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ORANGE COUNTY <br />BOARD OF COMMISSIONERS <br />ACTION AGENDA ITEM ABSTRACT <br />Meeting Date: May 3, 2005 <br />Action Agenda <br />Item No. -~` <br />SUBJECT: Acceptance of Report by Action Audits, LLC and Adoption of 2005 Rate Order <br />Resolution for Cable Services in Unincorporated Orange County <br />DEPARTMENT: PUBLIC HEARING: (Y/N) No <br />ATTACHMENT(S): <br />Review of Time Warner Cable's <br />FCC1240, 1235 and 1205 Rate <br />Filings, Prepared by Action Audits, <br />LLC <br />2005 Rate Order Resolution <br />TWC Response to AA, LLC Review <br />INFORMATION CONTACT: <br />Robert Sepe, Action Audits, LLC <br />Gwen Harvey, Assistant County <br />Manager, Ext 2307 <br />Durham 688-7331 <br />Mebane 336-227-2031 <br />TELEPHONE NUMBERS: <br />Hillsborough 732-8181 <br />Chapel Hill 968-4501 <br />PURPOSE: To receive the report and adopt the recommendations from Bob Sepe of Action <br />Audits, LLC, Triangle J COG Cable Consortium consultant, regarding Time Warner Cable's <br />FCC Forms 1240, 1235, and 1205 for 2005, <br />BACKGROUND: In October 2004, Time Warner Cable (TWC) filed rate farms seeking <br />approval to increase the rates charged to unincorporated Orange County cable subscribers far <br />basic cable television service, installation and equipment rental for the 2005 calendar year, <br />Action Audits evaluated the information provided by TWC in accordance with the Federal <br />Communications Commission (FCC) rate rules and regulation, and issued a report in December <br />finding that their request to increase the basic service, equipment and installation rates to be in <br />compliance with FCC's rate rules while the proposed form 1235 'add-on' rate was not in <br />compliance, County staff had recommended postponing placement of the possibly contentious <br />1235 rate denial on the BOCC agenda this winter and spring in deference to the on-going <br />facilitated franchise negotiations with TWC, <br />Bab Sepe appeared at the BOCC meeting on April 19, at the Board's request, to present an <br />update on cable regulation in the Triangle area, as previously presented to the Triangle J COG <br />Board, Mr, Sepe's presentation highlighted aspects of the "Social Contract", a 1995 agreement <br />under which the FCC agreed to dismiss rate complaints against TWC in exchange for a promise <br />by the cable operator to upgrade its systems by deploying fiber-optic cable and to implement <br />advanced telecommunication services, TWC was given authority by the FCG to pre-capitalize <br />the upgrade by collecting funds in advance of the work with a cap of $180 per customer. In <br />2000, TWC implemented FCC farm 1235, the monthly surcharge levied to recover the balance <br />