Municipalities can't charge fees to new telecommunications providers that
they do not collect from incumbent companies, according to a recent ruling by a
New York Appeals Court.
However, the panel declined to state amounts that may be charged by
regulators without running afoul of the 'fair and reasonable' standard stated in
the federal Cable Act.
Fees are allowed under Section 253c, and other courts have upheld charges of
4 percent, but the Second Circuit declined to rule on what percentage is
The decision, issued Sept. 13 by the U.S. Court of Appeals for the Second
District in New York, both upheld and struck down portions of a contested
franchise scheme applied by White Plains, N.Y., to new telecommunications
One of those providers -- Teleport Communications Group, a subsidiary of
AT&T Corp. -- argued that it should not be compelled to pay fees and 5
percent of its gross revenues to the city when the incumbent carrier, Verizon
Communications, does not pay the same.
The city countered that Verizon has compensated the city in the form of
municipal conduit use.
But the court said compensation equality must be computed on what competitors
pay going forward, not historically. Franchise fees don't have to be equal among
competitors, though. They can reflect different uses of the rights-of-way, the