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                                Before the
                Federal Communications Commission
                      Washington, D.C. 20554

                                 
In the Matter of:                  )                         
                              )
TELERAMA, INC.                     )               File No. CSB-A-0166
                              )               CUID OHO756
Appeal of Local Rate                    )         
Order of the City of                    )
Euclid, Ohio                       )                    
                              

                  MEMORANDUM OPINION AND ORDER

   Adopted:  July 24, 1998              Released:  July 30, 1998 

By the Commission:


     1.   On January 13, 1997, the City of Euclid, Ohio ("Euclid") filed an Application For Review of
that portion of the Cable Services Bureau's decision in Telerama, Inc. which held that the local cable operator,
Telerama, Inc. was correct in its assertion that the franchise fees it collects from subscribers for Euclid do not
constitute gross revenues from the operation of its cable system, and that, therefore, Euclid is not entitled to
impose a five percent franchise fee on the entire amount that Telerama collects from its subscribers, including
the franchise fee.  On January 21, 1997, Telerama, Inc. filed an opposition to this application.  We grant
Euclid's application for review.

     2.   On May 5, 1994, Telerama filed an appeal of a cable rate order adopted by Euclid on April
4, 1994.  Euclid's rate order established rates for Telerama's basic tier services and associated equipment based
on Telerama's FCC Form 393, and required that Telerama implement certain rate reductions and refund
overcharges to its subscribers dating back to May 14, 1994.  Telerama addressed eight issues on appeal, only
one of which is raised by Euclid in its application for review.  That issue is whether or not Telerama is required
to include revenues it has collected to pay Euclid's five percent franchise fee in the gross revenues that are
subject to the franchise fee.

     3.   Euclid argues that the franchise fee owed to it should be treated consistently with the outcome
of then-pending litigation in City of Dallas, Texas v. F.C.C.  In response, Telerama contends that the Bureau's
initial decision was correct when it ". . . concluded that the amount of a customer's monthly bill attributable
to the franchise fee does not constitute cable operator gross revenues," and therefore that it is not subject to a
five percent franchise fee assessment. 

     4.   The court has now issued its decision in City of Dallas, Texas v. FCC.  It held that ". . . all
money collected from subscribers, including funds used to pay franchise fees, must be included in a cable
operator's gross revenue."  The court did not agree with the conclusion that cable operators were merely acting
as collection agents for the city.  It held that franchise fees are essentially a form of rent for using public rights-
of-way in the city, rather than a tax.  The court added, however, that even if franchise fees were to be
considered to be a tax, they would be considered to be a normal expense of doing business, unless the tax was
imposed directly upon the subscriber.  Since franchising authorities normally impose their franchise fees upon
cable systems, rather than directly upon the cable subscribers, ". . . any money collected to pay those fees will
be part of the system's gross revenue . . . ."  Moreover, the court concluded that the standard definition of the
term "gross revenue" includes all revenue collected from any source, and that no evidence had been submitted
to demonstrate that Congress intended to depart from this definition when it utilized the term in  622(b) of the
Communications Act of 1934, as amended.  

     5.   In view of the decision in City of Dallas, Texas, we have reviewed the prior decision in
Telerama.  We hold that the franchise fee that Telerama collects from subscribers constitutes gross revenues
from the operation of the cable system.  Euclid is entitled to charge a franchise fee on the total amount that
Telerama collects from subscribers, including the franchise fee.  Thus, we will vacate that part of the Bureau's
prior decision in Telerama, Inc. which held to the contrary.

     6.   Accordingly, in view of the foregoing, IT IS ORDERED that the Application For Review
filed January 14, 1997, by the City of Euclid, Ohio IS GRANTED, and Telerama, Inc. IS VACATED in
part, to the extent noted above. 
     7.   IT IS FURTHER ORDERED that the Motion Of The City Of Euclid, Ohio For A Stay Of
Its Application For Review IS DISMISSED.


                              FEDERAL COMMUNICATIONS COMMISSION



                              Magalie Roman Salas
                              Secretary