FCC ORDERS REFUND TO MIDLAND CABLE SUBSCRIBERS

AND CLASSIFIES CABLE MODEM SERVICE AS INFORMATION SERVICE

The Federal Communications Commission has recently taken two actions that are good news to Charter Communications subscribers in Midland.

The first action occurred on February 15, 2002 in which the FCC issued a final order resolving a cable rate case involving Bresnan Communications, which was initiated by the City of Midland in 1994. At that time, the City asked its rate consultant to review this rate increase. The consultant and City Administration recommended that the increase be appealed. The City Council unanimously approved this action. As a result, Midland cable subscribers will receive a one-time credit of $25.34 within 60 days of the order. The FCC order was the final step in a process that saw Bresnan lose the original rate case, but continued as a result of numerous appeals filed by Bresnan. After losing the final appeal, Bresnan was required to submit a refund plan to the FCC for final approval. The February 15 action by the FCC denied approval of the plan submitted by Bresnan and ordered Bresnan to pay a total of $170,289.04 to Midland subscribers. Since Charter Communications purchased Bresnan in 2000, Charter has assumed the responsibility of paying the refund to current subscribers. Subscribers should have already received their refund as a credit. Those who have not should contact Charter Communications.

In another action that occurred on March 14, 2002 the FCC issued a declaratory ruling that cable modem service be classified as an information service rather than a cable service. Charter Communications offers a cable modem service called Charter Pipeline. Included with the declaratory ruling was a notice of proposed rulemaking stating that since cable modem service is not a cable service, it should not be included in a cable operator’s gross revenues for purposes of determining franchise fees. Therefore, Charter Pipeline subscribers should see the elimination of the 5% franchise fee on that portion of their cable bill involving the high-speed Internet service.

Charter Communications has formally notified the City of Midland that it will no longer be collecting franchise fees on cable modem services from their customers as a result of the FCC ruling. The amount of the franchise fee for subscribers varies depending upon the level of service.

The City of Midland receives approximately $80,000 annually in franchise fees from Charter Communications cable modem service. Franchise fees paid to the City of Midland by Charter Communications are used to support the public and governmental access channels.

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The FCC noted that past collections and payments were made in good faith. Charter Communications does not intend to initiate any reimbursement of prior payments.

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