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6 <br />-3- <br />the lower inflation rate, its maximum permitted BST rates would have been slightly <br />lower. However, the company's selected rate would have remained unchanged in <br />both systems because they fall below the recalculated maximum rates. <br />2. FCC 1205 Equipment & Installation Rates <br />a. Time Warner calculated FCC 1205 maximum permitted equipment and <br />installation rates by aggregating its costs on a state-wide basis, which is allowed by <br />the FCC and Social Contract.` Time Warner calculated a maximum installation <br />service charge of $23.39. <br />11L REPORT <br />A. Background <br />1. In September 19995, the FCC adopted the 13th Report and Order, which, among other <br />things,. allowed cable operators to adjust their rates on an annual basis using the FCC <br />1240, taking into consideration past and anticipated future external costs. <br />2. In November 1995, the FCC adopted the Time Warner Social Contract, which <br />resolved hundreds of cable complaints against Time Warner Cable. Provisions of the <br />Social Contract permit Time Warner to aggregate its leased subscriber equipment <br />costs on a regional basis (using regional FCC 1205 filings) and assess uniform <br />equipment rates based on these data. Also, Time Warner is allowed to include in its <br />annual programming service rate filing (FCC 1240) past and.f rture (estimated) costs, <br />along with future costs attributable to cable system upgrades. <br />3. The 13th Order requires Time Warner and other cable operators to submit their FCC <br />1240 filings ninety (90) days before the date of rate implementation. During this <br />period, the franchise authority may review the reasonableness of the basic service tier <br />rates and issue an order to either approve or deny the rates. After ninety (90) days, <br />the franchise authority retains refund authority as long as it responds within 15 days to <br />any inquiries from the cable operator regarding its review of the company's FCC 1240 <br />documents. <br />4North Carolina is treated as a single region. TWC files a single FCC 12o5 for North Carolina to establish <br />uniform state-wide rates for equipment and installation. <br />101 Pocono Lane, Cary, North Carolina 27513-5316 Voice # 919.467.5392 Fax # 919.460.6868