Cable Fees - Senate Bill 1152

The City holds the right-of-way in trust for its citizens. The right-of-way is used by citizens for transportation purposes --- sidewalks, bike lanes and access to the roadways; by the City for its facilities — water and sewer mains, street lights and traffic signals; and by utilities to avoid the additional cost of acquiring separate property for their exclusive use. Under the State Constitution, the City cannot give a thing of value to any corporation or individual, so it must be compensated by private entities for their use of public property.

Senate Bill 1152 eliminates one of the fees paid to municipalities for the use of the right-of-way by telecommunications (voice) and cable service providers.

The bill, by Sen. Kelly Hancock and Rep. Dade Phelan, eliminates a significant amount of the compensation received by the City from companies using the right-of -way, by allowing a provider of both cable and telecommunications services (voice) to pay only one of the state statutory fees even though there are multiple uses of the public asset by one provider.

The City of Houston had not heard from a cable company regarding their franchise fees prior to the filing of this bill. Based on their long-time use in the Houston market, it did not seem like there were any concerns regarding city management.

This bill makes Houston's budgeting process even more challenging by imposing a cut between $17 and $27 million annually, as well as uncertainty to revenue projections. SB 1152 requires cities to estimate the decisions of multiple companies based on revenue generated in prior calendar years across thousands of cities in Texas. This further complicates attempts to prepare an accurate and reliable budget.

Telecommunications and cable/video service providers profit from using the public right-of-way. Value-based rental fees allow a municipality, as steward of this asset, to collect the fair value for the use of the taxpayer's property.

The City of Houston opposed passage of this bill.