47 U.S.C. § 542 — Franchise fees

Page 286 TITLE 47—TELECOMMUNICATIONS § 542 Subsec. (d)(3). Pub. L. 104–104, § 3(d)(3), substituted ‘‘section 153’’ for ‘‘section 153(v)’’. 1992—Subsec. (a)(1). Pub. L. 102–385, § 7(a)(1), inserted before period at end ‘‘; except that a franchising au- thority may not grant an exclusive franchise and may not unreasonably refuse to award an additional com- petitive franchise. Any applicant whose application for a second franchise has been denied by a final decision of the franchising authority may appeal such final de- cision pursuant to the provisions of section 555 of this title for failure to comply with this subsection’’. Subsec. (a)(4). Pub. L. 102–385, § 7(b), added par. (4). Subsec. (b)(1). Pub. L. 102–385, § 7(c)(1), inserted ‘‘and subsection (f)’’ after ‘‘paragraph (2)’’. Subsec. (f). Pub. L. 102–385, § 7(c)(2), added subsec. (f). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1992 AMENDMENT Amendment by Pub. L. 102–385 effective 60 days after Oct. 5, 1992, see section 28 of Pub. L. 102–385, set out as a note under section 325 of this title. EFFECTIVE DATE Section effective 60 days after Oct. 30, 1984, except where otherwise expressly provided, see section 9(a) of Pub. L. 98–549, set out as a note under section 521 of this title. § 542. Franchise fees (a) Payment under terms of franchise Subject to the limitation of subsection (b), any cable operator may be required under the terms of any franchise to pay a franchise fee. (b) Amount of fees per annum For any twelve-month period, the franchise fees paid by a cable operator with respect to any cable system shall not exceed 5 percent of such cable operator’s gross revenues derived in such period from the operation of the cable system to provide cable services. For purposes of this sec- tion, the 12-month period shall be the 12-month period applicable under the franchise for ac- counting purposes. Nothing in this subsection shall prohibit a franchising authority and a cable operator from agreeing that franchise fees which lawfully could be collected for any such 12-month period shall be paid on a prepaid or de- ferred basis; except that the sum of the fees paid during the term of the franchise may not exceed the amount, including the time value of money, which would have lawfully been collected if such fees had been paid per annum. (c) Itemization of subscriber bills Each cable operator may identify, consistent with the regulations prescribed by the Commis- sion pursuant to section 543 of this title, as a separate line item on each regular bill of each subscriber, each of the following: (1) The amount of the total bill assessed as a franchise fee and the identity of the fran- chising authority to which the fee is paid. (2) The amount of the total bill assessed to satisfy any requirements imposed on the cable operator by the franchise agreement to sup- port public, educational, or governmental channels or the use of such channels. (3) The amount of any other fee, tax, assess- ment, or charge of any kind imposed by any governmental authority on the transaction be- tween the operator and the subscriber. (d) Court actions; reflection of costs in rate structures In any court action under subsection (c), the franchising authority shall demonstrate that the rate structure reflects all costs of the fran- chise fees. (e) Decreases passed through to subscribers Any cable operator shall pass through to sub- scribers the amount of any decrease in a fran- chise fee. (f) Itemization of franchise fee in bill A cable operator may designate that portion of a subscriber’s bill attributable to the fran- chise fee as a separate item on the bill. (g) ‘‘Franchise fee’’ defined For the purposes of this section— (1) the term ‘‘franchise fee’’ includes any tax, fee, or assessment of any kind imposed by a franchising authority or other governmental entity on a cable operator or cable subscriber, or both, solely because of their status as such; (2) the term ‘‘franchise fee’’ does not in- clude— (A) any tax, fee, or assessment of general applicability (including any such tax, fee, or assessment imposed on both utilities and cable operators or their services but not in- cluding a tax, fee, or assessment which is un- duly discriminatory against cable operators or cable subscribers); (B) in the case of any franchise in effect on October 30, 1984, payments which are re- quired by the franchise to be made by the cable operator during the term of such fran- chise for, or in support of the use of, public, educational, or governmental access facili- ties; (C) in the case of any franchise granted after October 30, 1984, capital costs which are required by the franchise to be incurred by the cable operator for public, educational, or governmental access facilities; (D) requirements or charges incidental to the awarding or enforcing of the franchise, including payments for bonds, security funds, letters of credit, insurance, indem- nification, penalties, or liquidated damages; or (E) any fee imposed under title 17. (h) Uncompensated services; taxes, fees and other assessments; limitation on fees (1) Nothing in this chapter shall be construed to limit any authority of a franchising author- ity to impose a tax, fee, or other assessment of any kind on any person (other than a cable oper- ator) with respect to cable service or other com- munications service provided by such person over a cable system for which charges are as- sessed to subscribers but not received by the cable operator. (2) For any 12-month period, the fees paid by such person with respect to any such cable serv- ice or other communications service shall not exceed 5 percent of such person’s gross revenues derived in such period from the provision of such service over the cable system. (i) Regulatory authority of Federal agencies Any Federal agency may not regulate the amount of the franchise fees paid by a cable op- Page 287 TITLE 47—TELECOMMUNICATIONS § 543 erator, or regulate the use of funds derived from such fees, except as provided in this section. (June 19, 1934, ch. 652, title VI, § 622, as added Pub. L. 98–549, § 2, Oct. 30, 1984, 98 Stat. 2787; amended Pub. L. 102–385, § 14, Oct. 5, 1992, 106 Stat. 1489; Pub. L. 104–104, title III, § 303(b), Feb. 8, 1996, 110 Stat. 125.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (h)(1), was in the original ‘‘this Act’’, meaning act June 19, 1934, ch. 652, 48 Stat. 1064, known as the Communications Act of 1934, which is classified principally to this chapter. For com- plete classification of this Act to the Code, see section 609 of this title and Tables. AMENDMENTS 1996—Subsec. (b). Pub. L. 104–104 inserted ‘‘to provide cable services’’ before period at end of first sentence. 1992—Subsec. (c). Pub. L. 102–385 amended subsec. (c) generally. Prior to amendment, subsec. (c) read as fol- lows: ‘‘A cable operator may pass through to sub- scribers the amount of any increase in a franchise fee, unless the franchising authority demonstrates that the rate structure specified in the franchise reflects all costs of franchise fees and so notifies the cable operator in writing.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1992 AMENDMENT Amendment by Pub. L. 102–385 effective 60 days after Oct. 5, 1992, see section 28 of Pub. L. 102–385, set out as a note under section 325 of this title. EFFECTIVE DATE Section effective 60 days after Oct. 30, 1984, except where otherwise expressly provided, see section 9(a) of Pub. L. 98–549, set out as a note under section 521 of this title. § 543. Regulation of rates (a) Competition preference; local and Federal regulation (1) In general No Federal agency or State may regulate the rates for the provision of cable service ex- cept to the extent provided under this section and section 532 of this title. Any franchising authority may regulate the rates for the pro- vision of cable service, or any other commu- nications service provided over a cable system to cable subscribers, but only to the extent provided under this section. No Federal agen- cy, State, or franchising authority may regu- late the rates for cable service of a cable sys- tem that is owned or operated by a local gov- ernment or franchising authority within whose jurisdiction that cable system is lo- cated and that is the only cable system lo- cated within such jurisdiction. (2) Preference for competition If the Commission finds that a cable system is subject to effective competition, the rates for the provision of cable service by such sys- tem shall not be subject to regulation by the Commission or by a State or franchising au- thority under this section. If the Commission finds that a cable system is not subject to ef- fective competition— (A) the rates for the provision of basic cable service shall be subject to regulation by a franchising authority, or by the Com- mission if the Commission exercises juris- diction pursuant to paragraph (6), in accord- ance with the regulations prescribed by the Commission under subsection (b); and (B) the rates for cable programming serv- ices shall be subject to regulation by the Commission under subsection (c). (3) Qualification of franchising authority A franchising authority that seeks to exer- cise the regulatory jurisdiction permitted under paragraph (2)(A) shall file with the Com- mission a written certification that— (A) the franchising authority will adopt and administer regulations with respect to the rates subject to regulation under this section that are consistent with the regula- tions prescribed by the Commission under subsection (b); (B) the franchising authority has the legal authority to adopt, and the personnel to ad- minister, such regulations; and (C) procedural laws and regulations appli- cable to rate regulation proceedings by such authority provide a reasonable opportunity for consideration of the views of interested parties. (4) Approval by Commission A certification filed by a franchising author- ity under paragraph (3) shall be effective 30 days after the date on which it is filed unless the Commission finds, after notice to the au- thority and a reasonable opportunity for the authority to comment, that— (A) the franchising authority has adopted or is administering regulations with respect to the rates subject to regulation under this section that are not consistent with the reg- ulations prescribed by the Commission under subsection (b); (B) the franchising authority does not have the legal authority to adopt, or the per- sonnel to administer, such regulations; or (C) procedural laws and regulations appli- cable to rate regulation proceedings by such authority do not provide a reasonable oppor- tunity for consideration of the views of in- terested parties. If the Commission disapproves a franchising authority’s certification, the Commission shall notify the franchising authority of any revisions or modifications necessary to obtain approval. (5) Revocation of jurisdiction Upon petition by a cable operator or other interested party, the Commission shall review the regulation of cable system rates by a fran- chising authority under this subsection. A copy of the petition shall be provided to the franchising authority by the person filing the petition. If the Commission finds that the franchising authority has acted inconsistently with the requirements of this subsection, the Commission shall grant appropriate relief. If the Commission, after the franchising author- ity has had a reasonable opportunity to com- ment, determines that the State and local