Appendix A: 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).


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


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.