Cable television franchise fee
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In the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
cable television Cable television is a system of delivering television programming to consumers via radio frequency (RF) signals transmitted through coaxial cables, or in more recent systems, light pulses through fibre-optic cables. This contrasts with bro ...
industry, a cable television franchise fee is an annual fee charged by a local government to a private cable television company as compensation for using
public property Public property is property that is dedicated to public use. The term may be used either to describe the use to which the property is put, or to describe the character of its ownership (owned collectively by the population of a state). This is in ...
it owns as
right-of-way Right of way is the legal right, established by grant from a landowner or long usage (i.e. by prescription), to pass along a specific route through property belonging to another. A similar ''right of access'' also exists on land held by a gov ...
for its cable. In the US, cable television services are provided by private for-profit companies, cable television providers, which sign a franchise agreement with cities and counties to provide cable television to its residents. The franchise fee is set during initial negotiation of the franchise agreement, usually by a process in which the government requests bids from cable providers to serve their community. This fee can be renegotiated when the franchise agreement comes up for renewal, usually at intervals of 10 to 12 years. Although it is paid to a government, it is not a tax. Franchise fees are governed under Section 622 of the
Cable Communications Act of 1984 The Cable Communications Policy Act of 1984 (codified at ) was an act of Congress passed on October 30, 1984 to promote competition and deregulate the cable television industry. The act established a national policy for the regulation of cable tel ...
. Section 622, states that municipalities are entitled to a maximum of 5% of gross
revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...
s derived from the operation of the cable system for the provision of cable services such as
Public, educational, and government access Public-access television is traditionally a form of non-commercial mass media where the general public can create content television programming which is narrowcast through cable television specialty channels. Public-access television was creat ...
(PEG) TV channels.


Controversy

Section 542(f) of the Communications Act says "A cable operator may designate that portion of a subscriber's bill attributable to the franchise fee as a separate item on the bill." Most cable providers choose to list this item on customer's bills, so every customer will see it each time they pay their bill. This fee has become a source of contention and controversy, since how franchise fees are characterized and billed can have a profound effect on public attitudes toward cable television. Local governments generally would prefer this item not be listed on the bill. Since the fee is paid to the government, when it is broken down on a per-customer basis on the bill it appears to be a tax on the customer, possibly igniting antipathy against government officials. If it just appeared on accounting statements as a lump sum payment by the cable provider, it would be perceived by the public more as a fee-for-service, which is how governments tend to regard it. However, the Communications Act provides the transparency of the franchise fee so that customers of the cable company understand the fee imposed by the government upon the cable company. Cable providers, in contrast, see the fee as a cost of doing business which they are passing along to the customer. By listing on their bill the portion attributable to the fee, customers may feel that government is responsible for that portion, not the cable provider. Also, since customers will notice any increase in the fee, and may interpret it as a "tax increase", listing it on the bill may discourage governments from pushing for an increase in the fee when the franchise agreement is renewed. Justifications or rationales for the franchise fee fall into six basic categories: *''Revenue'' - a source of general revenue for the government which can be raised without raising taxes. *''Rent'' - rent for the use of public land as right-of-way by the company for its cables. *''Exclusivity'' - compensation to the government for allowing the cable operator to maintain a de facto monopoly on cable service in the area. *''Diversity'' - it is in the public interest to fund government facilities providing
public, educational, and government access Public-access television is traditionally a form of non-commercial mass media where the general public can create content television programming which is narrowcast through cable television specialty channels. Public-access television was creat ...
(PEG) channels that promote diversity in the community. *''Benefit'' - compensation for the public relations benefits the cable provider gains by having public, educational, and governmental channels on the cable. *''Regulatory'' - compensation to the government for the cost of regulating cable television: consultants, auditors, administrators, and inspectors.


References

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See also

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List of communities serviced by Comcast Comcast provides cable television in and/or around the following locations (Partial list of franchises and communities served): As the largest Cable television provider in the United States, Comcast claims over 21 million domestic customers and th ...
Cable television in the United States Television terminology