERING, OH0496
28 MIAMISBURG, OH0500
2g MORAINE, OH050g
30 NEW CARLISLE, OH0689
31 NEW RUSSlATOWNSHIP (ELYRI~), OH1607
32 NORWALK, OH0038
33 OAKWOOD, OH0498
34 SPRINGBORO, OH1245
35 SPRINGFIELD, OH0279
36 WASHINGTON TOWNSHIP (KETTERING), OH0610
37 WEST CARROLLTON, OH0499
TOTAL
12/31/94
CPST SUBS
10,024
2,202
7,109
13,228
9,111
10,817
18,615
4,951
1,317
1,545
5,038
2,763
2,279
18,327
8,278
4,358
119,984
292,912
EXHIBIT 5
COMBINED FORM 393 AND FORM 1200 REFUNDS
CABLE PROGRAMMING SERVICE TIER
$10.00 PER SUBSCRIBER
PAGE 1 OF 1
MASSACHUSETTS
1 'COHASSET, MA0207
2 NEWBURY, MA0143
3 ROWLEY, MA0216
4 SClTUATE, MA0208
MICHIGAN
5 DEWITT, MI0635
MISSOURI
6 ST. LOUIS COUNTY (AREA B), M00292
OHIO
7 ATHENS, OH0029
8 BAY VILLAGE, OH0739
9 CIRCLEVILLE, OH0311
10 EASTLAKE, OH0699
11 MENTOR, OH0740
12 WILLOUGHBY HILLS, OH0801
TOTAL
12/31/94
CPST SUBS
2,009
1,778
1,371
5,374
10,532
1,313
10,617
5,029
4,578
3,369
5,733
14,598
2,065
35,372
EXHIBIT 6
CONTINENTAL CABLEVISION, INC.
OPERATING REGIONS
Northeast: Connecticut, Maine, Massachusetts, New Hampshire,
New York
Southeast: Florida, Georgia, Virginia
Midwest: Michigan, Ohio
Central:
Western:
Illinois, Iowa, Minnesota, Missouri
California, Nevada