************************************************************************* NOTICE ********************************* *********************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ********************************* ******************************** DA 99-1252 CSB-ILR 99-2 Released: June 25, 1999 City of Bowie, Maryland c/o David Deutsch City Manager 2614 Kenhill Drive Bowie, Maryland 20715 Dear Mr. Deutsch: On May 18, 1999, I responded to a December 7, 1998 letter from the City of Bowie regarding the proper regulatory treatment of a proposed public, educational, and governmental ("PEG") access fee. A number of parties have requested that I clarify my response. See, e.g., ex parte letter of May 24, 1999 from Nicholas P. Miller; ex parte letter of May 27, 1999 from John W. Pestle; ex parte letter of May 27, 1999 from Lee Ruck, Executive Director, National Association of Telecommunications Officers and Advisors. I believe it would be useful to do so and would accordingly would ask that you substitute the following response to Question 4 for that contained in my May 18 letter. 4) Is the 3% PEG access fee permitted under the law or is it considered to be a franchise fee in excess of the 5% cap? Under the Cable Communications Policy Act of 1984, a franchise fee is "any tax, fee, or assessment of any kind imposed by a franchising authority or other governmental entity on a cable operator or cable subscriber, or both, solely because of their status." 47 U.S.C. 542(g)(1). However, for franchises granted after October 31, 1984, a franchise fee does not include "capital costs which are required by the franchise to be incurred by the cable operator for public, educational, or governmental access facilities." 47 U.S.C. 542(g)(2)(C). The legislative history explains that "Subsection 622(g)(2)(C) establishes a specific provision for PEG access in new franchises. In general, this section defines as a franchise fee only monetary payments made by the cable operator, and does not include as a "fee" any franchise requirements for the provision of services, facilities or equipment. As regards PEG access in new franchises, payment for capital costs required by the franchise to be made by the cable operator are not defined as fees under the provision. These requirements may be established by the franchising authority under Section 611(b) or Section 624(b)(1). In addition, any payments which a cable operator makes voluntarily relating to support of public, educational and governmental access and which are not required by the franchise would not be subject to the 5 percent franchise fee cap." See H.R. Rep. No. 98-934 at 65 (1984) reprinted in 1984 U.S.C.C.A.N. 4702; see also 1984 U.S.C.C.A.N. at 4753 (Colloquy between Rep. Wirth and Rep. Bliley). I hope this is helpful. Please do not hesitate to contact me if you require further assistance. Sincerely, Deborah A. Lathen Chief, Cable Services Bureau cc: Denise Mahoney John W. Pestle Nicholas P. Miller Lee Ruck Ken Fellman