Time Warner:
Iron-fisted Cable Access Term Sheet for ISPs

Cable company feigns shared access with a contractual fortification of its predatory self-interest, disregards of the concerns of independent ISPs.

by ISP-Planet Staff
[November 1, 2000]

This term sheet (the "Term Sheet") is a list of key business points that are intended to be memorialized in a definitive agreement (the "Definitive Agreement") between Time Warner Cable ("TWC") and the Internet Service Provider (the "ISP") identified below. Except for the provisions of Section 21 of this Term Sheet, this Term Sheet is not intended to create any rights for, or impose obligations upon, either party including without limitation any obligation to negotiate in good faith.

Service:
The "Service" will be ISP's Internet access, content, applications and functionality delivered over TWC's broadband cable infrastructure, as jointly provided by the parties within the Network Architecture to be specified by TWC in the Definitive Agreement. The Service will be tiered based on a maximum line speed and overall consumption of bits per billing period. Initially, the parties will offer two tiers of Service. The maximum line speeds for the lower tier Service will be 2mbps, downstream, and 384 kbps, upstream. Line speeds for the initial higher tier of Service, and bit consumption for both initial tiers of Service will be specified in the Definitive Agreement. Following execution of the Definitive Agreement, the parties may modify the foregoing service specifications and/or add service levels solely upon mutual agreement.

The Service will be optimized for the personal computer, but the parties understand that the Service may be capable of working on another device if so connected by a customer. TWC's obligations under the Definitive Agreement will be limited to a customer's use of the Service through a personal computer.

1. Non-Exclusive
   The parties' rights and obligations under the Definitive Agreement will be non-exclusive.
   
   
2. Scope and Rollout
   The rollout of the Service will be on a TWC divisional level, except with respect to the National Division, for which rollout will be on a cable system by cable system level (Each division, and in the case of the National Division, each system, may be referred to herein as an "Operator"). Each Operator will have the option ( but not the obligation) to rollout the Service to potential customers in its operating area, subject to ISP's agreement to offer the Service through such Operator and subject also to ISP's payment of the Advance (as defined herein) with respect to each Operator that offers the Service Rollouts will occur 30 days after the Operator determines that its cable systems are capable of providing the Service. TWC will have the right to terminate the Definitive Agreement with respect to Operators which are divested or are no longer under management by TWC. Systems which are acquire by TWC after the effective date of the Definitive Agreement but during the term thereof will have the option to offer the Service under the terms of the Definitive Agreement.
   
   
3. Distribution
   Each of ISP and TWC will sell the Service and will determine the pricing of the Service when sold by it.
   
   
4. Subscriber Revenue Splits
   TWC shall retain seventy-five percent (75%) of gross Service subscription revenues and ISP shall receive twenty-five percent (25%) thereof. Notwithstanding the foregoing, for subscriptions to the lower tier Service: (a) TWC shall receive a minimum monthly payment of $30 for each subscription sold by ISP to existing TWC cable television service subscribers; and (b) ISP shall receive a minimum monthly payment of $10 for each subscription sold by TWC. TWC shall be entitled to higher minimum monthly payments, specified in the Definitive Agreement, with respect to subscriptions sold by ISP to customers who are not TWC cable television service customers.
   
   
5. Service Home Page
   ISP will have sole control of, and responsibility (including without limitation editorial and technical responsibility) for the homepage for the Service, provided however that: (a) the home page will be subject to TWC's approval; and (b) at all times during the term of the Definitive Agreement there will be a dedicated availability of prominent above-the-fold areas on the home page of the Service for use by the Operator in its discretion, but which may, without limitation link to content, applications, services and functionality provided by such Operator. The Operator presence on the home page for the Service shall be defined in the Definitive Agreement.
   
   
6. Advertising and Other Fees
   TWC will receive twenty-five percent (25%) of gross revenues received by ISP for advertising, transactions, communications, premium services, e-commerce and other fees (e.g. web hosting surcharges) related to ISP's ability to offer the Service ("Ancillary Revenues"). Except as expressly set out in this Term Sheet, all revenues generated by the Operator in connection with the Service and whether or not through the Service Home Page (including advertising, transactions, communications, premium services, e-commerce and other fees and service revenues) will be retained by TWC.
   
   
7. Advance
   ISP will pay TWC an advance payment to be recouped against revenues to be received by TWC under the Definitive Agreement in the amount of dollars ($___) for each Operator which the parties agree shall offer the Service (the "Advance"). The Advance will be due and payable thirty (30) days following ISP's receipt of notice from TWC that the Pre-Existing Obligations have terminated. The Advance will be applied to revenues due to TWC hereunder until such advance had been fully recouped, at which time TWC and ISP shall make appropriate payments as set forth herein. The advance is refundable upon expiration of the Agreement, provided however that in the event the Definitive Agreement terminates for any reason before TWC has earned at least $50,000. TWC will be entitled to retain an amount equal to the difference between $50,0000 and the actual amounts earned by TWC under the Definitive Agreement.
   
   
8. Minimum Subscriber Level
   TWC will have the right to terminate the Definitive Agreement with respect to any particular Operator after one year from the commencement of rollout by such Operator unless the Service has, upon the one-year anniversary of the rollout, in such Operator's operating area, a number of subscribers equal to the greater of (a) 100 or (b) .5% of homes passed by the particular Operator.
   
   
9. Marketing and Service Packages
   ISP will market and promote the availability of the Service. TWC may package the Service with TWC's other services, subject to the terms and conditions of the Definitive Agreement, including without limitation the payment of minimum fees.
   
   
10. Facilities
    TWC will be responsible for all aspects of the Service infrastructure facilities from a point of demarcation at the Operator headend to Service subscribers. TWC will provision and install (except to the extent that self-provisioning is available) the Service for users using personal computers to utilize the Service. Whichever party sells the Service to a customer will determine whether it wishes to charge an installation fee. Notwithstanding the foregoing, if ISP sells the Service, ISP will reimburse TWC, at TWC's cost without markup, for TWC's direct costs (including labor and equipment) of provisioning and installing the Service.

    ISP will be responsible for all aspects of the Service, infrastructure facilities, software, hosting, caching, peering and general Internet connectivity and transport to the point of demarcation at the Operator headend. ISP's transport facilities to the TWC headends will meet maximum and minimum capacity specifications as will be specified in the Definitive Agreement. If tunneling protocols are used, the tunnels will terminate at TWC headend. ISP will be responsible for obtaining and managing blocks of IP addresses to support the Service.

    The Definitive Agreement will set forth minimal technical performance requirements with which the ISP must comply. The Definitive Agreement will provide for appropriate credits for Service outages caused by failure of either party's facilities to meet specifications. If outages or performance failures reach a specified level, or if the ISP does not respond reasonably to increased volume or usage of the Service in any particular operating area, TWC may terminate the Definitive Agreement with respect to the Operators in such areas.

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