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e <br /> 5 <br /> REPORT <br /> Background <br /> In September 1995, the FCC adopted the 13th Report and Order, which, among other things, <br /> allowed cable operators to adjust their rates on an annual basis using the FCC 1240, taking <br /> into consideration past and anticipated future external costs. <br /> In November 1995, the FCC adopted the Time Warner Social Contract, which resolved <br /> hundreds c{cable complaints against Time Warner Cable. Provisions of the Social Contract <br /> permit Time".Narner to aggregate its leased subscriber equipment costs on a regional basis <br /> (using regional FCC 1205 filings) and charge uniform equipment rates based on these data. <br /> Also, Time Warner is allowed to include in its annual programming service rate filing (FCC <br /> 1240) past and future (estimated) costs, along with future costs attributable to cable system <br /> upgrades. <br /> The 13th Order requires Time Warner and other cable operators to submit their FCC 1240 <br /> filings 90 days before the date of rate implementation. During this period, the City may review <br /> the reasonableness of the basic service tier rates and issue an order to either approve or <br /> deny the rates. After 90 days, the City retains review and refund authority as long as 4 <br /> responds within 15 days to any inquiries from the cable operator regarding the City's FCC <br /> 1240 review. <br /> County's Role in Rate Regulation <br /> It is the County's responsibility to verify that the cable operator correctly applies Federal <br /> Communications Commission rate making rules in determining Basic Service Tier(BST) <br /> cable rates. If the County determines that the operator has misapplied FCC rules, it may <br /> order a BST refund, rate roll back, or other appropriate action. <br /> Though the County has direct regulatory control over the operators BST rate making <br /> process, it plays an indirect role in the regulation of the CPST,' or upper cable tiers of service <br /> (i.e., Tier, and Standard--Service). Should the County determine that the cable operator <br /> incorrectly applied FCC rate making rules in determining upper tier cable rates, it may file a <br /> formal rate cwt-Ah the FCC, which will conduct an investigation into the cable <br /> operators process. <br /> A complaint(from the County) may be filed with the FCC only after the County has received <br /> °more than one" complaint from subscribers regarding upper cable tier service rates. <br /> 'CPST,or Cable Programming Service Tier,is a term used by the FCC to identify those upper <br /> tiers of cable service that are regulated by the FCC,but outside the regulatory control of the fianchise <br /> authority. <br /> 2 <br />