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6 <br />Franchise Related Costs <br />Public Access Television <br />Time Warner Cable reported no franchise related expenses during the past year. <br />Programming Costs <br />Time Warner will recover approximately $.26 monthly, per subscriber, during 1999 for <br />anticipated BST programming costs during the projected period. Time Warner representatives <br />state that program service providers customarily increase service fees annually. Time Warner <br />attributes its programming cost increase for increased program fees. <br />Inflation <br />Time Warner is claiming inflation adjustments in it's true up and projected period segments of its <br />FCC 1240 rate. filing. Time Warner used the FCC true up period inflation figure of 1.43 % for <br />the period October - December, 1997;1.14% for January- March, 1998. However, on October 1, <br />1998 the FCC announced that the true -up inflation rate for April - June, 1998 was 0.82 %. <br />Pursuant to the FCC's rate rules, the company must use the "current" inflation figure when <br />calculating its true -up and projected rate increase due to inflation. , <br />Staff recalculated Time Warner Cable's charges attributed to inflation using currently available <br />information3. This resulted in a reduction of the overall inflation for 1998 from 1.0121 % to <br />1.0105% and set the projected period (1999) inflation index to 0.82 %. The projected period <br />inflation figure is subject to correction in the operator's subsequent FCC 1240 rate filing. <br />Time Warner's FCC 1240 rate filing did not reflect the true up inflation factor for the second <br />quarter of 1998 released by the Commission on October 1, 1998. Had the operator used the <br />0.82% value to calculate the true -up period inflation rate instead to the previous quarter's value <br />(1.14 %), the Maximum Permitted BST rates would have been $0.11 lower for Carrboro system <br />customers, $0.35 lower for Durham system customers, and $0.30 lower for Chapel Hill system <br />customers. <br />Time Warner did not have this data available to it at the time it completed its FCC Form 1240 for <br />1999. Therefore, staff spoke with Jim Coghlan (TWC's VP- Finance) and he agreed to file an <br />amended FCC 1240 for 1998 at the time the FCC 1240 for 2000 is submitted and adjust <br />customer statements accordingly. <br />3See FCC Form 1240 Instructions for Line C3. <br />3 <br />