Under federal law, municipalities may assess up to five percent (5%) of the cable operator’s “gross revenues” for cable services. “Gross revenues” includes over 25 separate revenue sources. The cable operator’s interpretation of “gross revenues” is often limited in scope. As a result, the municipality may not receive all of the franchise fee revenue to which it is entitled. This discrepancy often is not be apparent until a franchise fee audit is performed. Other common franchise fee errors on the part of cable operators include, but are not limited to:
- Failure to apply the franchise fee to all revenue sources and/or allocate the correct proportion of revenue to cable service as opposed to internet and telephone services.
- Cable operator “miscoding” of addresses such that franchise fee revenue for those residents is paid to the “wrong” municipality. This is a common problem because cable systems are not built along municipal boundaries.
As the local franchising authority, a municipality may require a cable operator to submit to a franchise fee audit. Through an audit, any such mistakes on the part of the cable operator are identified and corrected. An audit includes a comprehensive and detailed investigation of the cable operator’s financial records.
Attorneys at the Cohen Law Group work aggressively to find franchise fee underpayments. We also have a strong track record – in approximately 60% of our audits, an underpayment was identified and recouped from the cable operator, including any applicable penalties. In the remaining 40%, confirming accurate franchise fee payments is equally important because a franchise fee audit ensures cable operator accountability.
For more than 20 years, the Cohen Law Group has represented municipalities in franchise fee audits against every national cable operator as well as numerous regional operators. In total, our firm has performed more than 300 franchise fee audits. Our attorneys are available to discuss fee audits and compliance reviews – please call or check our online schedule for a brief, no-obligation consultation.