FRANCHISE FEES

The following summary and legislation defines franchise fees and describes guidelines around what they are and how they should be handled by local governments and cable companies.

The Cable Communications Act of 1984 Section 622 permits a local franchising authority (a City) to impose a “franchise fee” of up to 5% of a cable company’s gross revenue. This franchise fee is intended to compensate a community for cable’s use of the local rights-of-way, and to offset any costs associated with administering the local cable franchise.

The Cable Act also authorizes the cable company to pass through the cost of the franchise fees to the customer, and itemize that cost on the monthly billing statement.