Federal Communications Commission 
In the Matter of 
Continental Cablevision, Inc. 
Amended Social Contract 
Before the 
Federal Communications Commission 
Washington, D.C. 20554 
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ORDER 
FCC 96-358 
Adopted: August 21, 1996 Released: August 23, 1996 
By the Commission: 
I. INTRODUCTION 
1. The Federal Communications Commission ("Commission") and Continental Cablevision, 
Inc. ("Continental") have negotiated a proposed amendment to Continental's social contract 
("Social Contract"). The Social Contract was approved by the Commission in an Order adopted 
on August 1, 1995.1 The proposed amendment to the Social Contract ("Amendment") extends 
the scope of the Social Contract to systems recently acquired by Continental and provides upgrade 
incentives for Continental and rate stability and increased quality of service for subscribers. The 
Amendment was placed on Public Notice and comment periods were established.2 The 
Commission received both initial and reply comments. In this Order, we approve the Amendment 
with modifications. A copy of the approved Amendment is attached as Appendix A. 
II. BACKGROUND 
A. The Original Social Contract 
2. In the Cable Television 1 Consumer Protection and Competition Act of 1992 ("1992 
Cable Act"), Congress intended cable operators to continue expanding the capacity and programs 
1Social Contract for Continental Cablevision, ~O FCC Red 12561 (199S)("Social Contract Order"). 
2See Public Notice, Amendment to Social Contract for Continental Cablevision, Inc. Available for Comment, FCC 
96· 76 (released March 6, 1996). Pursuant to the Public Notice, initial comments were to be filed no later than April 
22, 1996 and reply comments no later than May 7, 1996. 
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Federal Communications Commission FCC 96-358 
offered over their systems, where economically viable. 3 Subsequently, we adopted an 
experimental upgrade incentive plan which would "permit an operator to enter into a social 
contract with its customers under which the operator would be given substantial flexibility in 
setting rates for new regulated services it introduces, such as new service tiers offering additional 
program channels. "4 In exchange, rates for existing services would be limited to changes 
permitted by the benchmark/price cap approach while the quality of existing services would be 
maintained, if not increased. These social contracts would remain in effect for a fixed period and 
would offer operators an opportunity to earn higher profits as an incentive for upgrading their 
cable systems and introducing new and improved regulated services. 5 
3. In accordance with these objectives, Continental's Social Contract resolved 377 cable 
rate cases, paid $9.5 million in in-kind refunds to affected subscribers, created low-priced lifeline 
basic service tiers in all of Continental' s systems, committed Continental to a capital investment 
of$1.35 billion to upgrade the channel capacity and technical reliability ofContinental's domestic 
cable systems, and established a plan to stabilize rates for the basic service tier ("BST") and for 
the cable programming services tier ("CPST") in all of Continental' s franchises. 
4. By letters dated October 12, 1995, October 18, 1995, and November 22, 1995, 
pursuant to special ex parte procedures available in certain rate proceedings, Continental requested 
relaxed ex parte treatment to enable it to discuss broad rate-related matters with Commission 
officials.6 Consistent with these ex parte procedures, the Cable Services Bureau ("Bureau") and 
Continental negotiated the terms of the proposed Amendment. On March 6, 1996, the 
Commission approved the release of the draft of the proposed Amendment for public comment. 
5. The Commission has reviewed and considered the comments it received in approving 
the terms and conditions of th~ Amendment and making modifications to it. 
3Cable Television and Consumer Protection and Competition Act, Pub. L. No. 102-385, 106 Stat. 1460 (1992) 
§ 2(b)(3). 
4lmplementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate 
Regulation, MM Docket No. 93-215, Report and Order and Further Notice of Proposed Rulemaking, 9 FCC Red 
4527, 4678 (1994)("Cost Order"). · 
5Earlier this year, the Commission reafrumed its decision to use social contracts in appropriate circumstances 
and concluded that it would not adopt specific conditions that must be part of every social contract. Implementation 
of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, MM Docket 
No. 93-215, and Adoption of a Uniform Accounting System for Provision of Regulated Cable Service, CS Docket 
No 94-28, Second Report and Order, First Order on Reconsideration, and Further Notice of Proposed Rulemaking, 
11 FCC Red 2220, 2282 (1996) ("Final Cost Order"). 
"See Modification of E.x Parte Procedures in Certain Cable Rate Proceedings, 9 FCC Red 7812 (1994) ("Cable 
Ex Parre Order"). 
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Federal Communications Commission FCC 96-358 
B. Overview of the Amendment 
6. The Amendment incorporates cable systems with approximately 987,000 subscribers 
acquired by Continental since we adopted the Social Contract ("the acquired systems"). Some 
of the Amendment's provisions apply only to the acquired systems while other provisions apply 
to all ofContinental's systems.7 The Amendment is for a period of four years. Continental is 
required to increase its investment from $1.35 billion to $1. 7 billion for the upgrade of its cable · 
systems, including the acquired systems. The upgrade will include deployment of fiber optic 
technology, increased channel capacity and improved system reliability and signal quality. At 
least 70 percent of all capital invested will be for the benefit of BST and CPST subscribers. 
Continental will add an average of 10 additional channels to the CPSTs of the upgraded systems. 
In no case will Continental add fewer than five channels. To fund this investment, Continental 
will be permitted to increase the monthly rate for the CPST by $1.00 in the acquired ·systems in 
each year from 1996 through 1999 and by $1.00 in Continental systems covered by the original 
Social Contract ("original systems") in each year from 1997 through 1999. However, Continental 
will not avail itself of the $.20 per-channel adjustments allowed under the Going Forward rules 
for CPST channels. added after the Amendment is adopted, except where Continental has 
upgraded or rebuilt an original system in 1996 and has not increased rates for programming 
channels added. 8 
7. The Amendment will resolve all CPST cases pending against Continental's acquired 
systems, including those cases where a la carte channel packages are at issue. This will resolve 
162 complaints altogether. Continental will make cash refunds in the form of bill credits to 
current subscribers of the acquired systems totalling approximately $1.67 million, including 
interest. Refund amounts which exceed $1.00 per subscriber will be paid in the form of monthly 
credits of not more than $1.00 and not less than $.50 over a period not to exceed 12 months. 
8. Continental will create a low-cost "lifeline" BST for 80 percent of the total number 
of subscribers in its acquired systems. On systems serving at least 80 percent of is total 
subscribers, Continental will reduce the current price on its BS'.f-by-15 to 20 percent no later than 
January 1, 1997, with a revenue neutral increase in the CPST rates. On the remaining systems 
where BST rates have not been reduced by at least 15 percent, Continental may streamline basic 
tiers that have a high number of channels. This retiering will consist of Continental moving 
channels from the BST to the existing CPST or to a newly created CPST or migrated product tier 
("l\1PT") in a revenue-neutral manner. 
70n February 27, 1996, Continental announced that it would merge with U S West Media Group. We note that 
all provisions of the Social Contract and Amendment that apply to the original and/or acquired systems will continue 
to apply after the closing of the merger. 
8See Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate 
Regulation, MM Docket Nos. 92-266, 92-215, Sixth Order on Reconsideration and Seventh Notice of Proposed 
Rulemaking, 10 FCC Red 1226 (1994) ("Going Forward'). 
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Federal Communications Commission FCC 96-358 
9. Continental will provide a free cable connection to all of the public schools (grades 
K-12) located within 200 feet of the activated plant of its cable system. Continental will further 
provide a cable connection at cost to any other unserved K-12 public school located beyond 200 
feet of the activated plant of its cable system but within its franchise area. 9 Also, Continental will 
provide a cable connection at cost to all secondary private schools within its franchise area that 
receive funding under Title I of the Education and Secondary School Act. BST and CPST 
services will be provided to each outlet in the connected public and private schools without cost. 
Continental will wire additional classrooms in existing schools at cost. For new public schools 
and existing public schools undergoing extensive rehabilitation, Continental will coordinate 
whenever possible with local officials and contractors to wire each of the classrooms in new 
schools free of charge. Continental will also provide the connected schools with free materials 
that explain the educational applications of Continental' s cable services and with a monthly 
educational program guide containing curriculum support ideas. In addition, within one year after 
Continental has made its on-line personal computer service commercially available in a specific 
franchise area, it will offer this service to each connected school free of charge during the school 
year and also provide a free modem to access the service. Continental will provide additional 
modems at cost and free on-line service for each modem purchased. Continental will also 
sponsor local workshops and training materials for teachers. 
10. In acquired systems that did not create a la carte channel packages between April l, 
1993 and September 30, 1994, and in 811 franchises formerly served by Cablevision of Chicago 
where no a la carte package currently exists, Continental will be permitted to create MPTs with 
up to four services migrated in a revenue-neutral manner from the BST and/or CPST. In 
accordance with S~ction 76.987(d) of the Commission's rules, Continental also will be permitted 
to move additional channels to the MPT as long as the these channels were not offered on a BST 
or CPST prior to October 1, 1994.10 There will be no limitation on the number of new channels 
that Continental may add to the MPTs at the price of up to $.20 per channel and license fees. 
11. On or after January 1, 1997, Continental may convert the MPTs created under the 
Social Contract to new product tiers (''NPTs"), by filing a notice with the Commission on or after 
January 1, 1997. In acquired systems that created either an "Expanded" package of a la carte 
channels (which generally consists of four a la carte channels) or a "Cable Plus" package with 
six or fewer channels, Continental will treat the a la carte package as an MPT with its initial price 
set at the current rate. Continental may convert the MPTs created under the Amendment to NPTs 
by filing a notice with the Commission on or after July l, 1997. In acquired systems where both 
the Expanded and Cable Plus packages exist, Continental may maintain the channel configurations 
of such packages and set their initial rate at the clli-rent rate. These packages will be treated as 
9The definition of "Cost" in the Amendment has been modified to clarify that Cost includes actual cost for 
materials plus a reasonable rate of return. See Amendment, II. E. 
1047 C.F.R. § 76.987(d) (Operators may temporarily place new channels on CPSTs for marketing purposes and 
then 'move them to new product tiers ("NPTs") if the channels have not been offered on a BST or CPST prior to 
October I, 1994.) 
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Federal Communications Commission FCC 96-358 
MPTs for the entire term of the Social Contract. 
12. In the Naples, Florida systems where only a Cable Plus package of eight a la carte 
channels exists, Continental will return four channels to the CPST. The remaining four channels 
will be treated as an MPT and may be converted to an NPT after July 1, 1997 pursuant to the 
procedures provided in the Amendment. Continental will also implement a prospective rate 
reduction in the Naples franchise which will have the effect of lowering annual revenues by 
$250,000. 
13. Continental will allow subscribers to remove, to maintain, to replace or to rearrange 
their home cable wiring so long as it does not create signal leakage or interfere with Continental's 
ability to provide services and to collect revenues from subscribers. To facilitate this benefit, 
Continental will provide the necessary home wiring materials to subscribers at cost and will 
identify other sources for such equipment. · 
14. In line with the Social Contract, the Amendment provides that beginning with the 
1997 FCC Form 1205 equipment and installation rate filing, Continental may use state or regional 
averaging in setting equipment and installation costs for each franchise in its acquired systems. 
15. Finally, the modification .and termination terms of the Social Contract remain 
unchanged in the Amendment. Accordingly, the Amendment may not be modified or terminated 
without the mutual agreement of both Continental and the Commission. In addition, Continental 
may petition the Commission to terminate the Contract if there is a material change in the 
applicable laws or regulations that would result in a material favorable financial impact to 
Continental. 
ID. DISCUSSION 
16. The Commission received numerous comments on several terms of the proposed 
Amendment. Support for the Amendment was expressed by 237 of 247 commenters. Only ten 
raised questions about or were critical of the Amendment. A list of commenters is attached as 
Appendix B. This section addresses the concerns of the commenters. 
A. System Upgrades and CPST Price Cap Increases 
(i) Terms of the Social Contract . 
17. The Amendment provides for Continental to increase its investment from $1.35 
billion to $1. 7 billion for the upgrade of its cable systems, including the acquired systems. The 
upgrade will include deployment of fiber optic technology, increased channel capacity and 
improved system reliability and signal quality. To fund this investment, Continental will be 
permitted to increase the monthly rate for the CPST by $1.00 in the acquired systems in each 
year. from 1996 through 1999 and by $1. 00 in original systems in each year from 1997 through 
1999. This increase will serve as the only increase on the CPST with the exception of revenue-
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Federal Communications Commission FCC 96-358 
neutral adjustments also provided under the Amendment and adjustments for inflation and 
external costs permitted under the Commission's rules. Continental waives its right to increase 
its CPST rates pursuant to the Commission's Going Forward rules, except where Continental has 
upgraded or rebuilt an original sy~em in 1996 and bas not increased rates for programming 
channels added. In addition, Continental will not implement the second round of Going Forward 
channel additions which the Social Contract currently allows for the years 1998 though 2000. 
CPSTs on the upgraded systems will have an average of 10 additional channels and in no case 
will a system have less than five additional channels. At least 70 percent of the capital cost of 
the upgrade will be used for regulated services. Continental waives its right to file cost-of-service 
showings to justify any rate increases during the term of the Amendment. 
(ii) Comments 
18. Most commenters support the proposed system upgrades, maintaining that subscribers 
will benefit from more advanced technology, access to the information superhighway and 
improved picture quality. 11 For example, Mayor Mort O'Ryan states that this "effort to bring the 
Information Superhighway to my community ... assures the residents and our schools of having 
access to the telecommunications needs of the 21st Century. The commitment of additional 
services, and the pledge of free connections and Internet access to the schools, means our 
community will keep up with the traffic on the Information Superhighway."12 Many commenters 
support Continental's plans to cap CPST price increases and to phase in rate increases annually 
because it spreads the costs over a period of time and provides for rate certainty.13 
19. Although commenters do not oppose the concept of system upgrades, some objections 
to certain aspects of the plan were raised. Some commenters argue that their systems already 
have been upgraded or that the upgrades would be required in any event because of the efforts 
of local franchising authorities ("LF As") or competitive requirements.14 Some commenters claim 
that the Commission's cost-of-service rulings require that the rate increase not be implemented 
before the upgrade is in service and that the rate increase will subsidize other Continental services 
such as unregulated non-video services. 15 Several commenters:.:ask that Continental be required 
to submit a master plan of system upgrades which would include proposed dates of upgrades and 
11 See e.g., Comments of Carson, California at 1; Comments of New Hampshire State Board of Education at 2; 
Comments of Milford Cable Oversight Committee at 1. 
12Comments of Mayor Mort O'Ryan of the City of Willoughby Hills, Ohio at 1. 
13 See, e.g., Comments of Eastlake, Ohio at 1; Comments of Calumet Park, Illinois at 1; Comments of Greater 
West Bloomrield Cable Advisory Board at 1. 
14Comments of Lakewood, California at 1; Comments of Fairborn, Ohio at 1. 
1scomments of Coachella, California at 11; Comments of Cypress, La Palma, La Quinta and Palm Desert, 
California at 11. 
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Federal Communications Commission FCC 96-358 
rate increase justifications on a per upgrade basis. 16 Other commenters contend that upgrades 
would.be better achieved through franchise renewal proceedings conducted at the local level. 17 
Metropolitan Dade County requests permission from the Commission for LF As to opt out of the 
$1.00 rate increase and to negotiate the upgrades individually during their franchise renewal 
process. 18 St. Louis County comments that the Amendment permits Continental to increase the 
monthly rate by $1.00 in all systems, but allows Continental to sell its St. Louis County system, 
the propo~ed sale of which has been announced, without implementing the upgrade provided in 
the Amendment. 19 Two commenters claim that the Social Contract requires Continental to 
implement two-way interactive capability in every system without passing on the cost to 
subscribers.2° Finally, some commenters ask that the Commission release Bureau materials 
relating to the justification of the rate increase and refund amounts.21 
20. In reply, Continental rejects the argument that system upgrades do not constitute a 
concession on its part. First, Continental contends that the Amendment requires it to upgrade all 
communities it serves as opposed to a minority of systems that may have been able to negotiate 
various upgrade commitments with Continental on their own. 22 Second, Continental maintains 
that it has agreed to forego its right to recover costs of system upgrades through cost-of-service 
filings. At the same time, Continental' s capital spending commitment does not preempt existing 
franchise requirements or impair an LF A's right to negotiate additional or earlier upgrades. 23 
Third, .Continental claims that without the Amendment, the uncertainty created by the large 
number of pending rate cases and the potential impact of the Commission's rate rules on 
Continental' s future cash flow would inhibit it from making major investments in its systems. 24 
21. Continental opposes the suggestion that it be required to submit a master plan of 
proposed system upgrades and rate increase justifications on a per upgrade basis. Continental 
16Comrnents of Metropolitan Dade Couilty, Florida at 2; Comments of Collier County Manager's Office at 2 . 
. 
17Comments of Coachella, California at 11; Comments of Cypress, La Palma, La Quinta and Palm Desert, 
California at 11. 
18Comrnents of Metropolitan Dade County, Florida at 4. 
19Comments of St. Louis County, Missouri at 1-2. 
2
°Comments of Lauderhill, Florida at l; Comments of Coral Gables, Florida at 2 - 3. 
21 Comments of Metropolitan Dade County, Florida at 3; Comments of Coachella, California at 12-14; Comments 
of Cypress, La Palma, La Quinta and Palm Desert, California at 13 - 15; Comments of Collier County Manager's 
Office at 3 - 5. 
22Continental Reply Comments at 55 - 56. 
23Continental Reply Comments at 56. 
24/d. at 56 - 57. 
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Federal Communications Commission FCC 96-358 
claims that no such plan exists and that decisions to upgrade will be based on: a particular 
system's current capacity and condition; that system's spare capacity, if any; the number of off­
air must-carry channels in that system's market; consumer demand for additiorial services in the 
community; and consumer willingness to pay for the additional services.25 Since these variables 
are fluid, Continental argues that it would be impossible for it to provide a pre-ordained upgrade 
plan.26 Continental emphasizes that the Social Contract already requires it to distribute system 
upgrades in a nondiscriminatory manner and that the Social Contract also requires Continental 
to submit an annual progress report to the Commission and all LF As so that they can properly 
assess how the upgrades and expenditures were distributed. 27 Thus, Continental contends that 
there are sufficient safeguards already in place to ensure that upgrades will take place in a 
reasonable, non-discriminatory manner. 
22. Continental denies that its rate increase will be used to fund upgrades that will be 
used primarily for non-regulated, non-video services and further contends that the Commission 
already has reviewed its economic cost data to preclude cross-subsidies.28 Continental claims that 
in order for its CPST rate mechanism to subsidize primarily non-video service such as telephony, 
the proposed rate increase would need to be several times greater than $1.00 since a telephony­
capable upgrade requires substantial additional expenditures for switches, network interface units, 
etc.29 
23. Continental explains that it needs considerable funding from lenders to implement the 
proposed upgrades. However, in order to receive this funding, Continental must demonstrate 
sufficient operator cash flow and debt repayment ability -- factors which would not be present 
if Continental was required to complete the upgrades before recovering any of its upgrade costs 
as some commenters have suggested. 30 
24. Continental rejects suggestions that localities negotiate individual system upgrades 
and cites Congressional preference for national approaches to questions of system upgrades.31 
Continental urges the Commission to reject Metropolitan Dade County's request to opt out of the 
$1.00 CPST provision and to allow the renewal process to govern cable operator upgrade 
25/d. at 58. 
27/d. at 59 - 60. 
28/d. at 70. 
30/d. at 72. 
31 /d. at 72 -73 (citing legislative history of the Telecommunications Act of 1996, § 30l(e), H.R. Rep. 204, 104th 
Cong., 1st Sess. 110 (1995)). 
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Federal Communications Commission FCC 96-358 
commitments.32 Further, Continental states that St. Louis County has misstated the factual 
situation with respect to Continental' s St. Louis County system. In that case, the transfer to 
another operator is scheduled to close before the end of 1996. The Amendment does not allow 
Continental to take the $1.00 increase in 1996. St. Louis County subscribers will not be assessed 
such an increase prior to. the scheduled sale of that system. Continental proposes, however, a 
further modification of the Amendment to ensure that subscribers to systems that are not 
increased to at least 550 MHz capacity and are sold while the Social Contract is in effect will be 
reimbursed for any such $1.00 increases imposed by Continental or a subsequent owner. Finally, 
Continental denies that two-way capability is a requirement of the Social Contract and maintains 
that where an LF A requires Continental to include such functionality as part of a system upgrade, 
the Social Contract allows it to recover the incremental costs incurred in that specified upgrade.33 
25. The majority of commenters express support for those provisions of the Amendment 
which require Continental to increase its investment from $1.35 billion to $1.7 billion for the 
upgrade of its domestic cable systems, including the acquired systems. Commenters support the 
deployment of fiber optic technology, increased system addressability, and improved reliability 
and picture quality. 
(iii) Discussion 
26. We believe that the Amendment's upgrade provisions represent a valuable benefit to 
subscribers in terms of advanced technology, improved reliability and picture quality, and 
increased programming choices. While upgrades may be implemented at various times during 
the course of the Social Contract, we believe that phasing in the upgrade costs over that period, 
in contrast to a one-time increase when the upgrade is completed, is preferable because it 
provides predictable rate increases and avoids rate shock. The Social Contract requires 
Continental to make an annual investment for upgrades in each year of the Contract which is at 
least equal to 120 percent of its average aggregate annual capital expenditures from ·1990 to 1994. 
(Accelerated expenditures will be credited toward future years during the contract period.) 
Continental must submit annual progress reports to the Commission with copies to the LF As 
showing it has done so. In addition, as Continental notes, financing requirements for the 
upgrades make implementation unlikely if Continental were required to complete the upgrades 
before recovering its costs. Under the Amendment, Continental agrees that at least 70 percent 
of all capital expended in connection with the upgrade commitment will be applied for the benefit 
of BST and CPST subscribers. Further, Continental is prohibited from recovering the costs of 
the system upgrades and rebuilds through a cost-of-service filing. As we recognized under the 
Social Contract Order, this represents a major concession from Continental. Finally, the 
Amendment will enhance Continental' s ability to attract the necessary capital to invest in system 
upgrades. 
33/d. at 65. 
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Federal Communications Commission FCC 96-358 
27. Although Continental may have upgraded some systems recently or may have been 
required by LF As to upgrade some sections of its system, the Amendment extends the technical 
specifications of the original Social Contract to the acquired systems and obliges Continental to 
to provide an average of 10 additional services and a minimum of five such services in each 
community, so that all of its communities will benefit. 34 Those LF As that individually have 
negotiated upgrade benefits will not be disadvantaged since they can continue to enforce local 
franchise agreements or negotiate future agreements which provide for upgrade benefits exceeding 
those under the Amendment. 
28. We are mindful of the concerns expressed by some commenters that the $1.00 CPST 
rate increase may be used to pay for Continental's plans to provide non-regulated, non-video 
services. We believe that the costs of the upgrade are reasonable and necessary and that 
Continental has fairly allocated the costs of the upgrade between its current regulated and non­
regulated operations. If it is determined that Continental has not complied with its obligations 
under the Amendment, we may exercise any of the rights and remedies which are attendant to 
violations of a Commission order. 
29. Commenters' contention that the rate increase will exceed the amount permitted under 
the Going Forward Order is misplaced. The Going Forward Order was intended to be an 
incentive for operators to add a small number of cable channels to existing systems. The increase 
under the Amendment, on the other hand, is intended to enable Continental to undertake a major 
system upgrade, which will modernize facilities to provide improved quality and efficiency and 
to add new tiers and types of services. 35 Consequently, the rate increase primarily is not for a 
small number of new services, but for improved quality of services as a result of moderni7.ation. 
The Amendment does not change the requirements of the Commission's rules governing the pass­
through of external costs and inflation. 
30. In exchange for committing to upgrade it systems, Continen~ will be permitted to 
increase the monthly rate for its CPST by $1.00 in the acquired systems in each year from 1996 
through 1999 and by $1. 00 in original systems in each year from 1997 through 1999. Continental 
will forego relief through the cost of service rules and those authorized by the going forward 
rules.36 As noted, we have reviewed the $1.00 increase and believe that the costs of the upgrades 
are reasonable and necessary. The $1.00 increase is reasonable and justified by the magnitude 
of Continental's upgrade commitment. Tables A and B below indicate that Continental's rates 
under the Amendment will be within the parameters of the rates Continental would be authorized 
to implement under a typical cost-of-service analysis. 
34See Amendment, III.A.2. 
BSee Cost Order, 9 FCC Red at 4677-4680. 
36Except that Continental may avail itself of per-channel adjustments under the Going Forward rules where 
Continental upgraded or rebuilt a particular system in 1996 and had not previously added channels on such system 
in 1996 pursuant to the Going Forward rules. See Amendment, Ill. D. 2. 
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Federal Communications Commission 
TABLE A. CONTINENT AL RATES UNDER THE AMENDMENT37 
Initial Regulated Rate 
Inflation 
Going Forward Increases 
Surcharge Pursuant to Amendment 
Year End Regulated Rate 
1996 1997 ~ 1999 2000 
22.68 23.71 25.42 27.15 28.90 
00.68 00.71 00.73 00.75 00.77 
00.15 00.00 00.00 00.00 00.00 ~~ ~~ ~ ~ ~~
00.20 01.00 01.00 01.00 00.00 ~~ ~~ ~~ ~~ ~~
TABLE B. NO AGREEMENT; RATES BASED ON TYPICAL 
COST-OF-SERVICE JUSTIFICATION38 
Initial Regulated Rate 
Inflation 
Going Forward Increases 
Surcharge Pursuant to COS 
Year End Regulated Rate 
FCC 96-358 
37The initial Regulated Rate for 1996 represents the average rate for BST and CPST service company wide. The 
inflation figure assumes three percent annually. The Going Forward increases are the maximum permitted by the 
Going Forward rule under the Amendment. The Surcharge indicated for 1996 represents an average increase of 80 
cents net of Going Forward increases spread company wide. 
38 As noted, the initial Regulated Rate for 1996 represents the average rate for BST and CPST service company 
wide. The inflation figure assumes three percent annually. The Going Forward increases are the maximum permitted 
by the Going Forward rule exclusive of programming costs. The cost-of-service analysis is premised on construction 
being completed in equal increments over the five-year period and assumes an investment in a "typical" system, i..e., 
amortized over a 15-year period at an 1125% rate of return, utilizing a 50% debt and 50% equity capital structure. 
The reduction in the surcharge from 1997 to 2000 largely results from the depreciation of assets associated with the 
upgrade. The 95 cent figure for 1996, for example, was calculated by dividing the $1.7 billion investment by total 
subscribers to arrive at an investment per subscriber of $360, which was divided by five years to determine the 
investment per year per subscriber of $72. That figure was reduced by accumulated depreciation of I/15th ($4.80). 
Using the l l.25% rate of return provided in our cost-of-service rules; this resulted in a return on the rate base of 
$7.56. The return on rate base ($7.56), an income tax allowance..($2.9.l)~..annual depreciation ($4.80), and other 
estimated operating expenses ($0.97) were totaled to arrive at an annual revenue requirement of$1624. That figure 
was divided by 12 to arrive at a monthly revenue requirement of $1.35. The monthly revenue requirement 
attributable to regulated services (at 70 percent) is $0.95. 
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Federal Communications Commission FCC 96-358_ 
31. The amendment offers a means to expand capacity and improve service, including 
additional programming and enhanced picture quality, in a manner that protects subscribers from 
unreasonable rate increases yet allows the commitment of substantial capital investment. We have 
stated that regulation should not hinder cable operators ability to make network improvements 
that could benefit subscribers. 39 Phasing in, through predictable increases, the cost of a 
substantial upgrade is a reasonable, if not expanded, alternative for an operator, instead of 
pursuing those allowed by a cost of service showing or the going forward rules. The subscriber, 
who essentially is participating in the investment, avoids the "rate shock" associated with a 
substantial rate increase subsequent to completion. Moreover, providing increased flexibility to 
the cable operator while at the same time ensuring that rates remain reasonable, is consistent with 
the emergence of increased competition in the video programming market. 
32. Some commenters have expressed concern that the upgrades and rebuilds of the 
acquired systems may not take place in a reasonable, non-discriminatory manner and that the 
$1.00 CPST rate increase may not be justified by Continental's upgrade costs. Certain protective 
provisions of the Social Contract will apply to the acquired systems. For example, the Social 
Contract requires Continental to invest in systems in a way that will not discriminate on the basis 
of the socio-economic status of subscribers.40 In addition, if Continental does not invest at least 
85 percent of the annual amount committed to infrastructure upgrades, then it will be required 
to make an in-kind refund equal to the amount by which that year's capital expenditure is less 
than the required investment. 41 Continental is also required to file an annual report whereby the 
Commission and LF As can assess Continental' s performance for upgrades and rebuilds. 42 Under 
the Amendment, all of these requirements will also apply to the acquired systems.43 We conclude 
that sufficient safeguards exist to ensure that upgrades and rebuilds will take place as promised 
in a reasonable, non-discriminatory manner for the acquired systems without the need for 
Continental to submit a master plan of system upgrades or rate increase justifications on a per 
upgrade basis. 
33. In addition, Continental.has agreed to a modification to the Amendment which will 
apply generally to the issue raised by St. Louis County, which related to the imposition of a 
$1.00 increase by Continental and the sale of a system before an upgrade is undertaken. 
Continental has agreed to post a performance bond at the time of sale or trade of a Continental 
system to ensure that refunds of any assessed $1.00 increase are repaid to subscribers in a system 
39Rate Order, 8 FCC Red at 5794. 
40See Social Contract, III.E.3. 
41See Social Contract, III.E.4. 
42See Social Contract, III.J. 
4
; See Amendment, I. 
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Federal Communications Commission FCC 96-358 
that is sold or traded while the Social Contract is in effect if the system is not at 550 MHz of 
capacity at the time of the sale or trade and is not upgraded to 550 MHz by any subsequent 
owner on or before December 31, 2000. This new provision is added to the Amendment in new 
section IIl.G. We approve the proposed modification. 
34. With regard to requests for Bureau staff work papers and deliberations, as we held 
under the Social Contract Order, the Bureau's analysis and work papers relating to the calculation 
of the rate increase and refund amounts constitute intra-agency memoranda and other pre­
decisional and deliberative materials which are exempt from public disclosure under Exemption 
5 of the Freedom of Information Act, 5 U.S.C. § 552(b)(5).44 Disclosures of such protected 
documents would undermine the process which the Ex Parte Order was designed to create.45 
We deny commenters' requests for release of such materials. 
35. We agree with Continental's contention that neither the Social Contract nor the 
Amendment require Continental to implement active two-way capability within each system 
upgrade. Nothing in the Social Contract, Amendment, or negotiations with Continental suggests 
otherwise. Continental' s commitment in section 111.E.2 of the Social Contract to "utilize 
addressability or other suitable technology to make interactive services available to subscribers" 
was not intended to equate interactivity with active, two-way capability. In this context, 
interactivity may be achieved, for example, by downloading software to customer equipment for 
local interaction, by using a telephone return path to the cable headend, or by broadcasting 
information so quickly that interactivity is achieved by the customer's selection of information 
from the broadcast stream. Examples of "broadcasting information so quickly" are the Sega 
channel, videotext systems, and the new Intercast system of which Continental is a part. 46 By 
contrast, to make a cable plant two-way active requires additional investment in more 
sophisticated line equipment that is capable of sending signals upstream to the cable headend. 
36. We deny Metropolitan Dade County's request to opt out of the $1.00 CPST rate 
increase. Allowing covered communities to opt out of this provision would undermine CPST rate 
stability and the upgrade of Continental systems nationally;,- important purposes of the 
Amendment. The $1.00 rate increase constitutes compensation for the upgrades to which 
Continental is committed under the terms of the Social Contract. It is contemplated in the Cost 
Order.41 There is no notion in the Cost Order or in our rules that one can opt out of Commission 
approved rate increases. With respect to matters within the jurisdiction of LF As, we have 
44See Continental Social Contract Order at n. 7. 
45See Modification of Ex Parte Procedures in Certain Cable Rate Proceedings, 9 FCC Red 7812 (1994) ("Ex Parte 
Order"). 
46lntercast sends Internet Web pages related to a video picture in the vertical blanking interval to home 
computers, so, for example, a customer can refer to a player's statistics in a baseball game. 
41See Cost Order, 9 FCC Red at 4677-4680. 
11130 
Federal Communications Commission FCC 96-358 
permitted LF As to decide independently whether to opt out of those provisions of the Social 
Contract .where the Commission determined rates and refund liability for the BST.48 Similarly, 
in the Amendment, we allow LFAs to opt out of refunds which include BST rate liability.49 In 
contrast, the $1.00 rate increase concerns the CPST, which lies outside the scope of an LFA's 
jurisdiction. so 
B. Equipment and Installation Averaging 
(i) Terms of the Social Contract 
37. As with its original systems under the Social Contract, Continental may average broad 
categories of equipment and various installation costs for its acquired systems on a statewide or 
regional basis. This will be accomplished by Continental filing FCC Form 1205 (Equipment 
Form) with the Commission on an annual basis beginning in 1997. The geographic regions used 
for averaging are shown on Exhibit 1 of the Amendment. The Commission will verify the 
tiling's accuracy and establish rates applicable to that specific state or region. 
(ii) Comments 
38. Some commenters claim tJ::iat Commission regulation and averaging of equipment 
rates violate the 1992 Cable Act.s1 In its reply comments, Continental notes that the Commission 
granted Continental a waiver under the Social Contract to permit it to aggregate equipment and 
installation costs on a state or regional basis and that it is not requesting anything additional 
here. si Continental also argues that the 1992 Cable Act leaves the precise level of local versus 
federal authority over equipment and installation rates to the Commission's discretion.s3 
(iii) Discussion 
39. As we concluded in the Order approving the Social Contract, the 1992 Cable Act 
leaves the level at which equipment rates are set (i.e., the franchise, system, regional, or company 
48See Social Contract, III.I. 
49See Amendment, III.E2. 
50See also In the Matter of TCI Communications, Inc., Final Resolution of Cable Programming Service Rate 
Complaints, FCC 96-187 (released April 26, l 996)("TC/ Order"). 
51 Comments of Coachella, California at 10; Comments of Cypress, L~ Palma, La Quinta and Palm Desert, 
California at 1 O; Comments of Lakewood, California at 2. 
52Continental Reply Comments at 42. 
53Continental Reply Comments at 43. 
11131 
Federal Communications Commission FCC 96-358 
level) to the Commission's discretion.54 Until very recently, our rules provided that rates for 
installati~n and equipment may be aggregated only in a manner consistent with the accounting 
practices of the operator.55 We granted a waiver of our equipment rules to Continental in the 
Social Contract. 56 We concluded that equipment averaging will minimize drastic rate increases 
as upgrades take place and will reduce the administrative burden on Continental to prepare rates 
on a franchise basis.57 The Telecommunications Act of 199658 now requires that we allow 
operators to aggregate their equipment costs on franchise, system, regional, or company levels. 59 
The terms of the Amendment are consistent with both the 1992 Cable Act and the 1996 Act. 
Accordingly, no waiver of our rules is required in order to permit Continental to average broad 
categories of equipment and various instaij.ation costs for all of its systems on a statewide or 
regional basis. Nor does this provision of the Amendment violate section 624 of the 1992 Cable 
Act which directs the Commission to establish standards for setting, on the basis of actual cost, 
the rate for installation and lease of equipment used by subscribers to receive the BST.60 
Continental' s equipment rates will continue to be based on actual cost. We will continue the 
waiver we granted Continental in the Social Contract with respect to review by LF As of the 
equipment rate form. Those forms will be reviewed by the Commission for the reasoD.s stated 
in the Social Contract.61 
C. Lifeline Basic Tier Rates 
(i) Terms of the Social Contract 
40. Under the Amendment, Continental agrees to create a low-cost "lifeline" BST for 80 
percent of its acquired systems. On systems serving at least 80 percent of its total subscribers, 
Continental will reduce the current price on its BST by 15 to 20 percent no later than January 
1, 1997, with a revenue neutral increase in the CPST rates. On the remaining systems where 
BST rates have not been reduced by at least 15 percent, Continental may streamline basic tiers 
that have. a high number of channels.' This retiering will consist of Continental moving channels 
54Social Contract Order at ii 30. 
55See Implementation of Section 301G) of the Telecommunications Act of 1996 - Aggregation of Equipment 
Costs by Cable Operators, FCC 96-257 (released June 7, 1996). 
56Social Contract Order at, 31. 
58Pub. L. No. 104-104, 110 Stat. 56, 118 (1996) 
59Telecommunications Act of 1996, § 623(a)(7)(A), 47 U.S.C. § 543(a)(7)(A). 
6047 u.s.c. § 544. 
61See Social Contract Order at, 29-31. 
11132 
Federal Communications Commission FCC 96-358 
from the BST to the existing CPST or to a newly created CPST or MPT in a revenue-neutral 
manner. 
(ii) Comments 
41. Many commenters support the creation of a lifeline BST and emphasize that low 
basic cable rates are essential to persons on a fixed or low income. 62 Of those commenters who 
expressed opposition, the concerns are that a large number of CPST users will subsidize a low 
basic cable rate for a few BST-only subscribers and that the BST is not important in those 
communities where the reception of broadcast television is clear. 63 In its reply comments, 
Continental contends that a low-priced BST will benefit all subscribers, not just BST-only 
consumers. 64 
(iii) Discussion 
42. We approved the establishment of a low-cost lifeline BST for Continental's original 
systems under the Social Contract. There we noted that the creation of a lifeline BST increases 
the option of all subscribers and increases competition for services on the upper tiers.65 We also 
explained that any increase in rates for subscribers that receive both the BST and the CPST 
would be de minimis.66 It is our belief that the acquired systems will also benefit from the 
valuable public benefits resulting from the establishment of a low-cost lifeline BST. We approve 
this provision of the Amendment creating a lifeline BST for Continental's acquired systems.67 
D. Home Wiring 
62See, e.g., Comments of Lemont, Illinois at I; Comments ofHamtramck, Michigan at I; Comments ofLockport, 
Illinois at I. 
63Comments of Coachella, California at 9; Comments of Cypress, La Palma, La Quinta and Palm Desert, 
California at 9. 
64Continental Reply Comments at 66. 
65Socia/ Contract Order at~ 48. 
66ld. at~ 47. The Amendment requires creation of a lifeline basic in which the lower BST rates are offset by 
higher rates for the CPST in a revenue neutral manner. Because Continental has more subscribers receiving only 
BST than subscribers receiving both BST and CPST, the aggregate amount from the BST reduction must be spread 
ove~ a slightly smaller subscriber base. 
67The Commission re.cently proposed that all rate-regulated operators be allowed rate flexibility in pricing service 
tiers. Under the proposal, an operator that decreases its BST rate below the maximum permitted rate for that tier 
would be permitted to increase its CPST rate to offset the lost BST revenue. See Implementation of Sections of the 
Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, MM Docket No. 92-266, and 
Cable Pricing Flexibility, CS Docket No. 96-157, Memorandum Opinion and Order and Notice of Proposed 
Rulemaking, FCC 96-3 I 6 (released August 15, 1996). 
11133 
Federal Communications Commission FCC 96-358 
(i) Terms of the Social Contract 
43. Continental will allow subscribers to remove, to maintain, to replace or to rearrange 
their home cable wiring so long as it does not create signal leakage or interfere with Continental' s 
ability to provide services and to collect revenues from that subscriber or other subscribers in a 
multiple dwelling. To facilitate this benefit, Continental will provide the necessary home wiring 
materials to subscribers at cost and will identify other sources for such equipment. Subscribers 
will be responsible for the cost of remedying any improper installation. 
(ii) Comments 
44. We did not receive any comments opposing this provision of the Amendment. 
(iii) Discussion 
45. We find that the Amendment's home wiring provision benefits subscribers since it 
allows subscribers to make changes in their cable wiring without incurring additional costs. This 
will enable customers to make rational choices regarding their home wiring. 68 
E. Resolution of Pending Cases 
(i) Terms of the Social Contract 
46. The Amendment will resolve all CPST cases pending against Continental's acquired 
systems and those BST cases where a la carte channel packages are at issue. In resolution of 
these cases, Continental agrees to pay cash refunds totalling approximately $1.67 million, 
including interest, to subscribers in the franchise areas shown in Exhibits 2 and 3 of the 
Amendment. The cash refunds will'be paid in the form of credits on subscribers' cable bills. 
Refunds will continue to accrue interest until the date that the refunds are actually paid. LF As 
may elect to opt out of the refund plan, in which case an LF A individually may calculate refunds 
from BST overcharges under our rules. The Amendment vacates a Letter of Inquiry ("LOI") 
ruling and four orders which held that certain a la carte packages were not legitimate a la carte 
offerings and therefore must be treated as regulated offerings. All of the acquired systems' 
pending petitions for reconsideration of the Commission's rate decisions on the CPST complaints 
are vacated as well. 69 
68See also Social Contract for Time Warner, FCC 95-478 at ~ 76 (released November 30, 1995), petition for 
review pending, New York City Dep 't of Information Technology and Telecommunications, et al., v. FCC, D.C. Cir. 
No. 96-l027("Time Warner Social Contract Order"). 
69 Dynamic Cablevision of Florida, Ltd., LOI-93-43, DA 94-1546 (released January 23, 1995); Colony Cablevision 
of Florida. DA 95-624 (released March 29, 1995); Colony Cablevision of Florida, DA 95-820 (released April 18, 
1995); Dynamic Cablevision of Florida, Inc., DA 95-860 (released April 21, 1995); Dynamic Cablevision of Florida, 
Inc., DA 95-1143 (released May 26, 1995). 
11134 
Federal Communications Commission FCC 96-358 
(ii) Comments 
47. Many commenters express support for the Amendment's resolution of the pending 
rate cases as a way to avoid lengthy and burdensome administrative proceedings. 70 Some 
commenters, however, contend that complainants have the statutory right to have their complaints 
adjudicated individually on the record, that the negotiation of the Amendment between 
Continental and the Commission constituted a violation of the Commission's ex parte rules.71 
In addition, two commenters request an explanation of the calculation of interest on the proposed 
refunds.72 Finally, Brighton, Michigan asks the status of its petition for special relief filed with 
the Commission in which it requested, pursuant to 47 C.F.R§ 76.933(d), Commission 
adjudication of the operator's BST rates which were supported by a cost-of-service showing. 
48. In its reply comments, Continental cites Commission orders, court cases, and 
Congressional authority that establish the right of the Commission to resolve pending cable rate 
cases through a global rate settlement.73 In response to comments that Section 623(c)(l)(A) of 
the Communications Act requires the Commission to adjudicate CPST rate cases on an individual 
basis, Continental points out that the plain language of the section simply directs the Commission 
to identify criteria for determining when CPST rates are unreasonable and contains no reference 
to the types of procedural mechanisms (such as social contracts, for example) that the 
Commission must use to apply these criteria to CPS:r rates. 74 Continental stresses that the 
Amendment eliminates the time, expense, and administrative burdens required of all parties to 
adjudicate complex rate disputes, while also providing reasonable refunds to subscribers. 
Continental denie:; that the Amendment was negotiated in violation of the Commission's ex parte 
rules, and, as evidence thereof, submits FCC date-stamped copies of letters requesting a meeting 
and relaxed ex parte treatment for any specific pending rate proceedings involving the acquired 
systems. 75 Continental provides a detailed explanation of the calculation of the interest on the 
proposed refunds.76 Finally, Continental agrees to incorporate in the Amendment the review by. 
the Commission of its BST rates for its acquired system in Brighton, Michigan. 
'
0See, e.g., Miami Springs, Florida at I; Massachusetts Cable Television Commission at 2. 
71 Comments of Coachella, California at 2 - 9; Comments of Cypress, La Palma, La Quinta and Palm Desert, 
California at 2 - 8; Comments of Lakewood, California at I. 
72See Comments of Metropolitan Dade County at 4; Comments of Collier County Manager's Office at 5. 
73 See Reply Comments of Continental at 26 - 34. 
74Reply Comments of Continental at 27 - 29. 
';.Id at Appendix B. 
'bid. at 51 - 52. 
11135 
Federal Communications Commission FCC 96-358 
(iii) Discussion 
49. We conclude that proper procedures were followed with respect to the Amendment. 
As an initial matter, we find that. the Commission has the requisite authority to approve the 
Amendment. The Communications Act of 1934 provides the Commission with wide discretion 
to resolve rate cases. 77 Section 4(i) of the Communications Act authorizes the Commission to 
"perform any and all acts ... not inconsistent with [the] Act, as may be necessary in the execution 
of its functions. "78 Section 40) of the Communications Act provides that the "Commission may 
·conduct its proceedings in such manner as will best conduce to the proper dispatch of business 
and to the ends of justice .... "79 As we have held in prior orders; we believe that Sections 4(i) and 
40) of the Communications Act allow us to consider cable operators' proposals to resolve rate 
complaints. 80 
50. Moreover, the 1992 Cable Act directs the Commission to create "fair and expeditious 
procedures for the receipt, consideration and resolution of complaints."81 Congress has also 
charged the Com.nllssion with establishing "the procedures to be used to reduce rates for cable 
programming services that are determined by the Commission to be unreasonable and to refund 
such portion of the rates or charges that were paid by subscribers after the filing of such 
complaint and that are determined to be unreasonable. "82 Pursuant to these Congressional 
mandates, the Commission adopted rules in its Cost Order providing for the use of social 
contracts as one method of setting cable rates. 83 We note that nothing in our Cost Order prohibits 
the resolution of past overcharges under a social contract and, as noted above, such resolutions 
are within our Section 4 (i) and 4 G) authority. A significant purpose of our Cost Order is to 
promote the formation and implementation of innovative plans that will encourage operators to 
upgrade their systems. 84 Global rate resolutions are one such plan. Otherwise, some cable 
operators might have little to no incentive to enter into social contracts, and the upgrade incentive 
77Communications Act of 1934, as amended. 47 U.S.C. § 151 et seq. ("Communications Act"). 
7847 u.s.c. § 154(i). 
7947 u.s.c. § 154G). 
80See TC/ Order at~ 8; Comcast Cable Communications, Inc., FCC 95-482 (released December l, 1995), petition 
for review pending, City of Tallahassee v. FCC, 11th Cir. No. 95-3722. 
81 47 U.S.C. § 543(e)(l)(B). 
8247 U.S.C. § 543(e)(l)(C). 
83Cost Order, 9 FCC Red at 4677 - 4680. 
84Cost Order, 9 FCC Red at 4678 - 4679. 
11136 
Federal Communications Commission FCC 96-358 
plans contemplated by the Cost Order would remain a mere ideass To exclude global rate 
settlements from a social contract simply because they are not listed in the Cost Order, as argued 
by some commenters, s6 could mean that other beneficial provisions such as home wiring and free 
services to schools also might be excluded since they, too, are not listed in the Cost Order. 
Moreover, in Cost Order II, the Commission adopted the social contract approach as part of its 
final rules and reaffirmed its intent to "remain flexible with respect to the scope and terms of 
such [social contract] arrangements."s7 . 
51. There is no statutory requirement that each rate complaint be adjudicated individually. 
Rather, the Commission is required by Congress to establish procedures that resolve rate 
complaints and provide refunds of excessive charges.ss The courts have long recognized that 
regulatory agencies have broad discretion to choose among ratemaking methods and procedures 
in ratemaking determinations. s9 As we held in the TC! Order, the lengthy process of adjudicating 
each rate complaint and litigating those rulings through the court system is not in the public 
interest when an alternative procedure, such as global rate settlement, would ensure reasonable 
rates, provide immediate refunds to subscribers, and fulfill the Commission's Congressional 
mandate to ensure that challenged CPST rates are not unreasonable.90 We believe that Congress' 
desire to streamline cable rate regulation, as demonstrated by the passage of the 
Telecommunications Act of 1996,91 supports the adoption of the most expeditious means of 
resolving complaints that will afford adequate protection for subscribers.92 To the extent that 
we have diverged from the Commission's rules93 by adopting the Amendment, we find good 
85 See also Reply Comments of Continental at 30 ("Resolving pending rate cases clearly provides cable operators 
with the incentive and ability to upgrade their systems and services."). 
86See Comments of Coachella, California at n. 7; Comments of Cypress, La Palma, La Quinta and Palm Desert, 
California at n. 7. 
87lmplementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate 
Regulation, MM Docket No. 93-215, Second Report and Order, First Order on Reconsideration, and Further Notice 
of Proposed Rulemaking, 11 FCC Red 2220, 2282 (1996)("Cost Order If'). 
88See 47 U.S.C: § 543(c)(l)(C). 
· 
89See FERC v. Pennzoil Producing Co., 439 U.S. 508, 517 (1979); Permian Basin Area Rate Cases, 390 U.S. 
747, 797 (1968). 
<iosee TC/ Order at ii 9. 
<i 1See Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996). 
. . 
<i2See also Comments of Edward M. Kennedy, U.S. Senator (MA) at l and Representative Ken Calvert, U.S. 
Representative (CA), at I in support of the Amendment. 
93See 47 C.F.R. §§ 76.922, 76.950-76.963. 
11137 
Federal Communications Commission FCC 96-358 
cause to waive these rules pursuant to Section 1.3 of our rules. 94 Such a waiver furthers the 
purpose of the r u 1 es 
and advances the public interest in that the Amendment will more effectively achieve the 
objectives of the 1992 Cable Act by ensuring the expeditious resolution of rate complaints while 
protecting consumers from unreasonable CPST rates. 
52. In the Cable Ex Parte Order, we held that relaxed ex parte rules apply to discussions 
that are general to the cable operator as a whole although they potentially implicate pending rate 
proceedings "such as company-wide applications of the cable rules that impact specific rate 
proceedings. "9s A party wishing to take advantage of the modified ex parte procedures under the 
Cable Ex Parte Order must submit a written request to meet with the Bureau and a request for 
the relaxed ex parte treatment, receive Bureau approval of the requests, serve all parties to each 
affected pending rate complaint and/or appeal proceeding with the final version of the specific 
company-wide prop<)sed resolution, and allow all parties at least 30 days for comment We 
conclude that these requirements were complied with here. By letters dated October 12, 1995, 
October 18, 1995, and November 22, 1995, Continental requested relaxed ex parte treatment in 
order to discuss broad rate-related matters with Commission officials. The Bureau subsequently 
granted the requests. All complainants and affected LF As were served with a copy of the 
proposed Amendment and given 45 days to comment. The Commission has reviewed the 
comments, which, in some instances,. have resulted in changes to the Amendment LF As and 
other affected parties have been given ample opportunity to participate in this procedure. We 
conclude that the Commission's ex parte procedures in this case have been fully complied with.96 
53. The Cost Order states that when a cable operator submits a proposed upgrade 
incentive plan to the Bureau, it should include statements from affected LFAs.97 In the 
Continental Social Contract Order, the Commission waived its requirement that a statement be 
filed by the local LF A at the time an upgrade proposal is made to the Bureau.98 Instead, LF As 
were given the opportunity to make statements at the time the proposed Social Contract was 
released publicly. The Commission recognized that the comment period provided ample 
opportunity for LF As "to express their concurrence with or opposition to the proposed agreement" 
and that "the Cable Ex Parte Order contemplated this type of process, with the final proposal 
9447 C.F.R. § 1.3 ("Any provision of the rules may be waived by the Commission on its own motion .. .if good 
cause therefor is shown."). 
95See Modification of Ex Parte Procedures in Certain Cable Rate Proceedings, 9 FCC Red 7812 (1994) ("Cable 
Ex Parte Order") at ~ l 0. 
96Cf Comments of Coachella, California at 6 - 7; Comments of Cypress, La Palma, La Quinta and Palm Desert, 
California at 6 - 7. In addition, the Commission also has authority to enter in.to discussions to resolve matters before 
it pursuant to 4 7 C.F .R. § l .1208(b )(7). The Amendment could be considered under that provision of our rules also. 
91Cost.Order, 9 FCC Red at 4680. 
98Continental Social Contract Order at~ 70. 
11138 
Federal Communications Commission FCC 96-358 
being offered for comment. "99 The same situation exists here, except that in addition to the 
interests of LF As from the ·original systems, the concerns of numerous LF As from the acquired 
systems are also involved. The comment period has provided ample opportunity for LF As and 
other affected parties to express their views as to the Amendment and to participate in its 
finalization. 100 In keeping with the Social Contract Order, and on our own motion and for good 
cause shown, we waive the requirement that LF A statements be included in the submission of 
Continental' s amended upgrade incentive proposal. 
54. In reaching a resolution of the rates and refunds in the acquired systems, we 
evaluated the pending complaints and found that most of Continental' s refund liability results 
from a la carte packages, primarily in the Florida systems it acquired from the Providence 
Journal. The adjustments to liability we made emanate from a review of the circumstances 
involving these a la carte channels. The 1992 Cable Act, which established cable rate regulation, 
exempted video programming provided on a per program or per channel basis from regulation 
as a cable programming service101 yet directed the Commission to take steps to prevent evasions 
of rate regulation resulting from retiering services. 102 The Commission adopted rules and 
guidelines to implement this mandate103. and, in response to complaints, the Bureau sent letters 
of inquiry (LOI} to cable operators who had created packages of a la carte channels on the eve 
of rate regulation. 
55. An LOI was sent to the acquired system in Hialeah, Florida. The Hialeah operator 
had created two packages of a la carte channels on September 1, 1993, Cable Plus with six 
channels and the Expanded package with four channels. They continued to offer a substantial 
CPST. The LOI focused on the perspective that exempting particular packages from rate 
regulation provided an opportunity to engage in evasive maneuvers inconsistent with the policies 
of the 1992 Cable Act. Specifically, the question was whether the operator was allowed to 
remove the entire Cable Plus tier from rate regulation and the additional channels that were 
removed with the Expanded package: After the restructuring, customers automatically continued 
receiving the CPST packages and few changed to a la carte offerings. In its ruling104, the Bureau 
100See also Time Warner Social Contract Order at~ 49. 
101 Communications Act of 1934, as amended, 47 U.S.C. 543(1)(2)(B). 
102/d .. 47 u.s.c. 543(h). 
103 See Going Forward, 10 FCC Red at 1241-1244; Implementation of Sections of the Cable Television Consumer 
Protection and Competition Act of 1992: Rate Regulation, MM Docket No. 92-266, Second Order on 
Reconsideration, Fourth Report and Order, and Fifth Notice of Proposed Rulemaking, 9 FCC Red 4119, 4210-4216 
( 1994): MM Docket No. 92-266, Report and Order and Further Notice of Proposed Rulemaking, 8 FCC Red 5631, 
5911, 5915-17 (1993). 
104Dynamic Cablevision of Florida, Ltd., LOI-93-43, 10 FCC Red 2191 (C.S.B. 1994) ("LOI ruling"). 
11139 
Federal Communications Commission FCC 96-358 
concluded that the per channel offerings were not realistic service offerings, and were therefore 
subject to rate regulation. It applied this determination to all of the Providence Journal Florida 
systems in rate orders105 for Hialeah106 and Coral Gables, which offered the same packages, and 
Naples and surrounding parts of Collier County, which both offered a singie eight-channel Cable 
Plus package. The rate orders added the a la carte channels to the number of regulated channels, 
and resulted in increased refund -liability for the operators. 107 The Bureau ordered refunds through 
May 14, 1994 and adjustment of the benchmark rates, but stayed the effective dates of the rate 
orders pending action on the operator's petition for reconsideration of the LOI ruling, because 
"our resolution of the issues pending .. could require revisions to our analysis .... 11108 
56. Not addressed by the Bureau in either the ruling or rate orders was the degree of 
subscriber penetration of a particular a la carte package. Subscriber penetration is an element to 
be considered in a social contract context in determining whether a package should be returned 
to rate regulation. Returning channels to rate regulation, while allowing the subscriber to receive 
what was removed, also requires the subscriber to pay for those channels returned. As low 
subscriber penetration evidences lack of interest in programming, the impact of returning channels 
to rate regulation may result in offerings subscribers do not want to receive, much less pay for. 
Our review of the a la carte ruling and rate orders for the Florida acquired systems in this context 
included evaluating the degree of subscriber penetration for the packages involved. 
'
05Dynamic Cablevision of Florida, Inc., CUID _Nos. FL0202, FL0427, FL0553, FL0422, FL0429, FL0675, 
FL0428, FL0675, FL0428, FL0416, IO FCC Red 9345 (C.S.B. 1995) (H~aleah, et al.); Dynamic Cablevision of 
Florida, Inc., Coral Gables, Florida, CUIO-.No. FL0674, 10 FCC Red 8662 (C.S.B. 1995); Colony Cablevision of 
Florida, Naples, Florida, CUID No. FL0051, 10 FCC Red 6123 (C.S.B. 1995); Coloey Cablevision of Florida, 
Collier County, Florida, CUID Nos. FL0348, FL0098, FL0050, 10 FCC Red 5144 (C.S.B. 1995) (collectively 
"Bureau rate orders"). 
'~e Hialeah system included Hialeah, Hialeah Gardens, Medley, Miami Springs, Sweetwater, Virginia Gardens, 
West Miami, and unincorporated parts of Dade County. 
107Compare Nashoba Cable Services, Danvers, Ma. LOI-93-23, DA 94-1547, 10 FCC Red 994 
(C.S.B. 1994) (6 channel a la carte package not clearly unreasonable); Falcon Cable TV, Port 
Orchard, Wa. LOI-93-50, DA 94-1548, 10 FCC Red 998 (C.S.B. 1994) (same); Chattanooga 
Cable TV Company, Chattanooga, TN, LOI-93-51, DA 94-1427, 10 FCC Red 1519 (C.S.B. 1994) 
(same); with Vision Cable Television Co., Inc., Fort Lee, NJ, LOI 93-32, DA 94-1554, 10 FCC 
Red 2207, 2210 (C.S.B. 1994) (a la carte packages totaling 8 channels not reasonable); Vision 
Cable of North Carolina, Inc., Charlotte and Mecklenburg County, NC, LOI 93-24, DA 94-1552, 
10 FCC Red 2203, 2206 (C.S.B. 1994) (same); Falcon Cable TV, Southern Shores, NC, LOI 94-
2, DA 94-1551, 10 FCC Red 1002 (C.S.B. 1994) (IO-channel a la carte package not reasonable). 
108E.g., Dynamic Cablevision of Florida, Inc., I 0 FCC Red at 9346 ~ 11. 
11140 
Federal Communications Commission FCC 96-358 
57. The Cable Plus package had low penetration everywhere except the Naples area 109 
Subscrip~on to the package was not tied to subscription to any other CPST. The operator 
continued to offer a substantial CPST, attracting a far greater percentage of the system's 
subscribers than Cable Plus. Returning an a la carte package that attracted little interest to rate 
regulation could increase costs subscribers as they would pay for channels they had disregarded 
when offered a la carte. There is a reasonable perspective that the goal of subscriber choice was 
enhanced, or at least not reduced, by the Cable Plus package. Because of the low subscriber 
penetration, and because a la carte packages with six channels have not been found to have 
clearly evaded rate regulation, 110 we determined not to include six Cable Plus channels in the a 
la carte refund calculations as called for in the LOI ruling and the Bureau rate orders, even 
though in the situation addressed in the LOI ruling Cable Plus was converted to an a la carte 
package on the same day the Expanded package was created.111 We are not according the same 
refund treatment, however, to the Expanded package where it was offered along with Cable Plus, 
because of the substantial penetration of the Expanded package and the cumulative impact on 
rates. 112 
58. In reviewing complaints about Continental's other systems offering a la carte 
packages of more than six channels in the aggregate, we are excluding six channels from- the 
· refund calculation. A la carte packages involving only a small number of channels generally have 
not been found to be unreasonable, and for equitable reasons cable operators have not been 
subjected to refund liability for small a la carte packages, including packages of six channels. 113 
Subscribers have benefitted from the choice multiple packages provide and have had the choice 
of paying for them only if they chose to subscribe to them. Although Bureau rate orders have 
generally treated small a la carte packages as NPT whose rates are not regulated, in this case a 
la carte packages will be converted to migrated product tiers and subject to rate regulation for the 
.1 091n addition to the Florida communities, a similar situation obtained_i.n:.the other systems identified in Exhibit 
2. 
110See n. 104, supra. 
111Concemed that its rules did· not provide operators with sufficient incentives to expand capacity and provide 
new services to customers, the Commission created a new category of service, the new product tier (''NPT''), that 
would be considered CPST but would not have regulated rates. See Going Forward, IO FCC Red at 1234, et seq. 
Operators were permitted flexibility in marketing strategi~ to develop audiences for new channels, including the 
offering of packages of a Ia carte channels under the conditions specified for NPT, but could not condition 
subscription to an NPT on subscription to any tier other than BST. Id. at 1243. 
112See generally Adelphia Communications Corp. v. FCC, No. 95-1026, slip op. at 14 (D.C. Cir. July 23, 1996) 
("it is not unreasonable for the agency to suppose that the most egregious transgressors were also the most obvious."). 
The court found the Commission's use of a "small-number rule" to be reasonable. 
113 See, e.g., Nashoba Cable Services, Danvers, MA, 10 FCC Red 994, 997 (C.S.B. 1994) (not equitable to subject 
cable operator to refund liability for 6 channel a la carte tier). 
11141 
Federal Communications Commission FCC 96-358 
duration of the Social Contract. 114 Under these circumstances and in the context of the overall 
Social Contract, this resolution of the refund issues is reasonable. 
59. In determining refunds, we decided that inflation data should not be refreshed and 
that any CPST undercharges should be offset against BST and a la carte liability. 115 In the 
context of a universal resolution of all rate complaints for the acquired systems and obtaining the 
other benefits of the amendment, adding the inflationary adjustments applicable in individual rate 
determinations would have prolonged resolution as it · would have implicated a number of 
offsetting issues. Allowing CPST undercharges to offset BST and a la carte liability in this case 
moves to resolution all these categories, while ensuring that subscribers received refunds for 
charges in excess of the overall rate allowed by our rules. 
60. In response to the requests for an explanation of the interest rate applied to the 
refunds, we note that the Amendment defines "interest" as "the Internal Revenue Service rate of 
interest for tax overpayments," which is also the interest rate provided in our rules for the 
payment of refunds. 116 Continental's refund obligations already include interest calculations 
through July 1, 1997 (for the a la carte-related refunds) and through April 1, 1997 (for the non 
a la carte-related refunds). Continental will pay additional interest charges, calculated identically, 
on any refunds not paid by the respective dates through which interest has been calculated until 
the refunds are actually paid. 
61. Finally, resolution of the Brighton, Michigan BST case will be added to the 
Amendment. Previously, we had proposed the resolution of a single cost-of-service BST rate 
case involving the_ Westerly, Rhode Island Providence Journal system which had been referred 
by the LF A to the Commission for a decision. In that case, we found the BST rate reasonable. 
In the Brighton, Michigan (CUID MI0207) case, after review of the BST cost-of-service showing 
by Columbia Associates, L.P ., the prior owner of the Brighton system, we find that the BST rate 
in Brighton is not justified by the cost-of-service showing. A refund liability of $5.00 per 
subscriber is indicated. There are 2,475 subscribers in the Brighton franchise area. Total refund 
liability is $12,375. The Brighton refund liability will be added to Exhibit 3, which increases 
Continental's total refund liability in the communities listed in that Exhibit to $108,575. 
F. Migrated Product Tiers 
(i) Terms of the Social Contract 
114We are excluding six channels from the refund calculations and are allowing all systems with a la carte 
packages other than the Naples system to convert their packages to migrated product tiers. For the Naples system, 
we are allowing conversion of four channels. See discussion of migrated product tier, infra ~ 62. 
11 sThis review included Bureau rate orders in Cablevision of Chicago, 10 FCC Red 11443 (C.S.B. 1995) (DA 
95-2108), and Cablevision of Chicago, 10 FCC Rt;d 11441 (C.S.B. 1995) (DA 95-2097). 
1 
'bSee Amendment, § IV.E.5. See also, 47 C.F.R. § 76.942 (e). 
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Federal Communications Commission FCC 96-358 
62. Under the Proposed Amendment, in acquired systems that did not create packages 
of a la carte channels between April 1, 1993 and September 30, 1994, and in all formerly 
Cablevision of Chicago franchises where no a la carte package currently exists, Continental will 
be permitted to create MPTs with up to four services migrated in a revenue-neutral manner from 
the BST and/or CPST. · There will be no limitation on the number of new channels that 
Continental may add to the MPTs at the price of up to $.20 per channel plus license fees. 117 On 
or after January 1, 1997, Continental may convert the MPTs created under the original Social 
Contract to new product tiers ("NPTs") by filing a notice with the Commission on or after that 
date. In acquired systems that created either an "Expanded" package of ·a la carte channels 
(which generally consists of four a la carte channels) or a "Cable Plus" package with six or fewer 
channels, Continental will treat these a la carte packages as MPTs with the initial price set at the 
current rate. Continental may convert an MPT created under the Amendment to an NPT by filing 
a notice with the Commission on or after July 1, 1997. In acquired systems where both the 
Expanded and Cable Plus packages exist, Continental niay maintain the channel configurations 
of such packages and set their initial rates at current rates. These packages will be treated as 
MPTs for the full term of the Contract.118 In the Naples, Florida systems where the Cable Plus 
package consists of eight a la carte channels, Continental will return four channels to the CPST. 
The remaining four channels will be treated as an MPT subject to conversion to an NPT. 
(ii) Comments 
63. Several commenters oppose this provision of the Amendment. 119 In its reply 
comments, Continental notes that these commenters do not criticize any specific aspect of the 
Amendment's MPT provision nor do they challenge the Commission's authority to allow MPTs 
to be created. Instead, the commenters merely assert, without any explanation, that the MPTs 
in general will not benefit subscribers. 120 
(iii) Discussion 
64. Treatment of the Expanded and Cable Plus packages is consistent with our treatment 
111See also, supra, ~ 10, confirming application of 47 C.F.R. § 76.987(d) which permits the movement of 
additional channels from the BST and/or CPST to MPTs as long as the channels were added to the system after 
September 30, 1994. 
118 As does the Social Contract, the Amendment provides for the creation of an MPT and requires Continental 
to, among other things, restructure its rates. As a consequence, Continental has prepared a modified rate form for 
implementation of the Amendment. We have reviewed the modified form and find that it accurately reflects the 
requirements of the Amendment. 
119Comments of Lakewood, California at 2; Comments of Coachella, California at IO; Comments of Cypress, 
La Palma. La Quinta and Palm Desen, California at I 0. 
120Reply Comments of Continental at 49. 
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Federal Communications Commission FCC 96-358 
of comparable packages in other rate resolutions. 121 In addition, the Cable Plus package is low­
penetrated, except in the Naples, Florida systems. Consequently, our decision to permit 
Continental to continue to offer that package, except in Naples, is consistent with our intention 
to promote choice for subscribers. Were we to require Continental to return the low-penetrated 
Cable Plus package to a regulated tier, subscribers would be offered less choice and required to 
pay more for the tier to which the package was added. We have previously determined that the 
creation of MPTs and NPTs is -beneficial to subscribers since it will expand subscribers' 
programming choices and better enable subscribers to purchase only the services they want. 122 
The CPST will continue to be offered as well as an MPT and subscribers will have the choice 
to take either or both tiers. We note that the provision prohibits Continental from requiring 
subscribers to purchase the CPST in order to obtain MPT or NPT service. Because multiple 
packages offer subscribers more choice, and allow subscribers to pay only for what interests 
them, we accepted Continental' s proposal to preserve the benefits of the a la carte packages 
through MPTs, which will have regulated rates and will be retained for the duration of the Social 
Contract for the acquired syste~. We believe that, under these circumstances, consumers will 
benefit more from this provision of the Amendment than if the Cable Plus and Expanded 
packages were converted to CPST. Consistent with allowing MPTs, the a la carte channels 
permitted in MPTs were not counted as regulated channels for purposes of determining the 
maximum permitted benchmark rates and evaluating current rates. 123 Vacating the Bureau Rate 
orders in this regard is necessary to permit MPTs for the Florida systems and also for 
Continental' s Cablevision of Chicago franchises. 124 
G. Service to Schools 
(i) Terms of the Social Contract 
65. Under the Amendment, Continental will provide a free cable connection to all of the 
public schools (grades K-12) located'within 200 feet of the activated plant of its cable system. 
Continental will also·provide a cable connection at cost to any other unserved K-12 public school 
located beyond 200 feet of the activated plant of its cable systems but within its franchise area 
Continental will further provide a cable connection at cost to all secondary private schools within 
its franchise area that receive funding under Title I of the Education arid Secondary School Act. 
121See, e.g., Cablevision Industries Corporation: Final Resolution of Cable Programming Service Rate Complaints, 
FCC 96-262 (released June 11, 1996). 
122See TCJ Order at~ 23. 
123This is specified in Amendment, IV.D.8. for BST rates. With the exception of the Naples system where a rate 
reduction is being ordered, the current rates for the Acquired Systems are Justified. 
124Because of the high penetration of the Cable Plus package on the Naples, FL systems, we are allowing only 
a four channel MPT, which is consistent with what we have permitted in other rate resolutions. See, e.g., Garden 
State Cablevision. L.P .. 11 FCC Red 7327, 7328, 7331 ( 1996); see generally Comcast Cablevision, LOI 93-2, FCC 
95-341 (released Aug. 15, 1995) (reasonable for Bureau to treat 4 channel a la carte package as new product tier). 
11144 
Federal Communications Commission FCC 96-358 
BST and CPST services will be provided without cost to each outlet in the connected public and 
private schools. Continental will wire additional classrooms in existing schools at cost. For new 
public schools and existing public schools undergoing extensive rehabilitation~ Continental will 
attempt to coordinate with local officials and contractors to wire each of the classrooms in new 
schools free of charge. 
66. Continental will also provide the connected schools with free materials which ex.plain 
the educational applications of Comcast's cable services and with a monthly educational program 
guide containing curriculum support ideas. In addition, within one year after Continental has 
made its on-line personal computer service commercially available in a specific franchise area, 
it will offer this service to each connected school free of charge during the school year and also 
provide a free modem to access the service. Continental will provide additional modems at cost 
and free on-line service for each modem purchased. Continental will also sponsor local 
workshops and training materials for teachers. 
(ii) Comments 
67. The vast majority of comments overwhelmingly support this educational provision 
of the Amendment because it provides children with the necessary tools to compete in a 
technological world. 125 The Collier County Public Schools ex.press their belief . that the 
Amendment will ensure "that the schoolchildren of America are not left behind on America's 
information super highway." 126 Jacksonville Cities in Schools, Inc. states that "Continental 
Cablevision's work to enhance the technological capabilities of our schools will truly be of 
significant benefit to the youth of our community. "127 Lincoln Unified School District informs 
the Commission that they have "worked on numerous projects with Continental in the past and 
fully support and appreciate th~ opportunity to continue this partnership. "128 Several commenters 
request that the proposed services be expanded to local governments, which would include local 
libraries and parks. 129 Elmhurst, Illinois proposes that Continental provide a free service 
connection to each school building rather than to each school. 130 Elmhurst, Illinois also proposes 
several revisions to the wording of the provision in order to specify Continental's exact 
msee, e.g., Comments of Duval County Public Schools at l; Comments of Newport-Mesa Unified School 
District; San Joaquin County Office of Education at l. 
mcomments of Collier Count)' Public Schools at l. 
127Cornrnents of Jacksonville Cities in Schools, Inc. at l. 
128Cornrnents of Lincoln Unified School District at l. 
129See e.g., Comments of Elmhurst, Illinois at 6; Comments of Metropolitan Dade County at 2 - 3; Comments 
of Collier County Manager's Office at 2 -3. 
13
°Cornrnents of Elmhurst, Illinois at 5. 
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Federal Communications Commission FCC 96-358 
commitments to the schools. 131 One commenter asks that Continental commit to supply the 
schools with a "multi-user broadband-to-ethemet modem providing data throughput at 4 Mbps 
or higher."132 Several commenters argue that the Amendment's educational benefits are already 
required by most franchise agree~ents or soon will be under franchise renewal agreements. 133 
Fairborn, Ohio contends that the Amendment will not benefit its schools since they already 
independently subscribe to the Internet service. 134 
68. In its reply comments, Continental rejects Elmhurst, Illinois' proposal that Continental 
provide a free service connection to each school building rather than to each school. Continental 
points out that it already is making a substantial financial commitm~nt by agreeing to provide free 
service connections to more than 5,000 schools without recovering the cost for these connections 
as external or other costs. 13s Continental argues that since it ·will provide free BST and CPST 
service to all additional outlets, as well as free access to its on-line service to each cable modem 
in the school, the entire school complex (including multiple buildings) will benefit.136 For the 
same reason that it would be financially unrealistic for Continental to commit to an extension to 
all school buildings, Continental rejects proposals to modify the educational provision of the 
Amendment to include local government entities.137 Continental accepts, however, several 
revisions proposed by Elmhurst, Illinois to the wording of the school commitment provision and 
supports modification of the Amendment accordingly. 138 These revisions include a clarification 
that the cable modem and access to the on-line service will be available during the summer 
months as long as schools are open. These revisions are contained in the modified Amendment 
at section III.B. 
(iii) Discussion 
131Comments of Elmhurst, Illinois at 1 - 4. 
132Comments of Donald Shapiro at 1. 
133Comments of Coachella, California at 11; Comments of Cypress, La Palma, La Quinta and Palm Desert, 
California at 12. 
134Comments of Fairborn, Ohio at I. 
135Reply Comments of Continental at 46. 
136/d. at 47. 
137 /d. at 48. 
138See Reply Comments of Continental at Appendix C. Specifically, Elmhurst, Illinois requested a modification 
of the defined term "Cost", an amendment of section III.B.4 to specify that a school may copy the program listing 
at its own expense; an amendment of section III.B.5 to provide that Continental will provide a set of school materials 
to each "connected school building"; and an amendment of section IIl.B.6 that specifies that Continental will provide 
on-line services during the summer if the school offers summer sessions. 
11146 
Federal Communications Commission FCC 96-358 
69. We believe that the educational services which Continental has agreed to provide are 
a significant part of the Amendment. The enthusiastic endorsement of these provisions by 
numerous commenters confirms this belief. While the Amendment does not, and is not intended 
to, lnclude local government entities or all school buildings, it does bring new or improved 
educational opportunities to both public and private schools. The cost of these services will be 
borne by Continental and is not included within the upgrade costs that form the basis for the rate 
increase authorized under the Amendment. We believe that these educational benefits will enable 
many students to enter the information age and to receive the expertise necessary to succeed in 
today's highly technical environment. 
70. The educational services provision purposefully avoids specific technical parameters 
with respect to the modems to be supplied by Continental since the technology used to provide 
high-speed data service using a cable system is changing so rapidly. Technical specifications 
could be counterproductive to the extent they lock in a commitment to an older technology. 
Regardless of the precise technical parameters of the modems ultimately supplied by Continental, 
all modems will support advanced uses, such as multiple, simultaneous connections to the Internet 
via a school's own internal network, or to a school-installed Internet server for student and 
faculty e-mail or Web pages. 
71. Finally, we accept the modifications proposed by Elmhurst, Illinois to the educational 
services provision which clarify the educational benefits Continental will provide under the 
Amendment. Continental has agreed to these changes. 139 
H. Waivers 
72. The Amendment furthers the Commission's policy goals of ensuring that cable 
operators expand the capacity and programs offered over their systems where economically 
viable, and reducing regulatory burdens and other policy objectives specified in the 1992 Cable 
Act, while still ensuring that cable rates are reasonable. As we have noted previously; several 
aspects of the Social Contract do not conform precisely to the Commission's rules. 140 As a result, 
we concluded that special circumstances warranted a deviation from the Commission's generally 
applicable rules and that a waiver of such rules is in the public interest. Accordingly for the 
reasons stated in the Social Contract Order, we extend the waivers granted in that Order to the 
Amendment as well. 141 Continental also asks that we waive our requirement that cable operators 
file their FCC Forms 1205 two months after the effective date of the new rules implementing 
139See Reply Comments of Continental at Appendix C for modifications to the Amendment based on the 
proposals of Elmhurst, Illinois. See also footnote 111, supra. 
140See Social Contract Order and Continental Social Contract Implementation Order, DA 95-2160 (released 
October p, 1995). 
141See Social Contract Order at 11-12. 
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Federal Communications Commission FCC 96-358 
Section 30l(j)(7)(A) of the Telecommunications Act of 1996.142 Without this waiver, Continental 
would be required to restructure equipment rates prior to January 1, 1997, even though 
Continental may not restructure its BST and CPST rates under the Amendment until January 1, 
1997. We believe that permitting Continental a deferral of the Form 1205 filing deadline to make 
a one-time restructuring of rates furthers the goal of reducing administrative burdens and 
subscriber disruption. 
73. In addition, Continental seeks a waiver of 47 C.F.R §§ 76.922 and 76.923 to allow 
adjustment of CPST rates by the $1.00 adjustment set forth in Section III.D. of the Amendment 
in lieu of the two rounds of Going Forward adjustments permitted by the Social Contract. We 
believe that this waiver is in the public interest and should be granted. First, as noted above, the 
Commission has verified that the costs of the Continental upgrades are reasonable and necessary, 
that the $1.00 adjustment is an appropriate mechanism for recovering the costs for such 
nationwide upgrades, and that CPST rates resulting from the $1.00 adjustnient will be reasonable. 
Second, as we have stated previously, we believe that the $1.00 cost recovery mechanism is 
beneficial to consumers in that it provides orderly and predictable rate increases, thus avoiding 
"rate shock". 143 
74. Accordingly, we find good cause to waive the above provisions of the Commission's 
rules and believe that such waivers will expedite the significant benefits that will be provided by 
implementation of the Amendment. 
I. Preemption of State and Local Notice Requirements 
75. Continental has asked the Commission to preempt, on a one-time basis, local 
franchise rules which require ~ore than 30 days advance notice of rates and service charges to 
subscribers in connection with its implementation of the Amendment. Continental explains that 
without the exemption, it will be· unable to comply with both the January l, 1997 rafe 
restructuring deadline mandated by the Amendment and the 60 or 90 day advance notice 
requirement set by some LF As. 
76. We think that prompt implementation of the Amendment will best serve the public 
interest. We believe that preemption is necessary here since state and local notice requirements 
may hinder Continental's ability to implement rate adjustments uniformly pursuant to the terms 
of the Amendment by January 1, 1997. In order to realize the Amendment's goal of providing 
rate stability to subscribers, it is imperativ.e that Continental implement the upgrade surcharge 
provided for under the Amendment by January 1, 1997. Therefore, to allow Continental to 
142See Extension of Time to File FCC Equipment Form 1205 Pursuant to Sections 76.922, 76.923 of the 
Commission's Rules, DA 96-259 (released February 27, 1996); See also, Implementation of Section 30 I G) of the 
Telecommunications Act of 1996 - Aggregation of Equipment Costs by Cable Operators, CS Docket No. 96-57 
(released June 7, 1996). 
143See Time Warner Social Contract Order, FCC 95-478 (released November 30, 1995), at~ 32. 
11148 
Federal Communications Commission FCC 96-358. 
implement the rate restructuring and MPT provisions of the Amendment, any local franchise 
agreement or any state or local law or regulation is preempted on a one-time basis to the extent 
that it requires Continental to give greater than 30 days advance notice of rate and service charges 
to subscribers. 144 Such preemption shall be limited to the period prior to January l, 1997, 
although we encourage Continental to notify subscribers of the implementing rate adjustments as 
soon as possible. 
J. Clarification Of The Defmition Of "Current Rates" 
77. Continental has requested that the definition of "current rates" in the Amendment be 
revised to make it clear which BST rate Continental will use as the beginning rate for the lifeline 
basic tier restructuring.145 Continental believes that such an approach will help to avoid disputes 
at the time of restructuring. 
78. Under its proposal, in most cases, Continental will use the actual BST rate as of 
March 6, 1996 as the beginning BST rate for the lifeline basic tier restructuring. In cases where 
an acquired system had given notice to subscribers and/or filed a Form 1210 regarding a BST rate 
increase prior to January l, 1996, the increased BST rate will be used as the beginning BST rate. 
If, however, the increased rate cannot be used for the lifeline basic tier restructuring because the 
LF A had issued a tolling order that is still in effect on the restructuring date, Continental will use 
the actual BST rate in effect on March 6, 1996 for the restructuring, subject to the LF A's 
ultimate decision on the increased rate. After the LF A issues its decision, Continental will set 
the lifeline rate in accordance with section IV.A.6. of the Amendment. If the LFA-ordered rate 
is higher than the actual BST rate, Continental may adjust the lifeline BST rate accordingly. We 
believe Continental' s proposal is reasonable and will avoid unnecessary implementation disputes. 
Accordingly, we modify the Amendment's definition of "current rates" as follows: 
" 'Current rates' means the rates in effect in the franchises of the Acquired Systems as 
of tlie f.JBeaemeat Pal:llieat:iea Date March 6, 1996, 146 or the rates that will become 
effective after tfie Acmeaemeftt Pt:telieatiea Date March 6, 1996 and for which notice was 
given to subscribers and/or for which a Form 1210 was filed on or before January l, 
1996." [Italics reflect new language.] 
K. Other Issues 
(i) Comments 
79. One commenter claims that the comment period was too short and requests an 
144See Time Warner Social Contract Order at,, 21 - 22. 
145See Amendment, H.F. 
146We note that March 6, 1996 was the date on which the Amendment was placed on Public Notice. 
11149 
Federal Communications Commission FCC 96-358 
extension of time to file comments. 147 Another commenter, Madison Heights, Michigan. alleges 
that Continental impennissibly changed its rates subsequent to the issuance of a final local rate 
order. 148 
(ii) Discussion 
80. We have allowed two months for comments and reply comments on the Amendment, 
and have accepted all late-filed comments. We think that this period of time correctly balances 
the need for public comment with the need to make the public benefits of the Amendment 
available as soon as possible and that there was adequate opportunity to comment. We also note 
that of all the parties that filed comments, 149 only one complained that the comment period was 
too short. We therefore deny commenter's request for an extension of the comment period. 
81. This order is limited to the Amendment· and issues thereunder. Any comments 
unrelated to the Amendment are outside the scope of this proceeding. We cannot consider the 
comments of Madison Heights, Michigan in this order and reserve the right to consider its claim 
in a separate, individual proceeding. 
IV. CONCLUSION AND ORDERING CLAUSES 
82. For the reasons discussed above, we conclude that it is in the public interest to adopt 
the Amendment of the Social Contract between Continental and the Commission as modified 
above. 
83. Accordingly, for the reasons set forth above, IT IS ORDERED that the Amendment 
attached to this Order as Appendix A, including the modifications noted in this Order IS 
ADOPTED. 
84. IT IS FURTHER ORDERED that the waiver of any Commission rule that is 
necessary to effectuate the terms of the Amendment, including but not limited to 47 C.F.R §§ 
76.309(c)(3)(i)(B); 76.922; 76.923; 76.924(c); 76.930; 76.933; 76.942(d)(2); 76.950-963; 76.964; 
and 76.987(b)(2), IS GRANTED. 
85. IT IS FURTHER ORDERED that all proceedings pending review before the Bureau 
and the Commission with respect to rate complaints against the CPST rates of Continental and 
which are the subject of the. Amendment ARE RESOLVED. 
86. IT IS FURTHER ORDERED that the orders issued by the Bureau with respect to 
147Com.ments of Downers Grove, Illinois at 1 • 2. 
148Comments of Madison Heights. Michigan at 1 • 4. 
149See Appendix B for list of commenters. 
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Federal Communications Commission FCC 96-358 
CPST rate complaints against Continental and which are the subject of this Amendment ARE 
V ACA~D AND SUPERSEDED by this resolution. 
87. IT IS FURTIIBR ORDERED that preemption of any local franchise agreement or 
any state or local rule or regulation that requires Continental to give more than 30 days' notice 
of rate and service changes to subscribers for the period prior to January 1, 1997 IS GRANTED. 
88. IT IS FURTIIBR ORDERED that the Cable Services Bureau is given delegated 
authority to oversee implementation of this Order. 
89. IT IS FURTIIBR ORDERED that this Order is effective upon adoption. 
FEDERAL COMMUNICATIONS COMMISSION 
William F. Caton 
Acting Secretary 
11151 
Federal Communications Commission FCC 96-358 
APPENDIX A 
CONTINENTAL CABLEVISION, INC. 
AMENDMENT TO SOCIAL CONTRACT 
11152 
Federal Communications Commission FCC 96-358 
TABLE OF CONTENTS 
PAGE NO. 
I. SCOPE OF AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 
A. Cablevision of Chicago Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 
B. Consolidated Cablevision System . . . . . . . . . . . . . . . . . . . . . . . . . . 1 
C. Providence Journal Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 
D. Columbia Associates, L.P. Systems. . . . . . . . . . . . . . . . . . . . . . . . . 2 
E. N-COM Systems . . . . . . . . . . . . . . . . . ~ . . . . . . . . . . . . . . . . . . 2 
Il. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 
ill. AMENDMENTS TO THE SOCIAL CONTRACT TIIAT APPLY TO ALL 
CONTINENTAL SYSTEMS, INCLUDING THE ACQUIRED SYSTEMS . . . . . 3 
A. Additional System Upgrade Commitments . . . . . . . . . . . . . . . . . . . . . 3 
B. School Commitments ................................. 4 
C. Cable Home Wiring Commitments ......................... 7 
D. CPST Rates Subject to Price Cap . . . . . . . . . . . . . . . . . . . . . . . . . . 8 
E. Migrated Product Tiers and New Product Tiers .......... ~ ...... 9 
F. Uniform BST and CPST Service Rates . . . . . . . . . . . . . . . . . . . . . . . 9 
G. Acquired and Divested Systems ............................ 10 
IV. AMENDMENTS TO THE SOCIAL CONTRACT THAT APPLY ONLY TO 
THE ACQUIRED SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 
A. Creation of a Low-Cost, Lifeline Basic Tier in Acquired Systems . . . . . 11 
B. Procedures for Filing and Review of Social Contract Rates . . . . . . . . . 14 
. C. Equipment and Installation Rates . . . . . . . . . . . . . . . . . . . . . . . . . 14 
D. Migrated Product Tiers and New Product Tiers . . . . . . . . . . . . . . . . 14 
E. Settlement of Pending CPST Rate Cases and Refunds . . . . . . . . . . . . . 17 
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Federal Communications Commission FCC 96-358 
F. Term of this Amendment ......................... ' 21 
G. Service on Interested Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 
I. SCOPE OF AMENDMENT. 
Pursuant to section ill.H.1. of the Social Contract for Continental Cablevision, Inc. 
("Continental") (FCC 95-335, approved August 1, 1995) ("Social Contract"), this 
Amendment incorporates certain systems recently acquired by Continental into the Social 
Contract. The following systems ("Acquired Systems") are covered by this Amendment: 
A. Cablevision of Chicago Systems. This acquisition closed on August 4, 1995. 
The Cablevision of Chicago systems pass approximately 206,000 homes and 
serve approximately 92,000 subscribers in 31 franchise areas near Chicago, 
IL. 
B. Consolidated Cablevision System. This acquisition closed on September 7, 
1995. The Consolidated Cablevision system passes approximately 37,000 
homes and serves approximately 12,000 subscribers in 14 franchise areas near 
Fresno, CA. 
C. Providence Journal Systems. This acquisition closed on October 5, 1995. The 
Providence Journal systems pass approximately 1,251,000 homes and serve 
approximately 753,000 subscribers. Systems are located in California, 
Florida, Idaho, Massachusetts, Minnesota, New York, Rhode Island, 
Washington, and Wisconsin. A total of 157 franchise-areas are included in 
these systems. 
D. Columbia Associates, L.P. Systems. This acquisition closed on October 15, 
1995. The Columbia Associates, L.P. systems pass approximately 122,000 
homes and serve approximately 7 6, 000 subscribers in 16 franchise areas in 
Washtenaw and Livingston counties, MI. 
E. N-COM Systems. This acquisition closed on December 27, 1995. The 
N-COM systems pass approximately 90,000 homes and serve approximately 
54,000 subscribers in 28 franchise areas in Wayne and Washtenaw counties, 
MI. 
Some of the modifications to the Social Contract specified in this Amendment apply 
solely to the Acquired Systems. Others apply to all Continental systems, including the 
11154 
Federal Communications Commission FCC 96-358 
Acquired Systems. The scope of each of the provisions is indicated. All provisions of the 
Social Contract not specifically modified by this Amendment will remain in effect with 
respect to all Continental systems, including the Acquired Systems. 
ll. DEFINITIONS. 
For purposes of this Amendment, the following definitions shall apply. When used 
throughout this Amendment, these terms are capitalized. 
A. "Acquired System Eligible Subscribers" means all non-bulk, residentW 
subscribers of record in the Continental franchises listed in Exhibits 2 and 3 to 
this Amendment as of the date bills are issued reflecting Refunds. 
B. "Amendment Effective Date" means the date on which the Commission adopts 
the Amendment Order. 
C. "Amendment Order" means a Commission order regarding the terms of this 
Amendment. 
D. "Amendment Publication Date" means the date on which this Amendment is 
placed on public notice by the Commission. 
E. "Cost" means actual dollars used to purchase or acquire materials as 
documented on invoices, statements, canceled checks, etc., to which shall be 
added an amount equal to 11.25 % of the actual dollar cost as and for a 
reasonable rate· of return (profit), overhead, and administrative expenses. 
Where applicable, "Cost" shall also include labor costs calculated at the 
applicable Hourly Service Charge as defined by 47 C.F.R. § 76.923(d). 
111 SS 
Federal Communications Commission FCC 96-358 
F. "Current Rates" means the rates in effect in the franchises of the Acquired 
Systems as of March 6, 1996, or the rates that will become effective after 
March 6, ·1996 and for which notice was given to subscribers and/or for which 
Form 1210 was filed on or before January 1, 1996. 
G. "Implementation Date" means the date, prior to January 1, 1997, on which 
Continental implements in a particular franchise area the Lifeline Basic tier 
restructuring and other rate adjustment provisions contained in sections IV .A. 
and IV.D. of this Amendment and initiates the payment of Refunds specified 
in section IV.E. of this Amendment. The Implementation Date may vary from 
franchise area to franchise area. 
H. "Interest" means the Internal Revenue Service rate of interest for tax 
overpayments. 
I. "Regulated Services" means services added to a CPST or MPT, provided the 
latter does not become an NPT before January l, 20CH. 
J. "Refunds" means credits on subscriber bills as provided in. this Amendment. 
ill. AMENDMENTS TO THE SOCIAL CONTRACT THAT APPLY TO ALL 
CONTINENTAL SYSTEMS, INCLUDING THE ACQUIRED SYSTEMS. 
A. Additional System Upgrade Commitments. 
Continental makes the following additional infrastructure upgrade commitments 
beyond those set forth in section ill.E. of the Social Contract: 
1. Continental will increase the capital investment commitment specified 
11156 
Federal Communications Commission FCC 96-358 
in section ID.E.l. of the Social Contract from $1.35 billion to $1.7 
billion to upgrade its systems, including the Acquired Systems, to the 
technical specifications set forth in section ID.E.2. of the Social 
Contract. 
2. From the date of commencement of the Social Contract to the end of 
the Social Contract, on average, Continental systems (weighted by BST 
subscribers) will contain 10 add~tional Regulated Services, but in no 
event will any Continental system contain fewer than five additional 
Regulated Services. 
3. At least 70% of all capital expended in connection with Continental's 
system upgrade commitment will be applied for the benefit of BST 
and/or BST and CPST subscribers. 
B. School Commitments. 
1. Continental will provide a service connection at one outlet in all public 
schools (grades K-12) located within 200 feet of the activated plant of its cable systems. 
Such connections will be made free of charge and as promptly as pos_sible to all unserved 
schools requesting such a connection. Upon request, Continental will provide, at Cost, such 
a service connection to any other unserved K-12 public school located within its franchise 
areas but beyond 200 feet of the activated plant of its cable systems. If any internal wiring 
installation is requested to serve additional outlets in any public school, it will be provided at 
Cost; provided, however, that such internal wiring will be provided without charge if 
11157 
Federal Communications Commission FCC 96-358 
Continental is able to coordinate with other comparable electrical wiring installation in cases 
of new construction or substantial rehabilitation of existing schools in Continental' s franchise 
areas. 
2. Continental will provide a service connection, including any requested 
internal wiring for additional outlets, to any unserved private secondary school (as defined 
by, and which receives funding pursuant to, Title I of the Elementary and Secondary 
Education Act of 1965, 20 U.S.C. § 241a et seg., as amended) located within its franchise 
area. Such connections will be provided at Cost and as promptly as possible to all such 
schools requesting such a connection. 
3. Any public or private school connected pursuant to subparagraphs 1 or 
2 may elect to install its own internal wiring and to bear the cost thereof. Free BST and free 
CPST service will be provided to each outlet in all connected public and private schools. 
4. Continental will provide a free monthly educational program listing to 
each connected school. Additional copies of such program listings will be provided, if 
requested by a school, at Cost, but the school may also copy same at its own expense for its 
internal use. Such educational program listing will identify and describe programming on the 
Continental system that is appropriate for use in the classroom and will provide suggested 
curriculum support ideas. 
5. Continental will develop arid provide to each connected school materials 
for teachers that explain the educational applications of Continental' s broadband cable 
systems arid services. The materials will include a self-explanatory notebook and video. 
11158 
Federal Communications Commission FCC 96-358 
One free copy of each set of such materials will be provided to each and every connected 
school building. Additional copies of such materials will be provided, upon request, at Cost. 
6. Within one year after Continental makes an on-line service for personal 
computers commercially available in a specific franchise area, Continental will, upon request 
by the local school department, provide schools within such franchise area with one free 
connection to such on-line service. At a minimum, such on-line service will provide access 
to the Internet. Upon request, each connected school will receive one free cable modem and 
free, unlimited access to the Continental on-line service for use during the school year. 
Additional cable modems and operational support and services (for example, assisting 
connected schools in setting up and maintaining reliable Internet connections), will be 
provided to connected schools at Cost, upon request. Free access to the Continental on-line 
service will be provided through each such modem for use during the school year, which 
school year includes summer months if the school offers any classes during the summer 
months. In addition, Continental will sponsor local workshops at a convenient location in 
each region to educate _teachers about its on-line service and to provide connected schools 
with an opportunity for hands-on training concerning all educational services being provided 
by Continental. 
7. Continental agrees not to seek to recover the cost for these connections 
as external or other costs. 
8. Nothing herein shall affect the enforceability of any otherwise valid 
preexisting local franchise agreement, ordinance, local law, or regulation which provides 
11159 
Federal Communications Commission FCC 96-358 
benefits which exceed those provided in the Social Contract relating to system upgrades or 
the wiring of schools, nor shall LFAs be restricted in their authority to negotiate for such 
additional benefits after the Amendment Effective Date. 
C. Cable Home Wiring Commitments. 
1. Prior to a customer's termination of cable service, Continental will not 
restrict the ability of a customer to remove, replace, rearrange, or maintain any cable wiring 
located within the interior space of the customer's dwelling unit, so long as such actions do 
not interfere with the ability of the Continental system to meet Commission technical 
standards or to provide services to, and collect associated revenues from, that customer or 
from any neighboring customer in a multiple dwelling context. Continental' s ownership 
rights to such cable home wiring shall be no less than that provided by applicable law or 
regulation. 
2. Upon commencement of cable service, and annually thereafter, 
Continental will notify customers of their rights and options relating to cable home wiring. 
Such notice will advise customers that they may either: (a) remove, replace, rearrange, or 
maintain the cable home wiring themselves; (b) select a qualified third-party contractor to 
perform these services; or (c) request the Continental system to provide such services at 
Cost. 
3. Such notice will inform customers that if any cable home wiring is 
installed or rearranged by anyone other than Continental, and any harmful or improper signal 
leakage occurs as a result, the customer may be held responsible for the cost of rectifying the 
11160 
Federal Communications Commission FCC 96-358 
problem. Continental recognizes that it is required by Commission rules to terminate service 
to any location where signal leakage problems are not corrected. 
4. Such notice will encourage Continental customers to use high-quality 
home wiring materials to avoid signal leakage and to maintain signal quality. Continental 
will offer such materials to customers at Cost. 
5. Prior to disseminating the notice to Continental customers, Continental 
will provide a model of the notice to the Commission for its· approval. Such approval shall 
not be unreasonably withheld. 
D. CPST Rates Subject to Price Cap. 
1. All Continental systems other than the Acquired Systems may increase 
monthly CPST rates by $1.00 in each of 1997, 1998, and 1999, and all Acquired Systems 
may increase monthly CPST rates by $1.00 in each of 1996, 1997, 1998, and 1999. These 
rate increases have been established at a level designed to recover solely those costs allocable 
to BST and CPST subscribers. 
2. During the term of the Social Contract, the only other permitted 
increases to regulated CPST rates will be for inflation, increases in external costs, and any 
other adjustments permitted by the Social Contract, as amended, or by Commission rules. 
However, Continental will not avail itself of any per-channel adjustment permitted by the 
Going-Forward rules for any programming channels added to the CPST after the Amendment 
Effective Date, except where Continental has upgraded or rebuilt a particular system during 
1996 which is not an Acquired System and has not previously added any channels on such 
11161 
Federal Communications Commission FCC 96-358 
system during 1996 pursuant to the Going-Forward rules. In addition, Continental will not 
implement the second round of Going-Forward channel additions from 1998 through 2000 
pursuant to section ill.C.2. of the.Social Contract. As of the Amendment Effective Date, the 
second sentence of section m.C.2. of the Social Contract will be superseded by this 
Amendment. 
3. Any per-channel adjustments implemented pursuant to the Going-
Forward rules by any Acquired System for services added in 1996 shall be netted against the 
initial $1.00 CPST adjustment. Upon implementation of any such net initial CPST 
adjustment, such Acquired Systems will be allowed to concurrently adjust CPST rates to 
reflect any license fees not already passed through to subscribers associated with any such 
services added to such systems in 1996. 
E. Migrated Product Tiers and New Product Tiers. 
Continental may convert the MPTs created under the Social Contract to NPTs by 
filing a notice with the Commission and with affected LF As of its intention to do so on or 
after January l, 1997. Continental may convert the MPTs created under this Amendment 
(except for the MPTs created under section IV.D.3. of this Amendment) to NPTs by filing a 
notice with the Commission and with affected LF As of its intention to do so on or after July 
1, 1997. If Continental does not file such NPT notice with respect to a particular MPT, such 
MPT will retain its MPT regulatory status (including the limitation on price increases to the 
recovery of inflation and external costs and $.20 plus license fees for all new MPT services), 
and the services added to such MPT will be counted as Regulated Services as defined in this 
11162 
Federal Communications Commission FCC 96-358 
Amendment. 
F. Uniform BST and CPST Service Rates. 
If the Commission adopts new rules allowing cable operators to restructure their 
regulated rates to achieve pricing uniformity on a regional or statewide basis, Continental 
will be permitted to ·implement such restructurings in all of its systems, including the 
Acquired Systems. 
G. Acquired and Divested Systems. 
1. If Continental sells or trades any cable system that is covered by the 
terms of the Social Contract (including all amendments thereto) prior to December 31, 2000, 
and Continental had implemented the $1 price cap mechanism in such system pursuant to 
section m.D.1 of this Amendment, the subscribers of such system will be eligible for 
refunds of the increases, in the event that: (a) the system is not at 550 MHz of capacity at 
the time of such sale or trade; and (b) the system is not upgraded to 550 MHz on or before 
December 31, 2000 by any subsequent owner of such system. .Such refunds will be paid in 
the form of bill credits to CPST subscribers of such system existing at the time refunds are 
distributed. 
2. Any such refunds will: (a) be based on all funds collected by 
Continental through the $1 increases prior to such sale or trade; and (b) be offset by any 
increases to which Continental would have been entitled, but which it did not implement, 
relating to the $0.20 per-channel "Operator's Cap" component of the Going-Forward Rules, 
including~ after December 31, 1997, the Operator's Cap component of the second round of 
11163 
Federal Communications Commission FCC 96-358 
Going-Forward increases permitted by section ill.C.2 of the Social Contract, for any CPST 
channels added to such system by Continental prior to such sale or trade. 
3. At the time of the sale or trade of any such Continental system, 
Continental will post a performance bond or obtain a letter of credit or other equivalent 
security in the amount of the funds that would be due under the previous subparagraph 
(including any applicable offsets for Going-Forward channel additions), plus Interest 
calculated at the current rate of Interest as of the time of sale or trade and applied through 
December 31, 2000. 
4. The last sentence.of section ill.H.2 of the Social Contract is amended: 
(a) by replacing "section ill.E.l," with "section ill.E. "; and (b) by inserting "(but not 
systems acquired through direct purchase)" after the words "system trade". 
5. Section m.E.2 of the Social Contract is amended by adding a new 
provision or "bullet" after the third existing bullet as follows: "At least two million 
Continental subscribers will be served by a system with a capacity of at least 550 MHz and 
at least two million Continental subscribers will be served by a system with a capacity of at 
least 750 MHz." 
IV. AMENDMENTS TO THE SOCIAL CONTRACT THAT APPLY ONLY TO 
THE ACQUIRED SYSTEMS. 
A. Creation of a Low-Cost, Lifeline Basic Tier in Acquired Systems. 
In order to provide subscribers with the option to purchase a low-cost basic service 
tier, Continental will create a Lifeline Basic tier in the Acquired Systems as set forth below. 
11164 
Federal Communications Commission FCC 96-358 
The minimum reduction for a Lifeline Basic tier will be 15% from the Current Rate for BST. 
In order to achieve uniform BST rates in a given system, Continental may reduce BST rates 
up to an additional 5 3 for a maximum reduction of 20 % . 
1. No later than January 1, 1997, Continental will reduce the Current Rate 
for BST by 15%-203 in franchise areas serving at least 80% of the total number of 
subscribers in the Acquired Systems. 
2. In any franchise area in which the BST rate was not reduced pursuant 
to the previous subparagraph, Continental may, at its option, create a Lifeline Basic tier by 
reducing the BST rate by 15 %-20 % . In order to create the Lifeline Basic tier pursuant to 
this subparagraph, Continental will be permitted to restructure the BST. Such restructuring 
will include shifting BST channels to an existing or newly created CPST (or MPT as 
permitted by section IV.D.5. of this Amendment) in a revenue-neutral manner pursuant to 
Commission rules, except that Continental may not move channels that are required by 
statute to be on the BST. Such revenue-neutral restructuring shall not be deemed to be a 
"fundamental change" of any affected service tier, and Continental shall not be required to 
re-market any of the services or tiers affected or created by such restructuring. 
3. In franchise areas in which a Lifeline Basic tier is created pursuant to 
this Amendment, Continental may, on the franchise's respective Implementation Date, adjust 
the reduced BST rate for: (a) unrecovered external costs for the five calendar quarters 
beginning on April 1, 1995; (b) unrecovered inflation for the year ended June 30, 1995; and 
(c) an adjustment to reflect channels carried on the BST in the· franchise area as of the· 
11165 
Federal Communications Commission FCC 96-358 
Implementation Date. In franchise areas in which a Lifeline Basic tier is not created 
pursuant to this Amendment, Continental may, on the franchise's respective Implementation 
Date, adjust the Current Rate for BST in such franchises as specified in this subparagraph. 
4. · In franchise areas in which a Lifeline Basic tier is created pursuant to 
this Amendment, Continental may, on the franchise's respective Implementation Date, adjust 
the Current Rate for CPST by: (a) an amount which yields the total revenues foregone by the 
15%-20% Lifeline Basic rate reduction; (b) unrecovered external costs for the five Calendar 
quarters beginning on April 1, 1995; (c) unrecovered inflation for the year ended June 30, 
1995; (d) an adjustment to reflect the channels carried on CPST in the franchise area as of 
the Implementation Date; and (e) the adjustment permitted by section ill.D. of this 
Amendment. In franchise areas in which a Lifeline Basic tier is not created pursuant to this 
Amendment, Continental may, on the franchise's respective Implementation Date, adjust the 
Current Rate for CPST in such franchise areas as specified in this subparagraph, except for 
item (a). 
5. Continental will adjust rates in franchise areas of the Acquired Systems, 
if necessary, to comply with the Commission's November 9, 1995 Public Notice concerning 
inflation recovery in transition systems (DA 95-2295) upon the earlier of the creation of a 
Lifeline Basic tier in a franchise area, or the next filing with respect to service rates in such 
franchise area. 
6. In any franchise area of an Acquired System where: (a) a Lifeline Basic 
. . 
tier is created; (b) the BST rate is the subject of a pending review as of the Amendment 
11166 
Federal Communications Commission FCC 96-358 
·Publication Date; and (c) a lower maximum permitted BST rate is ultimately ordered, 
Continental will, in its next rate filing in such franchise area, set its Lifeline Basic tier rate 
(after the ordered BST rate is no longer subject to review or appeal), so that the resulting 
BST rate level is at least 15 % below the Current Rate for BST (plus all applicable 
adjustments for inflation and external costs), unless the ordered BST rate is lower than the 
reduced Lifeline Basic tier rate, in which case the ordered BST rate shall be deemed the 
Lifeline Basic tier rate. 
B. Procedures for Filing and Review of Social Contract Rates. 
The procedures outlined at,, 17-23 of the Bureau's Order released on October 17, 
1995 in Jn the Matter of Social Contract for Continental Cablevision, Inc. (DA 95-2160) 
shall govern LFA review of the initial BST rates as restructured and adjusted pursuant to 
section N .A. of this Amendment. The relevant sections of this Bureau order are attached to 
this Amendment as Exhibit 4. 
C. Equipment and Installation Rates. 
Equipment and installation rates in the Acquired Systems will be governed by the 
provisions set forth in sections ill.B.2.d. and ill.C.3. of the Social Contract. However, 
these provisions will only apply to the Acquired Systems beginning with the 1997 annual 
equipment and installation rate filing. Exhibit 6 of the Social Contract has been modified to 
incorporate into Continental' s operating regions the states in which the Acquired Systems 
operate. The modified version is attached to this Amendment as Exhibit 1. 
D; Migrated Product Tiers and New Product.Tiers. 
11167 
Federal Communications Commission FCC 96-358 
1. Certain Providence Journal systems have been providing packages of a 
la carte channels which were created between April 1, 1993 and September 30, 1994. Two 
different packages of a la carte channels were offered under the names of "Expanded 
Package" and "Cable Plus Package." The Expanded Package is an a la carte package 
generally consisting of four (but no more than five) a la carte channels, including up to three 
superstations in certain franchises. The Cable Plus Package is a low-penetrated a la carte 
package which generally consists of six to eight a la carte channels. Six Providence Journal 
systems offer both packages. 
2. In Providence Journal franchises in which only the Expanded Package 
exists or only a Cable Plus Package with six or fewer channels exists, such package will be 
treated as an MPT as of the Amendment Effective Date. The initial price of any such MPT 
will be the Current Rate of the package. 
3. In all Providence Journal franchises in which both an Expanded 
Package and a Cable Plus Package exist, Continental may maintain the channel 
' 
configurations of such packages and will set the initial rate of such packages at the Current 
Rate. These packages will be treated as MPTs in all such franchises, including unregulated 
franchises, for the entire term of the Social Contract. Continental will issue Refunds to 
Acquired System Eligible Subscribers in the franchises listed in Exhibit 2 to this 
Amendment, as described in section IV.E. of this Amendment . 
. 
4. On their respective Implementation Dates, for all Providence Journal 
franchises in the Naples, FL system that ar~ listed in Exhibit 2 of this Amendment (in which 
11168 
Federal Communications Commission FCC 96-358 
an eight-channel Cable Plus Package was created) (CUIDs FLOOSO, FLOOSl, FL0096, 
FL0098," FL0345, FL0348), Continental will select four services from the Cable Plus 
Package to return to CPST. The services not returned to CPST from the Cable Plus Package 
will be offered as a single MPT. The net effect of the rebundling of the four Cable Plus 
Package services and the adjustment of BST, CPST, and MPT prices pursuant to 
Commission rules and the terms set forth in this subparagraph will be a prospective 
annualiz:ed rate reduction of $250,000 in the Naples, FL franchises. Continental will 
implement this prospective rate reduction at the same time it implements the other rate 
adjustments described in sections ill.D. and IV.A. of this Amendment. 
5. In all franchises of the Acquired Systems in which no a la carte 
packages were created between April l, 1993 and September 30, 1994, and in all 
Cablevision of Chicago franchises where a four-channel a la cane package was created but 
then eliminated, Continental may move a maximum of four existing BST and/or CPST 
services, in a revenue-neutral manner, to a single MPT per franchise. 
6. Continental may not require the subscription to any tier, other than the 
BST, as a condition for subscribing to an MPT /NPT created under the terms of this 
Amendment, and may not require subscription to an MPT /NPT as a condition for subscribing 
to a CPST. Continental may add any number of new services to an MPT and may increase 
the price for the MPT only as provided in section III.F. of the Social Contract. 
7. On its own motion, the Cable Services Bureau, consistent with the 
terms set forth herein, hereby reconsiders its Letter of Inquiry ("LOI") ruling involving 
11169 
Federal Communications Commission FCC 96-358 
Providence Journal's Hialeah, FL system (LOI-9343), as well as its four orders which relied 
on the Hialeah LOI ruling in finding that the a la cane packages in such systems must be 
treated as regulated tiers (DA 95-624; DA 95-820; DA 95-860; and DA 95-1143). The 
· Amendment Order will vacate this LOI ruling and Bureau orders. As of the vacating of the 
LOI ruling and the four Bureau orders, any pending petitions for reconsideration of the LOI 
ruling and the four Cable Services Bureau orders will be deemed to be withdrawn. 
8. Except as provided in section IV.E.3. of this Amendment, for purposes 
of review of BST rates which are or which may at some future time become regulated, the a 
la cane channels permitted to be included in the MPTs created under this section shall not be 
counted as regulated channels for purposes of determining the maximum permitted BST rates 
under the Commission's benchmark rate rules. 
E. Settlement of Pending CPST Rate Cases and Refunds. 
1. This Amendment finally resolves all CPST rate cases filed under FCC 
Forms 393, 1200, 1210, and 1220 pending as of the Amendment Publication Date agaiiist the 
Acquired Systems. 
2. In settlement of all pending CPST rate cases of the Acquired Systems 
and of the various issues regarding a la carte packages described in section IV.D. of this 
Amendment, Continental shall issue Refunds to Acquired System Eligible Subscribers in the 
communities and in the amounts set forth in Exhibit 2. Such Refunds already include all 
applicable Interest through July l, 1997. Except as provided in the next subparagraph, and 
subject. to. the right of LP As to opt out under this subparagraph, such Refunds account for 
11170 
Federal Communications Commission FCC 96-358 
and finally resolve all amounts owed to subscribers as a result of the creation of a la cane 
packages by the Acquired Systems. Specifically, such Refunds cover BST and CPST rates 
for both rounds of the Commission's rates rules (i.e., September 1, 1993 through July 15, 
1994, and July 15, 1994 through the final date of Refund payment). Except as provided 
herein, Continental may not be required to pay any additional refunds as a result of the 
creation of such a la cane packages by the Acquired Systems. An LF A that is listed in 
Exhibit 2 may elect to opt out of the Refunds established under this subparagraph and set 
forth in Exhibit 2 by providing notice to the Commission and Continental no later than 30 
days following the Amendment Effective Date. Such notice shall: (a) be in writing; (b) be 
addressed to the Office of the Secretary, Federal Communications Commission, 1919 M 
Street, N.W., Washington, D.C. 20554, with a copy to Continental Cablevision, Inc., The 
Pilot House, Lewis Wharf, Boston, MA 02110, attention: Margaret Sofio, Vice President 
and Counsel; (c) identify the local franchising authority and the community unit identification 
number for the franchise area; and (d) reflect the clear intent to opt out of the Refund 
provision of this subparagraph. However, such notice need not meet any other requirements 
and may be in letter form. An election by an LF A to opt out of the Refunds under this 
subparagraph shall not otherwise affect the applicability of the remaining provisions of this 
Amendment or the Social Contract in such community, except that if an LFA in the Naples, 
FL system that is listed in Exhibit 2 elects to opt out under this subparagraph, such LF A 
shall also be deemed to opt out of its subscriber-based pro rata share of the $250,000 
prospective rate reduction specified in section IV.D.4. of this Amendment. The $250,000 
11171 
Federal Communications Commission FCC 96-358 
prospective rate reduction will be proportionately reduced by the share of any LF A that opts 
out. 
3. The Refunds described in the previous subparagraph exclude and will 
have no effect on the refunds included in the resolution concerning a la carte package issues 
adopted by the Los Angeles Board of Information Technology Commissioners in October 
1995 and approved by the Los Angeles City Council on December 12, 1995. The Los 
Angeles order calculates refunds due for the period of September l, 1993 through July 15, 
1994 in the Sylmar and Sunland/Tujunga franchises (CUIDs CA0188 and CA0219). 
However, the terms of this Amendment shall govern the calculation of the number of 
regulated· channels and the amount of refunds due in these franchises for the period beginning 
on July 15, 1994. 
4. Providence Journal previously filed refund plans to comply with orders 
issued by the Cable Services Bureau in cases not involving a la carte packages. In 
accordance with those plans, Continental will pay Refunds to all communities listed in 
Exhibit 3 in the amounts indicated in this Exhibit. Such Refunds already include all 
applicable Interest through April l, 1997. 
5. The Refunds described in subparagraphs 2 and 4 of this section will be 
reflected as monthly credits of a maximum of $1.00 and a minimum of $.50 on subscriber 
bills until full payment is made, except that the last payment may be credited in an amount 
less than $.50 on subscriber bills. In all cases, the Refund payment period shall not exceed 
12 months. Continental will provide the first installment of tlie Refunds to Acquired System 
11172 
Federal Communications Commission FCC 96-358 
Eligible Subscribers on the franchise's respective Implementation Date. In the event the 
Refund amounts are not fully paid by the dates through which Interest has been calculated (as 
noted in subparagraphs 2 and 4 of this section), Continental shall be required to calculate and 
pay additional Interest through the date on which all Refunds are fully paid. 
6. The Commission finds that the CPST rates in the Naples, FL system as 
modified pursuant to section IV.D.4. of this Amendment and the Current Rates for CPST in 
all other Acquired Systems are not unreasonable. Continental will be permitted to adjust 
such rates in the Acquired Systems at any time after the Amendment Effective Date without 
prior Commission approval, subject to Commission rules, the terms of the Social Contract, 
the terms of this Amendment, and any future review by the Commission of a new CPST 
complaint. 
7. The Cable Services Bureau has reviewed the BST cost-of-service case 
and FCC Forms 1210 filed by Providence Journal for the Westerly, RI system in response to 
complaints in Westerly, RI (CUID RIOOOl) and Charlestown, RI (CUID RI0035) and 
referred by the LF A to the Commission for a decision. The Commission finds that the 
Current Rate for BST in the Westerly system is reasonable and that the Current Rate for 
CPST in the Westerly system is not unreasonable. 
8. The Cable Services Bureau has reviewed the BST cost-of-service case 
filed by Columbia Associates, L.P., for the Brighton, MI franchise (CUID MI0207) in 
response to a request by the Brighton LF A to conduct this review. Based on this review, the 
Bureau has resolved this BST rate case. In resolution of this case, Continental will pay 
11173 
Federal Communications Commission FCC 96-358 
Refunds to Brighton subscribers in the amount of $12,375. Such Refunds already include all 
applicable Interest through June 30, 1997, and are reflected in the Refund schedule set forth 
in Exhibit 3. 
9. The Cable Services Bureau has reviewed the CPST cost-of-service 
filings for the Columbia Associates, L.P. systems. The Commission finds that the Current 
Rate for CPST in these systems is not unreasonable. 
10. On its own motion, the Cable Services Bureau hereby reconsiders two 
orders -- DA 95-2097 and DA 95-2108 - concerning the maximum permitted CPST rate for 
certain Cablevision of Chicago franchis~s (CUIDs IL0473, IL0520, and IL0601). The 
Amendment Order will vacate these two Bureau orders. As of the vacating of these orders, 
any pending petitions for reconsideration concerning these orders will be deemed to be 
withdrawn. 
11. This settlement is without a finding by the Commission of any 
wrongdoing by Continental or any of the Acquired Systems and does not constitute an 
admission by Continental or any of the Acquired Systems of any violation of, or failure to 
conform to, the 1992 Cable Act, Commission rules, or any other applicable law, rule, or 
policy. 
F. Term of this Amendment. 
This Amendment will becon;ie effective on the Amendment Effective Date and shall 
continue through December 31, 2000, subject to section Ill.K. of the Social Contract 
regarding modification and termination, and to section III. G. of the Social Contract regarding 
11174 
Federal Communications Commission FCC 96-358 
franchises subject to effective or price-constraining competition. 
G. Service on Interested Parties. 
Continental will serve a copy of this Amendment, the Public Notice announcing this 
Amendment, and the Social Contract on. all Continental LF As and on all parties to any 
pending· CPST rate case in the Acquired Systems. In addition, within 30 days of the 
adoption of this Amendment, Continental will serve a copy of Section ill, B, ("School 
Commitments") of this Amendment on all school superintendents responsible for schools in 
Continental' s franchise areas. 
11175 
Federal Communications Commission FCC 96-358 
IN WlTNESS WHEREOF, this Amendment to the "Social Contract for Continental 
Cablevision, Inc." (FCC 95-335) has been duly executed and delivered by ot on behalf of the 
parties hereto as of the Amendment Effective Date as defined herein. 
CONTINENTAL CABLEVISION, INC. 
By: 
Name: 
Title: 
Robert J. Sachs 
Senior Vice-President 
Corporate and Legal Affairs 
FEDERAL COMMUNICATIONS COMMISSION 
By: 
Name: William F. Caton 
Title: Acting Secretary 
11176 
Northeast: 
Southeast: 
Midwest: 
Central: 
Western: 
Northwest: 
EXHIBIT 1 
CONTINENTAL CABLEVISION, INC. 
EQUIPMENT REGIONS 
PAGE 1OF1 
Connecticut, Maine, Massachusetts, New Hampshire, New 
York, Rhode Island 
Florida, Georgia, Virginia 
Michigan, Ohio 
Illinois, Iowa, Minnesota, Missouri, Wisconsin 
California, Nevada 
Idaho, Washington 
NB: This Exhibit modifies Exhibit 6 of the Social Contract. New states in which 
the Acquired Systems o.perate are indicated by underline. 
11177 
CALIFORNIA 
EXHIBIT 2 
A LA CARTE REFUND COMMlJNmEs 
PAGE 1OF1 
TOTAL REFUND 
WITH INTEREST 
1. Sundland/Tujunga, CA0219 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $43,812 
2. SyJmar, CA0188 ..................................... 17,710 
FLORIDA $61,522 
3. Coral Gables, FI..0674 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $109,160 
4. Hialeah, Fl..0202 .................................... 361,720 
5. Hialeah Gardens, FI..0675 ............................... 26,040 
6. Medley, Fl1>429 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,830 
7. . Miami Springs, FL0427 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,590 
8. Naples - Collier County - upgrade, FL0050, FL0098, FL0348 . . . . . . . . 346,080 
9. Naples - Lee County Fort Myers Beach - upgfade, FL0096 ........... 25,740 
10. Naples - upgrade, FL0051 ................................ 79,400 
11. Naples - Sanibel - upgrade, FI..0345 ......................... 33,370 
12. Sweetwater, FL0422 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,420 
13. Virginia Gardens, FL0428 ..... - . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,710 
14. West Miami, FL0553 . ~ .................................. 11,000 
15. Unincorporated Dade Cow1ty, Fl..0416 ....................... 167,320 
16. Unincorporated Dade County - Coral Gables, FL0416 . . . . . . . . . . . . . . . 6,490 
MASSACHVSEITS 
$1,227,870 
17. Chelmsford, MA0147 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $96,900 
18. Fall River, MA0099 ................................... 53,434 
19. Tewksbury, MA0145 ................................... 79,350 
MINNESOTA 
$229,684 
20. Central St. Croix Valley, MN0392, MN0393, MN0394 .............. $8,784 
21. Denmark ToWnsbip, MN0399 . . . . . . . . . . . . . . . . . . . . ... : . . . . . . . 78 
22. Hastings, MN0309, MN0310 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,586 
23. South Washington County, MN0395, MN0396, MN0397, MN0400, 
MN0401, MN0533 ................................... 26,942 
WISCONSIN 
$42,390 
24. Hudson, WI0502, WI0503 ............................... $4,610 
25. River Falls, WI0510 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,752 
$8,362 
$1,569,828 
11178 
EXHIBIT 3 
NON-A LA CARTE REFUND COMl\.fiJNITIES 
PAGE 1OF1 
TOTAL REFUND 
WITH INTEREST 
CALIFORNIA 
1. Costa Mesa, CA1173 .................................. $13,252 
2. Cypress, CA1203 ..................................... 20,896 
$34,148 
MINNESOTA ...................................... $52,578 
The total refund in Minnesota systems will 
be distributed to Eligible Subscribers in the 
following franchises: 
3. Brooklyn Center, MN0279 
4. Brooklyn Park, MN0271 
5. Crystal, MN0292 
6. Golden Valley, MN0294 
7. Maple Grove, MN031 l 
8. New Hope, MN0291 
9. Osseo, MN0280 
10. Plymouth, MN0307 
11. Robbinsdale, MN0293 
NEW YORK 
12. East Fishkill, NY0275 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,850 
13. Wappingers Falls, NY0278 :· . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,166 
$6,016 
WASHINGTON 
14. . City of Kittitas, WA0172 ................................ $2,516 
15. County of Kittitas, WA0175 ................................ 942 
$3,458 
MI CID GAN 
16. City of Brighton, MI0207 ................................. $12;375 
$108,575 
11179 
EXBIBn· 4 - ~~A10NS FROM SOCIAL CONTRACT lMPLEMENTATION ORDER. 
DA ff.21A Federal Communiaitiom Coauidsion Record •' . IO P'CC Red No. 24 
C.Remedles 
17. The Social Contract states that "in order 10 allow 
subscriben the full benefit of a low-cost lifeline basic rate, 
local franchising authorities will not be permitted to toll 
the effective date of the restructured basic service tier 
rates.",. Continental has requested that we clarify the pro­
cedural mechanism that applies if the basic service tier 
rates and/or the cable programming service tier rates are 
resrructured incorrectly.JS Continental suggests that in or· 
der to preserve the right to order rate reductions and/or 
refunds. a IOQJ franchising authority should issue a wriuen 
accounting order to Continental by the date the 
restructuring becomes effective._,. Continental also suggests 
that any refunds ordered by local franchising authorities or 
the Commission commence no earlier than the date rates 
were restructured under rhe Social Contract.37 Funher· 
more. Continental sugr<>ts thar refunds for overcharges 
should be based on the difference between the corrected 
rates and the originally implemented restructured rates.• 
Finally. Continental suggesu that prospective reductions in 
the basic service tier rate or cable programming service tier 
rate should he limited to what the restructured rates should 
have been had the restructuring been implemented cor· 
reclly.'" 
18. The Social Contract sets forth who will review 
restructured rates. As the Commission indicates in the 
Social Contract. "we recognize . . . a certain level of 
.u Social Co11U11cr Orthr, ilip op. at , ~ n.1S. 
11180 
~~nry with resPcct to the jurisdictional responsibiJ· 
toes of the loca.I franchising autboritieS. Therefore, we ~ 
nqotiated • modification to tbe Sociat Contnct to clarify 
that the jurisdictional di'Yision sec forth in tbe 1992 Cabte 
Act and implemented by our nda hll been reWned....., 
Local franchising authorities will rnicw tbc basic tcnic:e 
tier rue and tbe Commission will l'CTiew the table iro­
iramming SCfTiCC tier rates that Continental esrabJishes. I 
19. LDCal franchising authorities should follow the same 
procedures in reTiewing rcsuuaured rates to prescne their 
&utbority to order reductions and/or refunds a they would 
m.: to rniew other rates subject co certain modifications 
UW we belinc are appropriate to implement the Commis­
sion's ordcr approYing the Social Contna. Tbese proce­
dures incorpome the protections of the current rules and 
the new procedures recently adopted by the Commission. 
In du Mmu of S«tiolu of w Cllble Television CoMUner 
~ and c~ Aa of 1992: RtUe Rep/AUon, 
MM Docket No. 92-266, 77Unttn 0,., on Reconsilknuion, 
FCC 9S·J.47 (released September 22. 1995) ("Tltineenth 
Reconsidmz1.io11 O,u,•J. Specifically, as provided by our 
rules, local franchising authorities will have a 30-day re· 
view period to evaluate the reasonableness of Continentars 
initial restructured basic service tier rate, after Continental 
proYides notice of the rate resiruauring. 'l In the order 
approving the Social Contract, the Commission held that 
local franchising authoritic< will not be permined to toll 
the effecti\'e d4te of the restructured basic service tier 
rate.'' 
20. In order to implement the Commission"s order will\ 
a minimum of difficulty, if the local franchising authorizy 
has not reached a decision in the initial JO.day review 
period, the local franchising authority nr:ed not issue an 
accounting order to presene its right to require a refund 
after the 30-day rnicw period. Thus. a local franchising 
authority may order refunds with respect to the initial 
restructured race ror the lesser of the period from the 
effective date of the restructured rate to the date of its rate 
order or the 12 month period preceding the date of its rare 
order. However. at any time before the local franchising 
authority issues A rate order. Continental may inquire as !o 
whether the local franchising authority is continuing to 
rniew Continental's initial restructured rate. If Continental 
makes such an inquiry. the local franchising authority 
must respond to Continental within IS days of receiving 
the inquiry. If the local franchising authority fails to re­
spond within 15 day$ to Continental. the local franchising 
authority will lose its ability to issue refunds with respect 
to the initial restructured rate after the initial 3<klay re­
view period. lf the local franchising authority does re· 
spond. it need only indicate whether it is continuing to 
review Continental's filing. Such respor.se will preserve its 
right to order a refund. 
JS August .311. I~ lencr at 7. 
_,.. Id. al M. 
J" Id. 
Jll Id. 
1~ Id . 
.. , Socuil Cc1111r11ct Orthr. slip op. at, 7-&. 
'
1 Id. 
•
1 
.&7 C.F.R. I 7b.Q3~a) . 
•J SocUil Conrriw Orthr. slip op. at , ~. n.1S. Suspension of 
the tollin1 requirement will i>rovide sub5c:ribcn the full benefit 
uf a low-cent lifeline basic rate. 
11 ftX ... Ne. 24 Federal Communicatiom Commiauion Record 
21. rmaUJ, Continental seeks clarification that where a 
local franchite authority or the Commission orders a re­
duction iJl tbe tmic senice tier rate or cable progrunmiq 
1C1 tic:a tier rMe tblt onpnatly become effectiw pursuant 
to tbe restructuriq requirement and that afkds the re"l­
enue neutral restructUriJl& P.nmsions of the Social Con­
cncl, Continental may iacrase tbe other tier rates in a 
rewnae-neutral manner co offlet such reduction." Adcfi. 
tioaallJ, Continental leeks IO clarify that it will be liable 
for refunds only co tmic~nly subscribers in c:mes where 
Contiaental's initial restructured ntes for the basic scnice 
tier were reduced becaus Continental implemented in­
correct raacs.., 
22. Under the proYisions of the Social Contrac1, the 
initial basic senice tier rate and the cable progrunmiq 
serYic:cs rate arc linked. As pan of the initial rcstrUCturing 
of rates. Continental is required to reduce the basic service 
tier rate by 151' co 2K to create the lifeline basic tier. 
The ~iaJ Contnc:t proYides that such reduction shall be 
ofl'set by an adjustment to the cable programming service 
tier nte to create a revenue neutnl rate restructuring. 
Because the initial rates for the basic SCl'Yice tier and the 
cable programming services tier are relalcd, an error in 
setting the basic serYice tier or the cable programming 
scnic:e tier rates affects this rate relationship. Therefore, we 
clarify that Continental may correct the. initial basic service 
tier rate or cable programming service tier rate, if Con· 
tinental initially restructures rates incorrectly. 
23. We further clarify that if it is determined that the 
initial basic service ~ has been implemented incorrectly, 
any refunds ordered are limited to basic~nly subscriben. 
This clarification only applies to the initial restructured 
rate. Chaqes in the rates due to externals and inflation arc 
subject to review under "'Ir existing procedures. Although 
the basic senic:e tier rate would decrease in this situation, 
Continental would be permitted to make an upward adjust· 
ment to the cable programming senice tier rate to main­
tain the rnenue neutnl requirements· of the Social 
Contract. Subscribers receiYing both the basic service tier 
and the cable programming services tier would experience 
a decrease in the : tlSic: service tier rate and an upward 
adjustment in the cable programming service tier nte. if 
the revenue neutral requirements of the Social Contract 
were violated. 
"' Id. 
45 Id. 
11181 
APPENDIXB 
COl\fMENTERS 
STATES/CITIES/CABLE COMMITTEES 
1. Amherst, OH, ~ity of 
2. Atlantic Beach, FL, Citypf 
3. Avon Lake, OH, City of 
4. Baldwin, FL, Town of 
5. Bay Village, OH, City of 
6. Beecher, IL, Village of 
7. Bellflower, CA, City of 
8. Brighton, MI, City of 
9. Burbank, IL, City of 
10. Calumet Park, IL, Village of 
11. Cambridge, MA, Chamber of Commerce 
12. Carson, CA, City of 
13. Chelmsford, MA, Town of 
14. Clinton Cable TV Committee, Clinton, MA 
15. Coachella, CA, City of 
16. Collier County Manager's Office, FL 
17. Coral Gables, FL, City of 
18. Corcoran, CA, City of 
19. Corona, CA, City of 
20. Corona, CA, City Council 
21. Costa Mesa, CA, City of 
22. Crest Hill, IL, City of 
23. Culver City, CA, City of 
24. Cities of Cypress, La Palma, La Quinta, and Palm Desert, CA 
25. Dade County, FL 
26. Dolton, IL, Village of 
27. Downers Grove, IL, Village of 
28. Dunsmuir, CA, City of 
29. East Hazel Crest, IL, Village of 
30. Eastlake, OH, City of 
31. Eaton Rapids, MI, City of 
32. El Dorado Hills, CA, Community Services District Board of Directors 
33. Elmhurst, IL, City of 
34. Exeter, NH, Town of 
35. Exeter Area, NH, Chamber of Commerce 
36. Fairborn, OH, City of 
37. Fall River, MA, City of 
38. Fernandina Beach, FL, City of 
39. ·Fishkill, NY, Town of 
11182 
Federal Communications Commission FCC 96-358 
40. Frankfort, IL, Village of 
41. Freeport, IL, City of 
42. Fresno, CA, City of 
43. Greater Portsmouth, NH, Chamber of Commerce 
44. Greater West Bloomfield, MI Cable Advisory Board 
45. Hamtramck, Ml, City of 
46. Hanover, MA, Town of 
47. Haverstraw, NY, Town of (Howard T. Phillips, Jr. - Director of Finance) 
48. Haverstraw, NY, Town of (Phillip J. Rotella - Supervisior) 
49. Hinsdale, IL, Village of 
50. Huber Heights; OH City of 
51. Hull, MA, Town of 
52. Ipswich, MA, Town of 
53. Jackson, Ml, City of 
54. James City County, VA 
SS. Justice, IL, Village of 
56. Kings County, CA 
57. Lakewood, CA, City of 
58. La Mirada, CA, City of 
59. Lansing, Ml, City of 
60. Lauderhill, FL, City of 
61. Lemont, IL, Village of 
62. Lemoore, CA, City Manager of 
63. Lockport, IL, City of 
64. Lodi, CA, City of 
65. Lowell, MA, Office of the City Manager 
66. Lyons, IL, Village of 
67. Macclenny, FL, City of 
68. Madison Heights, Ml, City of 
69. Massachusetts Cable Television Commission, Boston, MA 
70. Massachusetts Executive Office of Education, Boston, MA 
71. Miami Springs, FL, City of 
72. Miami Township, OH 
73. Milford Cable Oversight Committee, MA 
74. Neptune Beach, FL, City of 
75. New Lenox, IL, Village of 
76. Newburyport, MA, City of 
77. North Andover Cable Advisory Committee, MA 
78. North Ridgeville, OH. City of 
79. North Riverside, IL, Village of 
80. Norwalk, OH, City of 
11183 
Federal Communications Commission FCC 96-358 
81. Norwell, MA, Town of 
82. Ossining, NY, Village of 
83. Pekin, IL, City of 
84. Plaistow Cable Advisory Committee, NH 
85. Raynham, MA, Town of 
86. Reedley, CA, City of 
87. Richmond, VA, City of 
88. River Forest, IL, Village of 
89. Riverdale, IL, Village of 
90. Riverside, CA, County of 
91. St. Johns County Board of County Commissioners, Saint Augustine, FL 
92. St. Louis County, MO, County of 
93. San Joaquin, CA, County of 
94. Sanibel, FL, City of 
95. Santa Fe Springs, CA, City of 
96. Schiller Park, IL, Village of 
97. Scituate, MA, Town of 
98. Sherborn, MA, Town of 
99. Shorewood, IL, Village of 
100. Springfield, MA, City of 
101. Stockton, CA, City of 
102. Stockton, CA, Board of Supervisors 
103. Sutter, CA, County of 
104. Tarryto~, NY, Village of (Westchester County, NY) 
105. West Bloomfield, MI, Charter Township of 
106. West Bridgewater, MA, Board of Selectmen 
107. Westmont, IL, Village of 
108. Williamsburg, MA, Town of 
109. Willoughby Hills, OH, City of 
110. Willow Springs, IL, Village of 
111. Wilton Manors, FL, City of 
GOVERNMENT REPRESENTATIVES 
112. California Assemblyman, Michael J. Machado 
113. California State Senator, Teresa~. Hughes 
114. Corona, CA, City Councilman, Jeffrey P. Bennett 
115. Corona, CA, City Councilman, Darrell Talbert 
116. Florida State Representative, Jack N. Tobin 
117. Illinois State Representative, James H. Meyer 
118. Illinois State Senator, Dan Cronin 
11184 
Federal Communications Commission FCC 96-358 
119. Illinois State Senator, Tom Dunn 
120. Massachusetts State Representative, Christine E. Canavan 
121. Massachusetts State Representative, Shirley Gomes 
122. Massachusetts State Representative, Joan M. Menard 
123. Massachusetts State Representative, Michael J. Sentance 
124. Massachusetts State Representative, Daniel J. Valianti 
125. Michigan State Senator, Loren N. Bennett 
126. Michigan State Representative, Maxine Berman 
127. Michigan State Senator, Michael J. Bouchard 
128. Michigan State Representative, John F. Freeman 
129. New Hampshire Governor, Stephen Merrill 
130. New Hampshire State Senator, Wayne D. King 
131. U.S. Congressman, Ken Calvert, CA 
132. U.S. Senator, Edward M. Kennedy, MA 
SCHOOLS 
133. Anaheim Union High School District, CA 
134. Ann Arbor Public Schools, MI 
135. Arlington Massachusetts Public Schools 
136. Balcer County Board of Commissioners, Macclenny, FL 
137. Bedford School District, Unit #25, NH 
138. Brentwood High School, MO 
139. Brentwood Middle School, Brentwood, MO 
140. Broad Meadows Middle School, Quincy, MA 
141. Brockton Public Schools, MA 
142. Brockton School Committee, MA 
143. Broward County, Florida, School Board of, Plantation, FL 
144. Broward County, FL, Plantation Middle School 
145: Cohasset Public Schools, MA 
146. Clovis Schools, Foundation for, CA 
147. Collier County Public Schools, Naples, FL (Dr. James L. BUchholz -- Coordinator 
of Instructional Support Services) 
148. Collier County Public Schools, Naples, FL (Robert E. Munz -- Superintendent) 
149. Compton Unified School District, CA 
150. Concord School District, NH 
151. Consortium of Ohio Coordinators for the Gifted 
152. Clovis Unified School District, CA 
153. Crestline High School, OH 
154. Cypress School District, CA 
155. Dartmouth Public Schools, MA 
11185 
Federal Communications Commission FCC 96-358 
156. Dedham Public Schools, MA 
157. Delta Island Elementary School District, Stockton, CA 
158. Driscoll Elementary School, Dayton, OH 
159. Duval County Public Schools, Jacksonville, FL 
160. Duval Public Education Foundation, Inc., Jacksonville, FL 
161. Elyria Elem. School, OH (Karen Adolph - Elem. Media Spec.) 
162. Elyria Prospect Media Center, OH (Mary Behm) 
163. Elyria Windsor Media Center, OH (Anne Michael) 
164. Elyria High School, OH (Barbara Schneider, Librarian) 
165. Elyria High School, OH (Joyce Vacha, Media Specialist) 
166. Elyria West High School, OH (Gail Haywood, Media Spec.) 
167. Espirito Santo School, Fall River, MA 
168. Fall River Public Schools, MA 
169. Findlay High School, OH 
170. Freeport School District, IL (Dr. Michael Anderson - Assistant Supervisior of 
Instruction) · 
171. Freeport School District, IL (Richard B. Olsen - Superintendant) 
172. Grand Ledge Public Schools, MI 
173. Greenland Central School, NH 
174. Hanover County Public Schools, Ashland, VA 
175. Henrico County Public Schools, Richmond, VA 
176. Hull Public Schools, MA 
177. Jacksonville Cities in Schools, Inc., FL 
178. John F. Kennedy High School, La Palma, CA 
179. Joliet Central High School, IL 
180. Kettering Middle School, Kettering, OH 
181. Lake County Educational Service Center, Painesvilley OH 
182. Lamphere Schools, Madisoh Heights, MI 
183. Lansing School District, MI 
184.. Lincoln Unified School District, CA 
185. Lincoln-Way Community High School District #210, IL 
186. Lodi Unified School District, CA 
187. Lyme Elementary School, Bellevue, OH 
188. McGrath Elementary School, MO 
189. Macomb Intermediate School District, Clinton Township, MI 
190. Madison District Public Schools, Madison Heights, MI 
191. Madison School, Hinsdale, IL 
192. Manchester School of Technology, NH 
193. Manchester School District - SAU #37, NH 
194. Marblehead Community Charter Public School, MA 
195. Mark Twain Elementary School, MO 
11186 
Federal Communications Commission FCC 96-358 
196. Marysville Joint Unified School District, CA . 
197. Massachusetts Corporation for Educational Telecommunications, Cambridge, MA 
198. Massachusetts School Library Media Association, MA 
199. Massachusetts School Library Media Association 
200. Mentor Ex. Village School District, Mentor, OH 
201. Merrimack Valley Middle School, Penacook, NH 
202. Narragansett Regional School District, Phillipston, MA 
203. New Hampshire State Board of Education, Concord, NH 
204. Newport-Mesa Unified School District, Newport Beach, CA 
205. North Rockland Central School District, Garnerville, NY 
206. Norwell Public Schools, MA 
207. Oak Park and River Forest High School, Oak Park, IL 
208. Old Ham.mondtown School, Mattapoisett, MA 
209. Peekskill, NY, City School District of 
210. Pekin Public School District No. 108, IL 
211. Pekin Community High School, IL 
212. Plymouth Canton Community Schools, MI 
213. Practical Aceademic Cultural Education, Jacksonville, FL 
214. Quincy Public Schools Unit District No. 172, IL 
215. Richmond Public Schools, VA 
216. Ridge Elementary School, Bellevue, OH 
217. Roseville Community Schools, MI 
218. Rollinsford Grade School, NH 
219. Romulus Community Schools, MI 
220. Saints Peter and Paul School, Fall River, MA 
221. St. Joseph School, Mqnroeville, OH 
222. St. Peter School, N. Ridgeville, OH 
223. St. Raphael School, Bay Village, OH 
224. Salem School District Media Services, NH 
225. San Joaquin County Office of Education, Stockton, CA 
226. Sandalwood High School, Jacksonville, FL 
227. Scituate Public Schools, MA 
228. Shiloh Middle School, OH · 
229. South Amherst Middle School, OH 
230. Southfield Public Schools, Ml 
231. Springfield, Massachusetts, Public.Schools of 
232. Stoughton Public Schools, .MA 
233. Stratham Memorial School, MA 
234. Timberlane Regional School District, Hampstead School District, Plaistow, NH 
235. University of North Florida, Jacksonville, FL 
236. Wappingers Central School District, Wappingers Falis.NY 
11187