Although federal law allows cable operators to itemize franchise ...
Although federal law allows cable operators to itemize franchise fees as well as payments for support of public access programming, itemization doesn’t serve to “convert the franchise fee into a tax on the subscriber,” said Mt. Hood (Ore.) Cable…
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Regulatory Commission (MHCRC) Dir. David Olson, rejecting AT&T’s request for waiver of franchise fee on cable modem service. AT&T had sought waiver in wake of 9th U.S. Appeals Court ruling that cable-delivered Internet service was telecom service (CD Jan 3 p3). Commission handles cable franchising and regulatory matters on behalf of 6 Ore. local govts., including Portland. Olson said relevant facts and applicable law as construed by courts had established that burden of franchise fee, like any other operating expense, was on AT&T, not on company’s subscribers, he said. AT&T’s position appears to be based on “erroneous” premise that MHCRC is requiring that franchise fees be passed through to subscribers or that AT&T is collecting fee on behalf of jurisdictions, he said, charging that it was attempt by company to portray franchise fee, which compensates local govts. for value of use of public rights-of-way, as “a sales tax” on subscribers. Concerns raised by AT&T about potential class action lawsuits seeking refund of fees are “unwarranted,” he said. MHCRC offered 2 options to AT&T to allay its concerns about litigation: (1) AT&T can choose simply not to itemize franchise fees on cable modem service as there is no such requirement in federal law. Moreover, refraining from itemizing franchise fees wouldn’t reduce amount that company collected from subscribers because AT&T essentially could set rates at any level it chose. (2) MHCRC is willing to negotiate agreement whereby jurisdictions won’t collect “cable franchise fee” on cable modem service. Instead, AT&T can provide noncable services in exchange for 5% fee on such services.