PUBLIC NOTICE Federal Communications Commission 1919 M St., N.W. Washington, D.C. 20554 FCC 96-76 Released March 5,1996 AMENDMENT TO SOCIAL CONTRACT FOR CONTINENTAL CABLEVISION, INC. AVAILABLE FOR COMMENT THE COMMISSION SEEKS COMMENT ON A PROPOSED AMENDMENT TO THE SOCIAL CONTRACT WITH CONTINENTAL CABLEVISION, INC. THAT PROVIDES INCREASED INVESTMENT IN CABLE TV INFRASTRUCTURE AND ASSURES GENERAL RATE STABILITY, RESOLVES PENDING RATE CASES, AND PROVIDES APPROXIMATELY $1.7 MILLION IN REFUNDS TO AFFECTED SUBSCRIBERS. The Federal Communications Commission ("Commission") and Continental Cablevision, Inc. ("Continental") have negotiated an Amendment to Continental's Social Contract. The Social Contract was approved by the Commission on August 1, 1995 (FCC 95-335). The proposed Amendment incorporates cable systems with approximately 987,000 subscribers acquired by Continental ("Acquired Systems") since the Social Contract was adopted. Some of the provisions of the proposed Amendment apply only to the Acquired Systems; others apply to all Continental systems. The proposed Amendment will be considered for approval after the Commission evaluates public comment on the proposed Amendment. Continental will serve, via mail, a copy of this notice, a copy of the proposed Amendment, and a copy of Continental's Social Contract on each person who is a party to a pending rate complaint in one of the Acquired Systems and on all Continental local franchising authorities. This notice contains a summary description of the proposed Amendment. The terms of the Amendment and the Social Contract, however, will be controlling, and interested persons should read the proposed Amendment and the Social Contract in their entireties. Copies of the proposed Amendment and the Social Contract can be obtained in the manner described below. BACKGROUND. Continental's Social Contract resolved 377 cable rate cases, paid $9.5 million in in-kind refunds to affected subscribers, created low-priced lifeline basic service tiers in all Continental systems, committed Continental to a capital investment of $1.35 billion to substantially upgrade the channel capacity and technical reliability of Continental's domestic cable systems, and established a plan to stabilize rates for the basic service tier and for cable programming services tiers in all Continental franchises, including franchises that are not subject to rate regulation. Under the 1992 Cable Television Consumer Protection and Competition Act, a basic service tier is the tier of programming that contains at a minimum local broadcast stations. Cable programming services tiers are all other video programming services, except those sold on a per-channel or per-program basis. SCOPE OF THE PROPOSED AMENDMENT. The proposed Amendment incorporates the following recently acquired systems into the Social Contract:  Providence Journal. 753,000 subscribers in 157 franchises in nine states;  Cablevision of Chicago. 92,000 subscribers in 31 franchises near Chicago, IL;  Columbia Associates, L.P. 76,000 subscribers in 16 franchises in Washtenaw and Livingston counties, MI;  N-COM. 54,000 subscribers in 28 franchises in Wayne and Washtenaw counties, MI; and  Consolidated Cablevision. 12,000 subscribers in 14 franchises near Fresno, CA. RESOLUTION OF CABLE PROGRAMMING SERVICES RATE CASES AND SUBSCRIBER REFUNDS. The proposed Amendment resolves all cable programming services tier rate complaints pending against the Acquired Systems. To resolve these cases, Continental will provide cash refunds in the form of bill credits to affected customers totalling approximately $1.7 million. The Amendment also resolves one basic service tier rate case -- a cost-of-service rate case in the Westerly, RI Providence Journal system which had been referred by the local franchising authority to the Commission for a decision -- by finding that the basic service tier rate is reasonable. With respect to a la carte package issues described below, local franchising authorities are given the opportunity to opt out of that portion of the refunds ordered by the Amendment that is based on the settlement of the a la carte package issues. If a local franchising authority elects to opt out of the a la carte refunds, it must notify the Commission and Continental in writing (a simple letter is acceptable) of its election within 30 days of the date the Commission adopts an order regarding the proposed Amendment. An election to opt out of the a la carte refunds will not affect the applicability of any remaining provisions of the Amendment or of the Social Contract, except that if a local franchising authority in the Naples, FL system opts out, such local franchising authority will also be deemed to have opted out of its subscriber-based pro rata share of a $250,000 prospective rate reduction described below. The a la carte refunds will have no effect on the refunds concerning a la carte package issues in two Providence Journal franchises approved by the Los Angeles City Council on December 12, 1995. However, the proposed Amendment would govern the calculation of the number of regulated channels and the amount of refunds due in these franchises for the period beginning on July 15, 1994. Under the proposed Amendment, the Commission finds that the current rates being charged for the cable programming services in the Acquired Systems are not unreasonable. The settlement is without a finding by the Commission of any wrongdoing on the part of Continental or any of the Acquired Systems. ADDITIONAL SYSTEM UPGRADE COMMITMENTS. Continental will increase its capital investment commitment from $1.35 billion to $1.7 billion for the upgrade of its cable systems, including the Acquired Systems, to the capacity and technical specifications set forth in the Social Contract. Continental also commits that during the life of the Social Contract (which runs from August 1, 1995 through December 31, 2000), on average, 10 additional regulated services will be added to all of its cable systems, and that no system will contain fewer than five additional regulated services. Finally, Continental commits that at least 70% of all capital expended in connection with these system upgrades will be applied for the benefit of basic service tier and cable programming services tier subscribers. In light of these increased capital investment and system upgrade commitments, Continental will be permitted to increase the monthly rates for cable programming services by $1.00 in the Acquired Systems in each year from 1996 through 1999 and in all other Continental systems in each year from 1997 through 1999. However, Continental will not avail itself of any additional per-channel adjustment permitted by the Commission's "Going-Forward" rules for any programming services added to cable programming services tiers after the effective date of the Amendment, except where Continental has upgraded or rebuilt a particular system during 1966 which is not an Acquired System and has not previously added any channels on that system during 1966 pursuant to the "Going-Forward" rules. In addition, Continental will not implement the second round of "Going-Forward" channel additions which the Social Contract currently permits for the period 1998 through 2000. During the life of the Social Contract, the only other permitted increases to Continental's cable programming services tier rates will be for inflation, increases in external costs, and other adjustments permitted by the Commission. COMMITMENTS TO WIRE AND SERVE SCHOOLS. Continental will provide a free cable connection to all public schools (grades K through 12) located within 200 feet of its cable plant in each of its systems. Continental will also provide a cable connection at cost to all K-12 public schools located beyond 200 feet of the cable plant and to all private secondary schools in Continental franchise areas that receive funding under Title I of the Elementary and Secondary Education Act of 1965. Continental will provide connected schools with any necessary internal wiring installation at cost. Such additional internal wiring will be provided to K-12 public schools for free if Continental is able to coordinate with other comparable electrical wiring installation in cases of new construction or substantial rehabilitation of existing schools in Continental's franchises areas. Continental will provide free basic tier service and free cable programming services at each outlet in all connected public and private schools. Continental will also provide free monthly educational program listings to each connected school and will develop and provide to connected schools materials for teachers that explain the educational applications of Continental's cable systems. Finally, within one year of the commercial availability of a Continental on-line service for personal computers, Continental will, upon request, provide schools with one free connection to this on-line service to the extent it is available on the local cable system. At a minimum, such on-line service will provide access to the Internet. Each connected school will receive one free cable modem and free, unlimited access to the Continental on-line service for use during the school year. Continental has also agreed to provide additional cable modems to schools at cost. Free access to the Continental on-line service will be provided through each additional modem during the school year. Continental will sponsor local workshops in each region to educate teachers and to provide connected schools with an opportunity for hands-on training. Continental agrees not to seek to recover the cost for school connections as external or other costs. CABLE HOME WIRING COMMITMENTS. Prior to a customer's termination of cable service, Continental will not restrict the ability of customers to remove, replace, rearrange, or maintain any cable wiring located within the interior space of their dwelling units. Continental will advise customers annually of their rights to: (1) remove, replace, rearrange, or maintain the cable home wiring themselves; (2) select a qualified third-party contractor to perform these services; or (3) request the Continental system to provide such services at standard hourly rates, plus materials at cost. Continental will offer to supply such materials to subscribers at cost. CREATION OF A LOW-COST LIFELINE BASIC SERVICE TIER. In systems serving at least 80% of the Acquired Systems' subscribers, Continental will establish a lifeline basic service tier rate that is at least 15% below the current rate. In order to achieve uniform basic service tier rates in a given system, Continental may reduce basic service tier rates up to an additional 5% for a maximum of 20%. Continental will be permitted to offset this 15%-20% reduction in the basic service tier rate by increasing, on a revenue-neutral basis, the rate for its cable programming services. In the franchises serving the remaining 20% of subscribers in the Acquired Systems, Continental may, at its option, restructure the basic service tier to create a lifeline basic service tier. EQUIPMENT AND INSTALLATION RATES. Continental will be permitted to establish prices for equipment and installation in the Acquired Systems based on averaged costs on a state or regional basis. However, these provisions will only apply to the Acquired Systems beginning with Continental's 1997 annual equipment and installation rate filings. MIGRATED PRODUCT TIERS AND NEW PRODUCT TIERS. In franchises of the Acquired Systems where Continental's predecessors did not create a la carte packages, Continental will be permitted to create a Migrated Product Tier consisting of up to four services migrated from the regulated tiers. The migration of regulated services will be on a revenue-neutral basis, and increases will be allowed for inflation and external costs. There will be no limit on the number of new services that Continental may add to the Migrated Product Tiers at the price of $.20 per channel plus license fees. The Providence Journal systems acquired by Continental created two different packages of a la carte channels -- the "Expanded Package," which generally consists of four a la carte channels (including up to three superstations in certain franchises), and the "Cable Plus Package," which generally consists of six to eight a la carte channels and, except in the Naples, Florida systems, was low-penetrated. In Providence Journal system franchises where only an Expanded Package exists or where only a Cable Plus Package with six or fewer channels exists, such package will be treated as a Migrated Product Tier with its initial price set at the current rate. In Providence Journal system franchises where both an Expanded Package and a Cable Plus Package exist, Continental may maintain the channel configurations of such packages and set their initial rate at the current rate. These packages will be treated as Migrated Product Tiers but may not be converted by Continental to a New Product Tier in all such franchises, including unregulated franchises, for the entire term of the Social Contract. In all other cases, on or after July 1, 1997, Continental may convert the Migrated Product Tiers created under the Amendment to New Product Tiers with market-constrained pricing as permitted by the Commission's rules. Continental will issue refunds to subscribers in these franchises as described above. In regulated franchises of the Naples, FL Providence Journal system, Continental will move four of the eight channels in the Cable Plus Package back to the cable programming services tier. The four remaining channels will be treated as a Migrated Product Tier. There will be a prospective rate reduction of $250,000 in regulated Naples, FL franchises. Continental will implement this prospective rate reduction on a pro rata subscriber basis at the same time it implements the other rate adjustments permitted by the Amendment. Continental will issue refunds to subscribers in these franchises as described above. * * * Parties wishing to comment on the proposed Amendment should do so by filing with the Commission Secretary no later than 45 days after release of this public notice the original and four copies of their comments. Continental may file a reply no later than 15 days after that due date. All such pleadings should reference the file number noted above and be filed with: The Secretary, Federal Communications Commission, 1919 M Street, N.W., Washington, D.C. 20554, Attention: Cable Services Bureau - Continental Cablevision, Inc. The proposed Amendment and the Social Contract are available for reference in the Cable Services Bureau's public reference room, Room 333 at 2033 M Street, N.W., Washington, D.C. Copies are available from the Commission's copy contractor, International Transcription Services, at Room 246, 1919 M Street, N.W., Washington, D.C., (202) 857-3822. For further information, contact John Norton at (202) 418-1035 or Jerome Fowlkes at (202) 418-2235. Media Contact: Morgan Broman at (202) 416-0852. CONTINENTAL CABLEVISION, INC. PROPOSED AMENDMENT TO SOCIAL CONTRACT TABLE OF CONTENTS PAGE NO. I. SCOPE OF AMENDMENT 1 A. Cablevision of Chicago Systems 1 B. Consolidated Cablevision System 1 C. Providence Journal Systems 2 D. Columbia Associates, L.P. Systems 2 E. N-COM Systems 2 II. DEFINITIONS 2 III. AMENDMENTS TO THE SOCIAL CONTRACT THAT APPLY TO ALL CONTINENTAL SYSTEMS, INCLUDING THE ACQUIRED SYSTEMS 4 A. Additional System Upgrade Commitments 4 B. School Commitments 4 C. Cable Home Wiring Commitments 7 D. CPST Rates Subject to Price Cap 8 E. Migrated Product Tiers and New Product Tiers 9 F. Uniform BST and CPST Service Rates 9 IV. AMENDMENTS TO THE SOCIAL CONTRACT THAT APPLY ONLY TO THE ACQUIRED SYSTEMS 10 A. Creation of a Low-Cost, Lifeline Basic Tier in Acquired Systems 10 B. Procedures for Filing and Review of Social Contract Rates 13 C. Equipment and Installation Rates 13 D. Migrated Product Tiers and New Product Tiers 13 E. Settlement of Pending CPST Rate Cases and Refunds 16 F. Term of this Amendment 20 G. Service on Interested Parties 20 I. SCOPE OF AMENDMENT. Pursuant to section III.H.1. of the Social Contract for Continental Cablevision, Inc. ("Continental") (FCC 95-335, approved August 1, 1995) ("Social Contract"), this Amendment incorporates certain systems recently acquired by Continental into the Social Contract. The following systems ("Acquired Systems") are covered by this Amendment: A. Cablevision of Chicago Systems. This acquisition closed on August 4, 1995. The Cablevision of Chicago systems pass approximately 206,000 homes and serve approximately 92,000 subscribers in 31 franchise areas near Chicago, IL. B. Consolidated Cablevision System. This acquisition closed on September 7, 1995. The Consolidated Cablevision system passes approximately 37,000 homes and serves approximately 12,000 subscribers in 14 franchise areas near Fresno, CA. C. Providence Journal Systems. This acquisition closed on October 5, 1995. The Providence Journal systems pass approximately 1,251,000 homes and serve approximately 753,000 subscribers. Systems are located in California, Florida, Idaho, Massachusetts, Minnesota, New York, Rhode Island, Washington, and Wisconsin. A total of 157 franchise areas are included in these systems. D. Columbia Associates, L.P. Systems. This acquisition closed on October 15, 1995. The Columbia Associates, L.P. systems pass approximately 122,000 homes and serve approximately 76,000 subscribers in 16 franchise areas in Washtenaw and Livingston counties, MI. E. N-COM Systems. This acquisition closed on December 27, 1995. The N-COM systems pass approximately 90,000 homes and serve approximately 54,000 subscribers in 28 franchise areas in Wayne and Washtenaw counties, MI. Some of the modifications to the Social Contract specified in this Amendment apply solely to the Acquired Systems. Others apply to all Continental systems, including the Acquired Systems. The scope of each of the provisions is indicated. All provisions of the Social Contract not specifically modified by this Amendment will remain in effect with respect to all Continental systems, including the Acquired Systems. II. DEFINITIONS. For purposes of this Amendment, the following definitions shall apply. When used throughout this Amendment, these terms are capitalized. A. "Acquired System Eligible Subscribers" means all non-bulk, residential subscribers of record in the Continental franchises listed in Exhibits 2 and 3 to this Amendment as of the date bills are issued reflecting Refunds. B. "Amendment Effective Date" means the date on which the Commission adopts the Amendment Order. C. "Amendment Order" means a Commission order regarding the terms of this Amendment. D. "Amendment Publication Date" means the date on which this Amendment is placed on public notice by the Commission. E. "Cost" means Continental's actual cost for materials, including a reasonable rate of return of 11.25%, and, where applicable, labor costs calculated at the applicable Hourly Service Charge as defined by 47 C.F.R.  76.923(d). F. "Current Rates" means the rates in effect in the franchises of the Acquired Systems as of the Amendment Publication Date, or the rates that will become effective after the Amendment Publication Date and for which notice was given to subscribers on or before January 1, 1996. G. "Implementation Date" means the date, prior to January 1, 1997, on which Continental implements in a particular franchise area the Lifeline Basic tier restructuring and other rate adjustment provisions contained in sections IV.A. and IV.D. of this Amendment and initiates the payment of Refunds specified in section IV.E. of this Amendment. The Implementation Date may vary from franchise area to franchise area. H. "Interest" means the Internal Revenue Service rate of interest for tax overpayments. I. "Regulated Services" means services added to a CPST or MPT, provided the latter does not become an NPT before January 1, 2001. J. "Refunds" means credits on subscriber bills as provided in this Amendment. III. AMENDMENTS TO THE SOCIAL CONTRACT THAT APPLY TO ALL CONTINENTAL SYSTEMS, INCLUDING THE ACQUIRED SYSTEMS. A. Additional System Upgrade Commitments. Continental makes the following additional infrastructure upgrade commitments beyond those set forth in section III.E. of the Social Contract: 1. Continental will increase the capital investment commitment specified in section III.E.1. of the Social Contract from $1.35 billion to $1.7 billion to upgrade its systems, including the Acquired Systems, to the technical specifications set forth in section III.E.2. of the Social Contract. 2. From the date of commencement of the Social Contract to the end of the Social Contract, on average, Continental systems (weighted by BST subscribers) will contain 10 additional Regulated Services, but in no event will any Continental system contain fewer than five additional Regulated Services. 3. At least 70% of all capital expended in connection with Continental's system upgrade commitment will be applied for the benefit of BST and/or BST and CPST subscribers. B. School Commitments. 1. Continental will provide a service connection at one outlet in all public schools (grades K-12) located within 200 feet of the activated plant of its cable systems. Such connections will be made free of charge and as promptly as possible to all unserved schools requesting such a connection. Upon request, Continental will provide, at Cost, such a service connection to any other unserved K-12 public school located within its franchise areas but beyond 200 feet of the activated plant of its cable systems. If any internal wiring installation is requested to serve additional outlets in any public school, it will be provided at Cost; provided, however, that such internal wiring will be provided without charge if Continental is able to coordinate with other comparable electrical wiring installation in cases of new construction or substantial rehabilitation of existing schools in Continental's franchise areas. 2. Continental will provide a service connection, including any requested internal wiring for additional outlets, to any unserved private secondary school (as defined by, and which receives funding pursuant to, Title I of the Elementary and Secondary Education Act of 1965, 20 U.S.C.  241a et seq., as amended) located within its franchise area. Such connections will be provided at Cost and as promptly as possible to all such schools requesting such a connection. 3. Any public or private school connected pursuant to subparagraphs 1 or 2 may elect to install its own internal wiring and to bear the cost thereof. Free BST and free CPST service will be provided to each outlet in all connected public and private schools. 4. Continental will provide a free monthly educational program listing to each connected school. Additional copies of such program listings will be provided, if requested by a school, at Cost. Such educational program listing will identify and describe programming on the Continental system that is appropriate for use in the classroom and will provide suggested curriculum support ideas. 5. Continental will develop and provide to each connected school materials for teachers that explain the educational applications of Continental's broadband cable systems and services. The materials will include a self-explanatory notebook and video. One free copy of such materials will be provided to all connected schools. Additional copies of such materials will be provided, upon request, at Cost. 6. Within one year after Continental makes an on-line service for personal computers commercially available in a specific franchise area, Continental will, upon request by the local school department, provide schools within such franchise area with one free connection to such on-line service. At a minimum, such on-line service will provide access to the Internet. Upon request, each connected school will receive one free cable modem and free, unlimited access to the Continental on-line service for use during the school year. Additional cable modems and operational support and services (for example, assisting connected schools in setting up and maintaining reliable Internet connections), will be provided to connected schools at Cost, upon request. Free access to the Continental on-line service will be provided through each such modem for use during the school year. In addition, Continental will sponsor local workshops in each region to educate teachers about its on-line service and to provide connected schools with an opportunity for hands-on training. 7. Continental agrees not to seek to recover the cost for these connections as external or other costs. 8. Nothing herein shall affect the enforceability of any otherwise valid preexisting local franchise agreement, ordinance, local law, or regulation which provides benefits which exceed those provided in the Social Contract relating to system upgrades or the wiring of schools, nor shall LFAs be restricted in their authority to negotiate for such additional benefits after the Amendment Effective Date. C. Cable Home Wiring Commitments. 1. Prior to a customer's termination of cable service, Continental will not restrict the ability of a customer to remove, replace, rearrange, or maintain any cable wiring located within the interior space of the customer's dwelling unit, so long as such actions do not interfere with the ability of the Continental system to meet Commission technical standards or to provide services to, and collect associated revenues from, that customer or from any neighboring customer in a multiple dwelling context. Continental's ownership rights to such cable home wiring shall be no less than that provided by applicable law or regulation. 2. Upon commencement of cable service, and annually thereafter, Continental will notify customers of their rights and options relating to cable home wiring. Such notice will advise customers that they may either: (a) remove, replace, rearrange, or maintain the cable home wiring themselves; (b) select a qualified third-party contractor to perform these services; or (c) request the Continental system to provide such services at Cost. 3. Such notice will inform customers that if any cable home wiring is installed or rearranged by anyone other than Continental, and any harmful or improper signal leakage occurs as a result, the customer may be held responsible for the cost of rectifying the problem. Continental recognizes that it is required by Commission rules to terminate service to any location where signal leakage problems are not corrected. 4. Such notice will encourage Continental customers to use high-quality home wiring materials to avoid signal leakage and to maintain signal quality. Continental will offer such materials to customers at Cost. 5. Prior to disseminating the notice to Continental customers, Continental will provide a model of the notice to the Commission for its approval. Such approval shall not be unreasonably withheld. D. CPST Rates Subject to Price Cap. 1. All Continental systems other than the Acquired Systems may increase monthly CPST rates by $1.00 in each of 1997, 1998, and 1999, and all Acquired Systems may increase monthly CPST rates by $1.00 in each of 1996, 1997, 1998, and 1999. These rate increases have been established at a level designed to recover solely those costs allocable to BST and CPST subscribers. 2. During the term of the Social Contract, the only other permitted increases to regulated CPST rates will be for inflation, increases in external costs, and any other adjustments permitted by the Social Contract, as amended, or by Commission rules. However, Continental will not avail itself of any per-channel adjustment permitted by the Going-Forward rules for any programming channels added to the CPST after the Amendment Effective Date, except where Continental has upgraded or rebuilt a particular system during 1996 which is not an Acquired System and has not previously added any channels on such system during 1996 pursuant to the Going-Forward rules. In addition, Continental will not implement the second round of Going-Forward channel additions from 1998 through 2000 pursuant to section III.C.2. of the Social Contract. As of the Amendment Effective Date, the second sentence of section III.C.2. of the Social Contract will be superseded by this Amendment. 3. Any per-channel adjustments implemented pursuant to the Going-Forward rules by any Acquired System for services added in 1996 shall be netted against the initial $1.00 CPST adjustment. Upon implementation of any such net initial CPST adjustment, such Acquired Systems will be allowed to concurrently adjust CPST rates to reflect any license fees not already passed through to subscribers associated with any such services added to such systems in 1996. E. Migrated Product Tiers and New Product Tiers. Continental may convert the MPTs created under the Social Contract to NPTs by filing a notice with the Commission and with affected LFAs of its intention to do so on or after January 1, 1997. Continental may convert the MPTs created under this Amendment (except for the MPTs created under section IV.D.3. of this Amendment) to NPTs by filing a notice with the Commission and with affected LFAs of its intention to do so on or after July 1, 1997. If Continental does not file such NPT notice with respect to a particular MPT, such MPT will retain its MPT regulatory status (including the limitation on price increases to the recovery of inflation and external costs and $.20 plus license fees for all new MPT services), and the services added to such MPT will be counted as Regulated Services as defined in this Amendment. F. Uniform BST and CPST Service Rates. If the Commission adopts new rules allowing cable operators to restructure their regulated rates to achieve pricing uniformity on a regional or statewide basis, Continental will be permitted to implement such restructurings in all of its systems, including the Acquired Systems. IV. AMENDMENTS TO THE SOCIAL CONTRACT THAT APPLY ONLY TO THE ACQUIRED SYSTEMS. A. Creation of a Low-Cost, Lifeline Basic Tier in Acquired Systems. In order to provide subscribers with the option to purchase a low-cost basic service tier, Continental will create a Lifeline Basic tier in the Acquired Systems as set forth below. The minimum reduction for a Lifeline Basic tier will be 15% from the Current Rate for BST. In order to achieve uniform BST rates in a given system, Continental may reduce BST rates up to an additional 5% for a maximum reduction of 20%. 1. No later than January 1, 1997, Continental will reduce the Current Rate for BST by 15%-20% in franchise areas serving at least 80% of the total number of subscribers in the Acquired Systems. 2. In any franchise area in which the BST rate was not reduced pursuant to the previous subparagraph, Continental may, at its option, create a Lifeline Basic tier by reducing the BST rate by 15%-20%. In order to create the Lifeline Basic tier pursuant to this subparagraph, Continental will be permitted to restructure the BST. Such restructuring will include shifting BST channels to an existing or newly created CPST (or MPT as permitted by section IV.D.5. of this Amendment) in a revenue-neutral manner pursuant to Commission rules, except that Continental may not move channels that are required by statute to be on the BST. Such revenue-neutral restructuring shall not be deemed to be a "fundamental change" of any affected service tier, and Continental shall not be required to re-market any of the services or tiers affected or created by such restructuring. 3. In franchise areas in which a Lifeline Basic tier is created pursuant to this Amendment, Continental may, on the franchise's respective Implementation Date, adjust the reduced BST rate for: (a) unrecovered external costs for the five calendar quarters beginning on April 1, 1995; (b) unrecovered inflation for the year ended June 30, 1995; and (c) an adjustment to reflect channels carried on the BST in the franchise area as of the Implementation Date. In franchise areas in which a Lifeline Basic tier is not created pursuant to this Amendment, Continental may, on the franchise's respective Implementation Date, adjust the Current Rate for BST in such franchises as specified in this subparagraph. 4. In franchise areas in which a Lifeline Basic tier is created pursuant to this Amendment, Continental may, on the franchise's respective Implementation Date, adjust the Current Rate for CPST by: (a) an amount which yields the total revenues foregone by the 15%-20% Lifeline Basic rate reduction; (b) unrecovered external costs for the five calendar quarters beginning on April 1, 1995; (c) unrecovered inflation for the year ended June 30, 1995; (d) an adjustment to reflect the channels carried on CPST in the franchise area as of the Implementation Date; and (e) the adjustment permitted by section III.D. of this Amendment. In franchise areas in which a Lifeline Basic tier is not created pursuant to this Amendment, Continental may, on the franchise's respective Implementation Date, adjust the Current Rate for CPST in such franchise areas as specified in this subparagraph, except for item (a). 5. Continental will adjust rates in franchise areas of the Acquired Systems, if necessary, to comply with the Commission's November 9, 1995 Public Notice concerning inflation recovery in transition systems (DA 95-2295) upon the earlier of the creation of a Lifeline Basic tier in a franchise area, or the next filing with respect to service rates in such franchise area. 6. In any franchise area of an Acquired System where: (a) a Lifeline Basic tier is created; (b) the BST rate is the subject of a pending review as of the Amendment Publication Date; and (c) a lower maximum permitted BST rate is ultimately ordered, Continental will, in its next rate filing in such franchise area, set its Lifeline Basic tier rate (after the ordered BST rate is no longer subject to review or appeal), so that the resulting BST rate level is at least 15% below the Current Rate for BST (plus all applicable adjustments for inflation and external costs), unless the ordered BST rate is lower than the reduced Lifeline Basic tier rate, in which case the ordered BST rate shall be deemed the Lifeline Basic tier rate. B. Procedures for Filing and Review of Social Contract Rates. The procedures outlined at  17-23 of the Bureau's Order released on October 17, 1995 in In the Matter of Social Contract for Continental Cablevision, Inc. (DA 95-2160) shall govern LFA review of the initial BST rates as restructured and adjusted pursuant to section IV.A. of this Amendment. The relevant sections of this Bureau order are attached to this Amendment as Exhibit 4. C. Equipment and Installation Rates. Equipment and installation rates in the Acquired Systems will be governed by the provisions set forth in sections III.B.2.d. and III.C.3. of the Social Contract. However, these provisions will only apply to the Acquired Systems beginning with the 1997 annual equipment and installation rate filing. Exhibit 6 of the Social Contract has been modified to incorporate into Continental's operating regions the states in which the Acquired Systems operate. The modified version is attached to this Amendment as Exhibit 1. D. Migrated Product Tiers and New Product Tiers. 1. Certain Providence Journal systems have been providing packages of a la carte channels which were created between April 1, 1993 and September 30, 1994. Two different packages of a la carte channels were offered under the names of "Expanded Package" and "Cable Plus Package." The Expanded Package is an a la carte package generally consisting of four (but no more than five) a la carte channels, including up to three superstations in certain franchises. The Cable Plus Package is a low-penetrated a la carte package which generally consists of six to eight a la carte channels. Six Providence Journal systems offer both packages. 2. In Providence Journal franchises in which only the Expanded Package exists or only a Cable Plus Package with six or fewer channels exists, such package will be treated as an MPT as of the Amendment Effective Date. The initial price of any such MPT will be the Current Rate of the package. 3. In all Providence Journal franchises in which both an Expanded Package and a Cable Plus Package exist, Continental may maintain the channel configurations of such packages and will set the initial rate of such packages at the Current Rate. These packages will be treated as MPTs in all such franchises, including unregulated franchises, for the entire term of the Social Contract. Continental will issue Refunds to Acquired System Eligible Subscribers in the franchises listed in Exhibit 2 to this Amendment, as described in section IV.E. of this Amendment. 4. On their respective Implementation Dates, for all Providence Journal franchises in the Naples, FL system that are listed in Exhibit 2 of this Amendment (in which an eight-channel Cable Plus Package was created) (CUIDs FL0050, FL0051, FL0096, FL0098, FL0345, FL0348), Continental will select four services from the Cable Plus Package to return to CPST. The services not returned to CPST from the Cable Plus Package will be offered as a single MPT. The net effect of the rebundling of the four Cable Plus Package services and the adjustment of BST, CPST, and MPT prices pursuant to Commission rules and the terms set forth in this subparagraph will be a prospective annualized rate reduction of $250,000 in the Naples, FL franchises. Continental will implement this prospective rate reduction at the same time it implements the other rate adjustments described in sections III.D. and IV.A. of this Amendment. 5. In all franchises of the Acquired Systems in which no a la carte packages were created between April 1, 1993 and September 30, 1994, and in all Cablevision of Chicago franchises where a four-channel a la carte package was created but then eliminated, Continental may move a maximum of four existing BST and/or CPST services, in a revenue-neutral manner, to a single MPT per franchise. 6. Continental may not require the subscription to any tier, other than the BST, as a condition for subscribing to an MPT/NPT created under the terms of this Amendment, and may not require subscription to an MPT/NPT as a condition for subscribing to a CPST. Continental may add any number of new services to an MPT and may increase the price for the MPT only as provided in section III.F. of the Social Contract. 7. On its own motion, the Cable Services Bureau, consistent with the terms set forth herein, hereby reconsiders its Letter of Inquiry ("LOI") ruling involving Providence Journal's Hialeah, FL system (LOI-93-43), as well as its four orders which relied on the Hialeah LOI ruling in finding that the a la carte packages in such systems must be treated as regulated tiers (DA 95-624; DA 95-820; DA 95-860; and DA 95-1143). The Amendment Order will vacate this LOI ruling and Bureau orders. As of the vacating of the LOI ruling and the four Bureau orders, any pending petitions for reconsideration of the LOI ruling and the four Cable Services Bureau orders will be deemed to be withdrawn. 8. Except as provided in section IV.E.3. of this Amendment, for purposes of review of BST rates which are or which may at some future time become regulated, the a la carte channels permitted to be included in the MPTs created under this section shall not be counted as regulated channels for purposes of determining the maximum permitted BST rates under the Commission's benchmark rate rules. E. Settlement of Pending CPST Rate Cases and Refunds. 1. This Amendment finally resolves all CPST rate cases filed under FCC Forms 393, 1200, 1210, and 1220 pending as of the Amendment Publication Date against the Acquired Systems. 2. In settlement of all pending CPST rate cases of the Acquired Systems and of the various issues regarding a la carte packages described in section IV.D. of this Amendment, Continental shall issue Refunds to Acquired System Eligible Subscribers in the communities and in the amounts set forth in Exhibit 2. Such Refunds already include all applicable Interest through July 1, 1997. Except as provided in the next subparagraph, and subject to the right of LFAs to opt out under this subparagraph, such Refunds account for and finally resolve all amounts owed to subscribers as a result of the creation of a la carte packages by the Acquired Systems. Specifically, such Refunds cover BST and CPST rates for both rounds of the Commission's rates rules (i.e., September 1, 1993 through July 15, 1994, and July 15, 1994 through the final date of Refund payment). Except as provided herein, Continental may not be required to pay any additional refunds as a result of the creation of such a la carte packages by the Acquired Systems. An LFA that is listed in Exhibit 2 may elect to opt out of the Refunds established under this subparagraph and set forth in Exhibit 2 by providing notice to the Commission and Continental no later than 30 days following the Amendment Effective Date. Such notice shall: (a) be in writing; (b) be addressed to the Office of the Secretary, Federal Communications Commission, 1919 M Street, N.W., Washington, D.C. 20554, with a copy to Continental Cablevision, Inc., The Pilot House, Lewis Wharf, Boston, MA 02110, attention: Margaret Sofio, Vice President and Counsel; (c) identify the local franchising authority and the community unit identification number for the franchise area; and (d) reflect the clear intent to opt out of the Refund provision of this subparagraph. However, such notice need not meet any other requirements and may be in letter form. An election by an LFA to opt out of the Refunds under this subparagraph shall not otherwise affect the applicability of the remaining provisions of this Amendment or the Social Contract in such community, except that if an LFA in the Naples, FL system that is listed in Exhibit 2 elects to opt out under this subparagraph, such LFA shall also be deemed to opt out of its subscriber-based pro rata share of the $250,000 prospective rate reduction specified in section IV.D.4. of this Amendment. The $250,000 prospective rate reduction will be proportionately reduced by the share of any LFA that opts out. 3. The Refunds described in the previous subparagraph exclude and will have no effect on the refunds included in the resolution concerning a la carte package issues adopted by the Los Angeles Board of Information Technology Commissioners in October 1995 and approved by the Los Angeles City Council on December 12, 1995. The Los Angeles order calculates refunds due for the period of September 1, 1993 through July 15, 1994 in the Sylmar and Sunland/Tujunga franchises (CUIDs CA0188 and CA0219). However, the terms of this Amendment shall govern the calculation of the number of regulated channels and the amount of refunds due in these franchises for the period beginning on July 15, 1994. 4. Providence Journal previously filed refund plans to comply with orders issued by the Cable Services Bureau in cases not involving a la carte packages. In accordance with those plans, Continental will pay Refunds to all communities listed in Exhibit 3 in the amounts indicated in this Exhibit. Such Refunds already include all applicable Interest through April 1, 1997. 5. The Refunds described in subparagraphs 2 and 4 of this section will be reflected as monthly credits of a maximum of $1.00 and a minimum of $.50 on subscriber bills until full payment is made, except that the last payment may be credited in an amount less than $.50 on subscriber bills. In all cases, the Refund payment period shall not exceed 12 months. Continental will provide the first installment of the Refunds to Acquired System Eligible Subscribers on the franchise's respective Implementation Date. In the event the Refund amounts are not fully paid by the dates through which Interest has been calculated (as noted in subparagraphs 2 and 4 of this section), Continental shall be required to calculate and pay additional Interest through the date on which all Refunds are fully paid. 6. The Commission finds that the CPST rates in the Naples, FL system as modified pursuant to section IV.D.4. of this Amendment and the Current Rates for CPST in all other Acquired Systems are not unreasonable. Continental will be permitted to adjust such rates in the Acquired Systems at any time after the Amendment Effective Date without prior Commission approval, subject to Commission rules, the terms of the Social Contract, the terms of this Amendment, and any future review by the Commission of a new CPST complaint. 7. The Cable Services Bureau has reviewed the BST cost-of-service case and FCC Forms 1210 filed by Providence Journal for the Westerly, RI system in response to complaints in Westerly, RI (CUID RI0001) and Charlestown, RI (CUID RI0035) and referred by the LFA to the Commission for a decision. The Commission finds that the Current Rate for BST in the Westerly system is reasonable and that the Current Rate for CPST in the Westerly system is not unreasonable. 8. The Cable Services Bureau has reviewed the CPST cost-of-service filings for the Columbia Associates, L.P. systems. The Commission finds that the Current Rate for CPST in these systems is not unreasonable. 9. On its own motion, the Cable Services Bureau hereby reconsiders two orders -- DA 95-2097 and DA 95-2108 -- concerning the maximum permitted CPST rate for certain Cablevision of Chicago franchises (CUIDs IL0473, IL0520, and IL0601). The Amendment Order will vacate these two Bureau orders. As of the vacating of these orders, any pending petitions for reconsideration concerning these orders will be deemed to be withdrawn. 10. This settlement is without a finding by the Commission of any wrongdoing by Continental or any of the Acquired Systems and does not constitute an admission by Continental or any of the Acquired Systems of any violation of, or failure to conform to, the 1992 Cable Act, Commission rules, or any other applicable law, rule, or policy. F. Term of this Amendment. This Amendment will become effective on the Amendment Effective Date and shall continue through December 31, 2000, subject to section III.K. of the Social Contract regarding modification and termination, and to section III.G. of the Social Contract regarding franchises subject to effective or price-constraining competition. G. Service on Interested Parties. Continental will serve a copy of this Amendment, the Public Notice announcing this Amendment, and the Social Contract on all Continental LFAs and on all parties to any pending CPST rate case in the Acquired Systems. In addition, within 30 days of the adoption of this Amendment, Continental will serve a copy of Section III, B, ("School Commitments") of this Amendment on all school superintendants responsible for schools in Continental's franchise areas. IN WITNESS WHEREOF, this Amendment to the "Social Contract for Continental Cablevision, Inc." (FCC 95-335) has been duly executed and delivered by or on behalf of the parties hereto as of the Amendment Effective Date as defined herein. CONTINENTAL CABLEVISION, INC. By: _______________________________ Name: Robert J. Sachs Title: Senior Vice-President Corporate and Legal Affairs FEDERAL COMMUNICATIONS COMMISSION By: _______________________________ Name: William F. Caton Title: Acting Secretary EXHIBIT 1 CONTINENTAL CABLEVISION, INC. EQUIPMENT REGIONS PAGE 1 OF 1 Northeast: Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island Southeast: Florida, Georgia, Virginia Midwest: Michigan, Ohio Central: Illinois, Iowa, Minnesota, Missouri, Wisconsin Western: California, Nevada Northwest: Idaho, Washington NB: This Exhibit modifies Exhibit 6 of the Social Contract. New states in which the Acquired Systems operate are indicated by underline. EXHIBIT 2 A LA CARTE REFUND COMMUNITIES PAGE 1 OF 1 TOTAL REFUND WITH INTEREST CALIFORNIA 1. Sundland/Tujunga, CA0219 $43,812 2. Sylmar, CA0188 17,710 $61,522 FLORIDA 3. Coral Gables, FL0674 $109,160 4. Hialeah, FL0202 361,720 5. Hialeah Gardens, FL0675 26,040 6. Medley, FL0429 1,830 7. Miami Springs, FL0427 32,590 8. Naples -- Collier County - upgrade, FL0050, FL0098, FL0348 346,080 9. Naples -- Lee County Fort Myers Beach - upgrade, FL0096 25,740 10. Naples - upgrade, FL0051 79,400 11. Naples -- Sanibel - upgrade, FL0345 33,370 12. Sweetwater, FL0422 21,420 13. Virginia Gardens, FL0428 5,710 14. West Miami, FL0553 11,000 15. Unincorporated Dade County, FL0416 167,320 16. Unincorporated Dade County - Coral Gables, FL0416 6,490 $1,227,870 MASSACHUSETTS 17. Chelmsford, MA0147 $96,900 18. Fall River, MA0099 53,434 19. Tewksbury, MA0145 79,350 $229,684 MINNESOTA 20. Central St. Croix Valley, MN0392, MN0393, MN0394 $8,784 21. Denmark Township, MN0399 78 22. Hastings, MN0309, MN0310 6,586 23. South Washington County, MN0395, MN0396, MN0397, MN0400, MN0401, MN0533 26,942 $42,390 WISCONSIN 24. Hudson, WI0502, WI0503 $4,610 25. River Falls, WI0510 3,752 $8,362 $1,569,828 EXHIBIT 3 NON-A LA CARTE REFUND COMMUNITIES PAGE 1 OF 1 TOTAL REFUND WITH INTEREST CALIFORNIA 1. Costa Mesa, CA1173 $13,252 2. Cypress, CA1203 20,896 $34,148 MINNESOTA $52,578 The total refund in Minnesota systems will be distributed to Eligible Subscribers in the following franchises: 3. Brooklyn Center, MN0279 4. Brooklyn Park, MN0271 5. Crystal, MN0292 6. Golden Valley, MN0294 7. Maple Grove, MN0311 8. New Hope, MN0291 9. Osseo, MN0280 10. Plymouth, MN0307 11. Robbinsdale, MN0293 NEW YORK 12. East Fishkill, NY0275 $4,850 13. Wappingers Falls, NY0278 1,166 $6,016 WASHINGTON 14. City of Kittitas, WA0172 $2,516 15. County of Kittitas, WA0175 942 $3,458 $96,200