NATOA: Don’t Offset the FCC’s Fees

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The National Association of Telecommunications Officers and Advisors has requested that the FCC declare that federal regulatory charges remitted by cable operators may not be used as a rationale to pay less in franchise fees to local governments.

Letters from Time Warner Cable attorneys to localities in North Carolina and Nebraska apparently prompted the petition, filed at the end of April.

NATOA representatives said four operators have made informal inquiries of local regulators regarding Federal Communications Commission fee offsets of local franchise-fee payments. The petition documented just the Time Warner inquiries.

Asked about the petition at the National Show here, Charter Communications Inc. executive vice president, general counsel and secretary Curtis Shaw secretary noted a relevant ruling made by the 9th U.S. Circuit Court of Appeals.

In a franchise dispute between Charter and Santa Cruz, Calif., the 9th Circuit ruled that the federal 5% cap on franchise fees was intended to encompass all the fees that local governments receive.

That said, Shaw was unaware of any Charter systems raising the federal fee-offset issues with local authorities.

Comcast Corp. executive vice president and general counsel, Terry Bienstock also said his company has not raised a fee-offset issue.

Time Warner’s assertions are in direct contradiction with the federal Cable Act, said NATOA executive director Libby Beaty.

She and a municipal consultant met with FCC staffers in February and raised the issue of the possibility of a change in interpretation on the fees by operators.

The staffers suggested that NATOA pursue the declaratory ruling, Beaty said.

Local regulators indicate that some operators argue that FCC regulatory fees are Title VI franchise fees.

Time Warner Cable argues that those charges plus local franchise fees amount to an assessment greater than the 5% federal cap on franchise fees.

“Some members of the cable industry apparently believe that they are entitled to a 'credit’ from local governments for the difference between the total franchise fees owed and FCC regulatory fees paid to the appropriate governmental authority,” the petition states.

The FCC fee amounts to an estimated 66 cents per year, per basic customer.

Extrapolated across the cable universe, a FCC fee offset by all operators could cost local governments $45 million a year, according to NATOA’s petition.

NATOA officials said offset proposals are not widespread, but nevertheless the trade group wants clarity from the FCC before it becomes a bigger issue.

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