47 U.S.C. § 542 — Franchise fees

(a) Subject to subsection (b), a franchise^* may require a cable operator^* to pay a franchise fee.

(b) For any 12-month period, fees paid by a cable operator for a cable system^* may not exceed 5 percent of the operator's gross revenue from operating that system to provide cable services during that period. The 12-month period is the period the franchise uses for accounting. The franchising authority^* and operator may agree to prepaid or deferred payment of fees that could lawfully be collected for a period. But total fees paid during the franchise term may not exceed what could lawfully have been collected if fees had been paid each year, including the time value of money.

(c) Consistent with Commission regulations under section 543, a cable operator may list each of these as a separate line on each subscriber's regular bill: (1) the part of the total bill charged as a franchise fee and the franchising authority receiving it; (2) the part charged to meet franchise requirements supporting public, educational, or governmental channels or their use; and (3) any other fee, tax, assessment, or charge imposed by a government authority on the transaction between the operator and subscriber.

(d) In a court action under subsection (c), the franchising authority must show that the rate structure includes all franchise-fee costs.

(e) A cable operator must pass any decrease in a franchise fee through to subscribers.

(f) A cable operator may show the part of a subscriber's bill attributable to the franchise fee as a separate item.

(g) For this section, (1) “franchise fee” includes any tax, fee, or assessment imposed by a franchising authority or other government entity on a cable operator or subscriber, or both, solely because of that status. (2) It does not include: (A) a generally applicable tax, fee, or assessment, including one imposed on both utilities and cable operators or their services, but excluding one that unfairly discriminates against cable operators or subscribers; (B) for a franchise in effect on October 30, 1984, payments the franchise requires the operator to make during its term for or to support public, educational, or governmental access facilities^*; (C) for a franchise granted after that date, capital costs the franchise requires the operator to incur for those facilities; (D) requirements or charges incidental to awarding or enforcing the franchise, including payments for bonds, security funds, letters of credit, insurance, indemnification, penalties, or liquidated damages; or (E) a fee imposed under title 17.

(h)(1) This chapter does not limit a franchising authority's power to impose a tax, fee, or other assessment on a person^* other than a cable operator for cable or other communications service that the person provides over a cable system, if subscribers are charged but the operator does not receive the charges. (2) For any 12-month period, fees paid by that person for the service may not exceed 5 percent of that person's gross revenue from providing it over the cable system during that period.

(i) A Federal agency^* may not regulate the amount of franchise fees paid by a cable operator or the use of money from those fees, except as this section provides.