NEWS
Report No. CS 96-19      CABLE SERVICES ACTION               April 26, 1996

           COMMISSION AFFIRMS CABLE FRANCHISE FEES ARE NOT PART 
                     OF AN OPERATOR'S "GROSS REVENUES"
                                     
     The Commission has adopted an order (FCC 96-188) affirming the Cable Services
Bureau's United Artists Cable of Baltimore order (DA 95-737).  This action denies petitions
for reconsideration filed by several local franchising authorities and associations representing
local franchising authorities.  For the purpose of calculating the amount of franchise fees, the
Commission's order affirms that the franchise fees a cable operator collects from its
subscribers are not part of the operator's "gross revenues."

     Under Section 622(b) of the Communications Act, franchise fees are limited to 5% of
an operator's "gross revenues," which are defined as revenues derived "from the operation of
the cable system."  The Commission affirmed that because franchise fees are a charge levied
by the franchising authority rather than revenues derived from the operation of the cable
system, the franchise fees a cable operator collects from subscribers should not be included in
calculating an operator's "gross revenues."  Furthermore, the Commission held that if the
amount collected as a franchise fee were itself subject to a franchise fee, as the City urged,
and if the franchise agreement required a 5% assessment (as is the case in Baltimore), a cable
operator would end up paying more than the maximum franchise fee permitted under the
1992 Cable Act.
 

                                  - FCC -


News Media Contact: Morgan Broman at (202) 416-0852
Cable Services Bureau Contact: Dave Roberts at (202) 418-1033