HOUSE BILL No. 5047

July 24, 2007, Introduced by Reps. Johnson, Constan, Hammel, Clack, Cushingberry, Accavitti, Scott, Lemmons, Jackson and Hammon and referred to the Committee on Energy and Technology.

     A bill to amend 2006 PA 480, entitled

"Uniform video services local franchise act,"

by amending section 6 (MCL 484.3306).


THE PEOPLE OF THE STATE OF MICHIGAN ENACT:


1       Sec. 6. (1) A video service provider shall calculate and pay


2  an annual video service provider fee to the franchising entity. The


3  fee shall be 1 of the following:


4       (a) If there is an existing franchise agreement, an amount


5  equal to the percentage of gross revenues paid to the franchising


6  entity by the incumbent video provider with the largest number of


7  subscribers in the franchising entity.


8       (b) At the expiration of an existing franchise agreement or if


9  there is no existing franchise agreement, an amount equal to the


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1  percentage of gross revenues as established by the franchising


2  entity not to exceed 5% and shall be applicable to all providers.


3       (2) The fee due under subsection (1) shall be due on a


4  quarterly basis and paid within 45 days after the close of the


5  quarter. Each payment shall include a statement explaining the


6  basis for the calculation of the fee.


7       (3) The franchising entity shall not demand any additional


8  fees or charges from a provider and shall not demand the use of any


9  other calculation method other than allowed under this act.


10      (4) For purposes of this section, "gross revenues" means all


11 consideration of any kind or nature, including, without limitation,


12 cash, credits, property, and in-kind contributions received by the


13 provider from subscribers for the provision of video service by the


14 video service provider within the jurisdiction of the franchising


15 entity. Gross revenues shall include all of the following:


16     (a) All charges and fees paid by subscribers for the provision


17 of video service, including equipment rental, late fees,


18 insufficient funds fees, fees attributable to video service when


19 sold individually or as part of a package or bundle, or


20 functionally integrated, with services other than video service.


21      (b) Any franchise fee imposed on the provider that is passed


22 on to subscribers.


23      (c) Compensation received by the provider for promotion or


24 exhibition of any products or services over the video service.


25      (d) Revenue received by the provider as compensation for


26 carriage of video programming on that provider's video service.


27      (e) All revenue derived from compensation arrangements for


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1  advertising attributable to the local franchise area.


2       (f) Any advertising commissions paid to an affiliated third


party for video service advertising.


4       (5) Gross revenues do not include any of the following:


5       (a) Any revenue not actually received, even if billed, such as


6  bad debt net of any recoveries of bad debt.


7       (b) Refunds, rebates, credits, or discounts to subscribers or


8  a municipality to the extent not already offset by subdivision (a)


9  and to the extent the refund, rebate, credit, or discount is


10 attributable to the video service.


11      (c) Any revenues received by the provider or its affiliates


12 from the provision of services or capabilities other than video


13 service, including telecommunications services, information


14 services, and services, capabilities, and applications that may be


15 sold as part of a package or bundle, or functionally integrated,


16 with video service.


17      (d) Any revenues received by the provider or its affiliates


18 for the provision of directory or internet advertising, including


19 yellow pages, white pages, banner advertisement, and electronic


20 publishing.


21      (e) Any amounts attributable to the provision of video service


22 to customers at no charge, including the provision of such service


23 to public institutions without charge.


24      (f) Any tax, fee, or assessment of general applicability


25 imposed on the customer or the transaction by a federal, state, or


26 local government or any other governmental entity, collected by the


27 provider, and required to be remitted to the taxing entity,


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1  including sales and use taxes.


2      (g) Any forgone revenue from the provision of video service at


3  no charge to any person, except that any forgone revenue exchanged


4  for trades, barters, services, or other items of value shall be


5  included in gross revenue.


6      (h) Sales of capital assets or surplus equipment.


7      (i) Reimbursement by programmers of marketing costs actually


8  incurred by the provider for the introduction of new programming.


9       (j) The sale of video service for resale to the extent the


10 purchaser certifies in writing that it will resell the service and


11 pay a franchise fee with respect to the service.


12      (6) In the case of a video service that is bundled or


13 integrated functionally with other services, capabilities, or


14 applications, the portion of the video provider's revenue


15 attributable to the other services, capabilities, or applications


16 shall be included in gross revenue unless the provider can


17 reasonably identify the division or exclusion of the revenue from


18 its books and records that are kept in the regular course of


19 business.


20      (7) Revenue of an affiliate shall be included in the


21 calculation of gross revenues to the extent the treatment of the


22 revenue as revenue of the affiliate has the effect of evading the


23 payment of franchise fees which THAT would otherwise be paid for


24 video service.


25      (8) In addition to the fee required under subsection (1), a


26 video service provider shall pay to the franchising entity as


27 support for the cost of public, education, and government access


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1  facilities and services an annual fee equal to 1 of the following:


2       (a) If there is A PROVIDER OPERATING UNDER an existing


3  franchise AGREEMENT on the effective date of this act JANUARY 1,


4  2007, the fee paid to the franchising entity by the incumbent video


5  provider with the largest number of cable service subscribers in


6  the franchising entity THE PROVIDER SHALL PAY THE FEE as determined


7  by the existing franchise agreement UNTIL THE AGREEMENT EXPIRES.


8       (b) At the expiration of the existing franchise agreement, the


9  amount required under subdivision (a) AN AMOUNT AS ESTABLISHED BY


10 THE FRANCHISING ENTITY not to exceed 2% of gross revenues.


11      (c) If there is no existing franchise agreement , a percentage


12 of gross revenues OR AT SUCH TIME ON OR AFTER JANUARY 1, 2007 THAT


13 A PROVIDER ENTERS INTO OR POSSESSES A UNIFORM VIDEO SERVICE LOCAL


14 FRANCHISE AGREEMENT, AN AMOUNT as established by the franchising


15 entity not to exceed 2% to be determined by a community need


16 assessment OF GROSS REVENUES.


17      (d) An amount agreed to by the franchising entity and the


18 video service provider.


19      (9) The fee required under subsection (8) shall be applicable


20 to all providers.


21      (10) The fee due under subsection (8) shall be due on a


22 quarterly basis and paid within 45 days after the close of the


23 quarter. Each payment shall include a statement explaining the


24 basis for the calculation of the fee.


25      (11) A video service provider is entitled to a credit applied


26 toward the fees due under subsection (1) for all funds allocated to


27 the franchising entity from annual maintenance fees paid by the


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1   provider for use of public rights-of-way, minus any property tax


2   credit allowed under section 8 of the metropolitan extension


3   telecommunications rights-of-way oversight act, 2002 PA 48, MCL


4   484.3108. The credits shall be applied on a monthly pro rata basis


5  beginning in the first month of each calendar year in which the


6  franchising entity receives its allocation of funds. The credit


7  allowed under this subsection shall be calculated by multiplying


8  the number of linear feet occupied by the provider in the public


9  rights-of-way of the franchising entity by the lesser of 5 cents or


10 the amount assessed under the metropolitan extension


11 telecommunications rights-of-way oversight act, 2002 PA 48, MCL


12 484.3101 to 484.3120. A video service provider is not eligible for


13 a credit under this subsection unless the provider has taken all


14 property tax credits allowed under the metropolitan extension


15 telecommunications rights-of-way oversight act, 2002 PA 48, MCL


16 484.3101 to 484.3120.


17      (12) All determinations and computations made under this


18 section shall be pursuant to generally accepted accounting


19 principles.


20      (13) The commission within 30 days after the enactment into


21 law of any appropriation to it shall ascertain the amount of the


22 appropriation attributable to the actual costs to the commission in


23 exercising its duties under this act and shall be assessed against


24 each video service provider doing business in this state. Each


25 provider shall pay a portion of the total assessment in the same


26 proportion that its number of subscribers for the preceding


27 calendar year bears to the total number of video service


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1   subscribers in the state. The first assessment made under this act


2  shall be based on the commission's estimated number of subscribers


3  for each provider in the year that the appropriation is made. The


4  total assessment under this subsection shall not exceed


5  $1,000,000.00 annually. This subsection does not apply after


6  December 31, 2009.