Orange County NC Website
Browse       Search
<br />Time Warner Cable Accounting Irregularities <br />Time Warner to Settle SEC Charges <br />WASHINGTON (Reuters) — Time Warner must pay $210 million to resolve criminal charges <br />that its America Online unit fraudulently inflated revenue figures and that it would pay an <br />additional $300 million to settle SEC charges. <br /> <br />March 21, 2005 <br />Time Warner to settle SEC charges <br /> Stephen Cutler, the SEC's director of enforcement, said, "Our complaint against AOL Time <br />Warner details a wide array of wrongdoing, including fraudulent round-trip transactions to <br />inflate online advertising revenues, fraudulent inflation of AOL subscriber numbers, <br />misapplication of accounting principles relating to AOL Europe, and participation in frauds <br />against the shareholders of three other companies.“ <br /> As part of the agreement, Time Warner will neither admit nor deny the SEC's allegations. <br /> <br />Rate Regulation History <br /> In 1984 Congress deregulated cable TV rates and they skyrocketed. <br /> In 1992, Congress reigned in cable companies by reintroducing rate regulation. <br /> Local governments were given authority by Congress to review and approve local rates. <br /> <br />Rate Regulation ->Social Contract <br /> By 1994, over 900 rate complaints filed with FCC alleging Time Warner breached rate rules. <br /> In 1995, the FCC agrees to dismiss rate complaints against Time Warner in exchange for a <br />promise to upgrade its cable systems by deploying fiber-optic cable and implement advanced <br />telecommunication services. <br /> Time Warner agrees to these conditions, but tells the FCC that “it does not have the <br />money.” <br /> <br />Time Warner Collects Upgrade Money in Advance from Customers <br /> FCC grants Time Warner authority to pre-capitalize the upgrade by collecting funds in <br />advance of work. (per Social Contract) <br /> TWC allowed to collect $180 from each enhanced basic cable customer during the 60 month <br />period from 1996 to 2000. <br /> Social Contract caps Time Warner upgrade recovery at $180 per customer. <br /> <br />Time Warner Terminates Social Contract Cap <br /> Summer 2000, Time Warner wiggles out of Social Contract $180/subscriber upgrade <br />recovery ceiling. <br /> In 2000, Time Warner implements FCC form 1235 monthly surcharge fee levied to recover <br />balance of its upgrade investment.