FOR IMMEDIATE RELEASE				NEWS MEDIA CONTACT:
October 4, 2001						Michelle Russo (202) 418-2358


FCC FINDS CABLE OPERATORS MAY PASS THROUGH FRANCHISE FEES

Agency Also Supports Consumers' Right to Know Who's Responsible for Charges on Bill


Washington, DC - The Federal Communications Commission (FCC) today said that 
cable operators may pass through to consumers and itemize on monthly bills the entire amount of 
a franchise fee assessed by the local franchising authority, including franchise fees from non-
subscriber related revenue, pursuant to the Communications Act. Today's action is in response to 
separate petitions filed by the cities of Pasadena, California; Nashville, Tennessee; and Virginia 
Beach, Virginia.

Under the Communications Act, cable companies pay franchise fees to local franchising 
authorities (LFAs) as a mechanism for reimbursing the local government for use of the public 
rights-of-way.  Pursuant to the Act, calculation of franchise fees is limited to 5 percent of the 
cable company's gross revenues.  The FCC determined that the statute does not prohibit a cable 
operator from passing through the full amount (or any portion) of the franchise fee, including the 
portion derived from non-subscriber revenues such as advertising sales and home shopping 
commissions. The FCC also clarified that, under the statute, cable companies may itemize 
franchise fees separately on subscriber bills to inform consumers about the portion of their bill 
that is paid to the local government.

The FCC said it hopes that both cable operators and local governments will use this 
decision as an opportunity to negotiate reasonable franchise agreements and franchise fees that 
put consumers at the forefront of their discussions.

The FCC noted that if cable operators and LFAs do not want to burden subscribers with 
higher franchise fee pass throughs, they may modify their franchise agreement and change the 
definition of gross revenues to exclude certain categories of revenue. 

		Action by the Commission, October 1, 2001, by Memorandum Opinion and Order 
(FCC 01-289). Chairman Powell, Commissioners Abernathy, Copps and Martin with 
Commissioners Abernathy and Martin issuing a joint statement.

Cable Services Bureau Contact:  Steve Broeckaert, Ben Golant at (202) 418-7200
5441-R (Pasadena, CA), 5373 (Nashville, TN), 5282-R (Virginia Beach, VA)

- FCC -
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	News media Information 202 / 418-0500
	Fax-On-Demand   202 / 418-2830
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Federal Communications Commission
445 12th Street, S.W.
Washington, D. C.  20554

This is an unofficial announcement of Commission action.  Release of the full text of a Commission order
constitutes official action.  See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).