2006.04.17 EDA Packet - Laserfiche WebLink

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f Are certain cable service requirements no longer needed in light of competition in the MVPD marketplace? The MTA asserts that "the application of a `franchise fee' as a condition for maintenance of the public right-of-way is obsolete." MTA Initial Comments at page 7. The LFAs strongly disagree with this position. A franchise fee is consideration paid by a cable operator to an LFA for the privilege of using the public streets or to compensate for the costs of necessary regulation and supervision.2 Compensation for the use of public right-of-ways for a service which is not classified as a utility is appropriate and reasonable in light of the valuable public property being made available. While the FCC formerly limited franchise fees, those limits were superseded by the Cable Act of 1984 and the 1992 Cable Act, which provide authority for LFAs to collect franchise fees but limit such fees to five percent (5%) of a cable operator's gross revenues.3 Moreover, the LFAs note that 47 U.S.C. § 542(i) provides that "any federal agency may not regulate the amount of the franchise fees paid by a cable operator, or regulate the use of funds derived from such fees, except as provided in 47 U.S.C. § 542. LFAs are charged with responsibility to oversee and maintain public rights-of-way and their ability to obtain fair compensation for such use should, not in any way, be limited simply because a private entity desires unfettered access to public property for its own financial gain. What problems have cable incumbents encountered with LFAs? Several commentators including Qwest have raised the City of Otsego and its franchising procedure as an example of a case where a telephone company was forced to "walk away from onerous build-out requirements." See Qwest Initial Comments at page 10 and footnote 15. In z See Cable Television Report and Order,36 F.C.C.2D 143,209-10(1972). s 47 U.S.C. § 542(a),(b). 5