Tauzin: Settle Modem-Fee Rebate

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Local governments should largely not be required to issue cable-modem
franchise-fee rebates as a result of legal changes adopted by the Federal
Communications Commission, House Energy and Commerce Committee chairman Billy
Tauzin (R-La.) said Tuesday.

In a March 11 letter to FCC chairman Michael Powell released Wednesday,
Tauzin indicated that he was concerned that communities in his state might owe
rebates either to cable companies or subscribers for franchise fees collected on
cable-modem revenue over the past few years.

Last March, the FCC ruled that cable-modem service was an information service
not subject to the 5 percent franchise fee. Many cable companies stopped
collecting the fee on data revenue, and questions immediately surfaced about
whether fees collected prior to the FCC ruling needed to be refunded.

In his letter, Tauzin urged Powell to spare cities "significant risk" in
court by clarifying that only modem fees collected after the FCC's decision are
subject to potential rebate.

Tauzin said he wanted the FCC to "clarify that its decision is prospective
and affects only contracts signed after the issuance of its ruling. Otherwise,
local governments will be exposed to future claims and significant risk."

He added that he agreed with the FCC's decision to classify cable-modem
service as an interstate information service and not as a cable service within
the meaning of federal law.

Tauzin said he also agreed that franchise fees normally collected on
video-programming revenue should not apply to broadband-data revenue as a result
of the reclassification.

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