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This Order does not address, and NCTA does not raise, whether local  xfranchising authorities can legally recover those franchise fees from cable operators. NCTA Reply Comments at  x3 n.4. In its Reply Comments, NCTA states that this issue "has not been decided by any administrative or judicial  {OV-body." Id. This is consistent  x.with Sections 622(a) and (b) of the Communications Act, which limit franchise fees that cable operators  xmay be required to pay, and with Section 622(c), which permits a separate line item to be added to subscriber bills identifying the franchise fee assessed.  S- II.xBACKGROUND  Sv- ` x4.` ` As part of the Cable Communications Policy Act of 1984, Congress limited local  xfranchising authorities to charging cable operators franchise fees of more than 5% of the cable operators'  S& - x"gross revenues derived in such period from the operation of the cable system to provide cable services.">&  yO-ԍ47 U.S.C.  542(b).>  S - xAlthough cable operators are responsible for paying the franchise fee,> L  yO-ԍ47 U.S.C.  542(a).> under the Commission's subscriber  S - xrate regulations, cable operators may, in turn, "pass through" to subscribers the full amount of the fee,   yOR- xԍ47 U.S.C.  542(c), (f), (g); 47 C.F.R.  76.922(a),  76.922(d)(3),  76.922(e)(2),  76.923(k),  76.933(e),  76.933(g)(5).  S - xwhich is an "external cost"E 4 yO-ԍ47 C.F.R.  76.922(f)(ii).E that is calculated separately from the maximum monthly charge per  S - xsubscriber.U  yO!-ԍ47 C.F.R.  76.922(a),  76.922(f)(ii).U Pursuant to the Cable Television Consumer Protection and Competition Act of 1992,  x Congress authorized cable operators to itemize on subscribers' cable bills the amount of the total bill  S6-assessed for franchise fees.> 6T yO*%-ԍ47 U.S.C.  542(c).>  S- ` #x5.` ` Cable operators may charge subscribers for the imposition of, or increase in, the franchise" ,`(`(88"  S- xjfee within the periods applicable to the cable operators' choice of accounting methods.o  yOh-ԍ47 C.F.R.  76.922(d)(3),  76.922(e)(2)(3),  76.933(e)(g).o Cable operators  S- xare also required to adjust subscriber charges to reflect any decrease in the franchise fee obligation.{X yO-ԍ47 U.S.C.  542(e); 47 C.F.R.  76.922(d)(3),  76.922(e),  76.933(e).{  xyUnderpayment of the franchise fee obligation is a contractual matter between local franchising authorities  S-and cable operators.   S8- ` x6.` ` In United Cable Artists, the Cable Services Bureau rejected the City of Baltimore's  xcontention that the franchise fee obligation must equal 5% of the total amount United Artists Cable of  S- xBaltimore received from its subscribers, including amounts that represent franchise fee pass throughs,PZ {Or - xԍUnited Artists Cable, 10 FCC Rcd. at 725152. United Artists Cable of Baltimore began on July 29, 1994,  xas an appeal of a local cable rate order filed by United Artists Cable of Baltimore against its Local Franchising Authority, the City of Baltimore.P  S- x?and held that gross revenues do not include the franchise fee collected from subscribers.F  {Ol-ԍId. at 7252.F Several  x>franchising authorities participating in that action filed petitions for reconsideration, which the Cable  Sr- xServices Bureau referred to the Commission.Mr {O-ԍSee 47 C.F.R.  1.106(a)(1).M On Reconsideration, the Commission affirmed the Bureau's  xdecision and held, among other things, that "franchise fees that a cable operator collects from its  xsubscribers are not part of an operator's `gross revenues' for purposes of calculating the total amount of  S -franchise fees owed by the operator to its local franchising authority."_ .  {O-ԍUnited Artists Cable, 11 FCC Rcd. at 18170._   S - ` x7.` ` The Commission's Order on Reconsideration was appealed to the United States Court of  x^Appeals for the Fifth Circuit by certain Texas franchising authorities. The Court reversed the  xCommission's decision. The Court addressed the issue of whether the term "gross revenues," as used in  x47 U.S.C.  542(b), "includes money collected from subscribers that is ultimately allocated by the cable  S -operator to pay a franchise fee"F   {Oj-ԍDallas, 118 F.3d at 395.F and concluded that it did.1 R  {O-ԍId.1  S-  S-III.xDiscussion  Sj- ` #x8.` ` The sole issue before us now is whether cable operators may "pass through" on customer  xbills the franchise fee payments they are now required to make to recompense local authorities for the  xunderpayments made during the period beginning April 6, 1995 and ending on July 31, 1997 that resulted  S- xMfrom following the Bureau and Commission's directives contained in the United Cable Artists Orders, which were subsequently reversed on appeal as of July 31, 1997.  S|- ` 2x9.` ` Local franchising authority commenters contend that cable operators should pay them for"|,`(`(88"  S- xlost franchise fees for the period that the United Artists Cable Orders were in effect, but should not be  xzable to pass through the amount of the underpayment to subscribers because it does not qualify as an  S- x"increase in" franchise fees, yO- xԍGMTC Comments at 12; MHCRC Comments at 45; National League of Cities Comments at 910; West Michigan Communities Reply Comments at 34; National League of Cities Reply Comments at 45. which can be passed through to subscribers under statute and regulations.  xThey argue that the underpayments arise out of the cable operators risky reliance on Orders that they  Sb- xyknew were subject to appeal.b  yO"- xԍCity of Dallas Comments at 2; City of Denver Comments at 34; National League of Cities Comments at 12 xi13; National League of Cities Reply Comments at 910. Our decision here is limited to the issue raised (i.e., pass  xthroughs with respect to cable operators and subscribers), we take no position as to whether Local Franchising  {Oz - xwAuthorities may seek to recover from cable operators that properly followed the United Artists Cable gross revenues methodology franchise fee underpayments for the term April 6, 1995 to July 31, 1997.  Various cable interests reply that cable operators were directed to follow  x the Orders and should not be punished for following and relying upon the Bureau and Commission's  S-directives. yO- xKԍComcast/Cox Comments at 78; Comcast/Cox Reply Comments at 45; TCI Reply Comments at 7; NCTA Reply Comments at 1314.  S- ` x 10.` ` We agree that cable operators were entitled to follow the United Artists Cable Orders  xzgross revenues methodology for calculating their franchise fee obligations and should not be penalized  St- x.for their reliance on those decisions as urged by some local franchising authorities.ut*  yO>-ԍRainier Comments; City of Dallas Comments at 2; City of Denver Comments at 3.u Those Orders were  xnever stayed and consequently were valid and binding until reversed on appeal. Although it is true that  xcable operators were on notice of the appeal, they were obligated to follow the directives of those Orders while those Orders were in force.  S - ` Bx 11.` ` Although local franchising authorities technically are correct that there are no increases  S - xin stated franchise fee levels,  yO- xԍCity of Denver Comments at 23; GMTC Comments at 12; National League of Cities Comments at 9; West Michigan Communities Reply Comments at 34. actual payments on the part of operators relying on the Orders in question  xwill increase when the previous underpayments are madeup. Moreover, cable operators only seek  xconfirmation that they may pass through to subscribers that which they would have been entitled to pass  S -through in the first instance if they did not use the United Artists Cable gross revenues methodology.  S- ` #x 12.` ` We disagree with GMTC that the issue should not even be decided by the Commission.> yOp!-ԍGMTC Comments at 3, 9.>  xLThe limitation in question is contained in Section 622 of the Communications Act and the rate regulation  xand franchise fee pass through rules have been adopted pursuant to Section 623 of the Communications  SF- xAct.;F yO%-ԍ47 U.S.C.  543.; The Commission has specifically stated that it would exercise jurisdiction over franchise fee"F2,`(`(88r"  S- xdisputes that impinge on "national policy concerning cable communications."$ {Oh- xԍUnited Artists Cable, 11 FCC Rcd. at 1817174; In re Amendment of Parts 1, 63 and 76 of the Commission's  {O2- xRules to Implement the Provisions of the Cable Communications Policy Act of 1984, 104 FCC 2d. 386, 39293  x=(1986); 47 U.S.C.  521; Comcast/Cox Reply Comments at 34; TCI Reply Comments at 56; NCTA Reply Comments at 16. We believe that this issue properly is before us because we required cable operators to calculate  S-their franchise fee obligations based upon our United Artists Cable gross revenues methodology.  Sb- ` x 13.` ` We further note that our decision here applies only to cable operators that properly  S:- xfollowed the United Artists Cable Orders. Various franchising authorities raise concerns that there are  S- xkcable operators that allegedly passed through to subscribers franchise fee charges based on the Dallas  xgross revenues methodology but forwarded to their local franchising authorities franchise fees based on  S- xthe United Artists Cable gross revenues methodology.0X yO - xԍCity of Des Moines Comments at 2; Rainier Comments; City of Dallas Comments at 12; GMTC Comments  xat 1415; National League of Cities Comments at 67, 911; West Michigan Communities Reply Comments at 5; GMTC Reply Comments at 25.0 Operators that have already collected the fees  xin question from subscribers, however, can not collect those fees again under this decision. We note that  xif such situations exist, those cable operators would be subject to various actions by their local franchising  xauthorities. Contrary to the concerns of some authorities, the cable operators will not be permitted to  x"doubledip" by passing through additional amounts to subscribers who already paid their share of the  S -franchise fees based on the Dallas gross revenues methodology.  S - ` ox 14.` ` Finally, we disagree that allowing a pass through here results in an increase of regulated  S - x>programming rates.T  yO-ԍNational League of Cities Comments at 1112.T Our decision does not affect regulated programming rates because franchise fee  Sb- xcharges are calculated separately from regulated programming rates.Fbd  yOf-ԍ47 C.F.R.  76.922(a), (f).F Similarly, we dismiss contentions  S:- xkthat a pass through of franchise fee charges for the period of April 6, 1995 to July 31, 1997 would be  xunfair to current subscribers who subscribed during that period and already paid the franchise fee pass  S- xthroughs calculated under the United Cable Artists gross revenues methodology for that period.   yO~- xԍCity of Denver Comments at 34; MHCRC Comments at 45; National League of Cities Comments at 12; National League of Cities Reply Comments at 45; West Michigan Communities Reply Comments at 6. We note  S- xzthat under the United Cable Artists gross revenues methodology, subscribers paid less in franchise fee  S- xcharges than subscribers of cable systems that followed the Dallas gross revenues methodology.  xSubscribers may now only be asked to pay amounts that operators would have been required to pay from  SP- xyApril 6, 1995 to July 31, 1997 if they had used the Dallas gross revenues methodology. With respect to  xzcurrent subscribers who did not subscribe during the period at issue, we do not agree with the City of  xDenver that they should be exempt from paying a share of any underpayment of the franchise fee for that  S- xperiod.G!L  yO%-ԍCity of Denver Comments at 35.G As a practical matter, new subscribers receive benefits made possible by charges levied on  xprevious customers (e.g., upgraded networks), and should be responsible for all properly assessed charges and fees."!,`(`(88"Ԍ S- ÙIV.xOrdering Clauses  S- ` x15.` ` Accordingly, IT IS ORDERED , pursuant to Section 622 of the Communications Act of  S- x1934, 47 U.S.C.  542, and Section 1.2 of the Commission's rules, 47 C.F.R.  1.2, that cable operators  S`- xthat properly followed the United Cable Artists Orders, In re United Artists Cable, 11 FCC Rcd. 18158  S:- xz(1995) and In re United Artists Cable, 10 FCC Rcd. 7250 (1995) while they were in effect from April  x6, 1995 to July 31, 1997 may pass through to their subscribers any underpayments of franchise fee  S- xcharges requested by their local franchising authorities as set forth in this Order and consistent with Dallas  S-v. FCC, 118 F.3d 393 (1997).  Sx- ` x16.` ` This action is taken by the Deputy Chief, Cable Services Bureau, pursuant to authority delegated by Section 0.321 of the Commission's rules. 47 C.F.R.  0.321. x` `  hhFEDERAL COMMUNICATIONS COMMISSION   x` `  hhWilliam H. Johnson x` `  hhDeputy Chief, Cable Services Bureau