---
kind: "section"
citation: "47 U.S.C. § 542"
title: "47"
title_heading: "Telecommunications"
number: "542"
heading: "Franchise fees"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/47/542"
units:
  - "Chapter 5 — Wire or Radio Communication"
  - "Subchapter V–A — Cable Communications"
  - "Part III — Franchising and Regulation"
---

# §542. Franchise fees

- (a) **Payment under terms of franchise—** Subject to the limitation of [subsection (b)](#b), any [cable operator](/usc/47/522.md?p=5) may be required under the terms of any [franchise](/usc/47/522.md?p=9) to pay a [franchise](/usc/47/522.md?p=9) fee.
- (b) **Amount of fees per annum—** For any twelve-month period, the [franchise](/usc/47/522.md?p=9) fees paid by a [cable operator](/usc/47/522.md?p=5) with respect to any [cable system](/usc/47/522.md?p=7) shall not exceed 5 percent of such [cable operator](/usc/47/522.md?p=5)’s gross revenues derived in such period from the operation of the [cable system](/usc/47/522.md?p=7) to provide [cable services](/usc/47/522.md?p=6). For purposes of this section, the 12-month period shall be the 12-month period applicable under the [franchise](/usc/47/522.md?p=9) for accounting purposes. Nothing in this subsection shall prohibit a [franchising authority](/usc/47/522.md?p=10) and a [cable operator](/usc/47/522.md?p=5) from agreeing that [franchise](/usc/47/522.md?p=9) fees which lawfully could be collected for any such 12-month period shall be paid on a prepaid or deferred basis; except that the sum of the fees paid during the term of the [franchise](/usc/47/522.md?p=9) may not exceed the amount, including the time value of money, which would have lawfully been collected if such fees had been paid per annum.
- (c) **Itemization of subscriber bills—** Each [cable operator](/usc/47/522.md?p=5) may identify, consistent with the regulations prescribed by the Commission pursuant to [section 543 of this title](/usc/47/543.md), as a separate line item on each regular bill of each subscriber, each of the following:
  - (1) The amount of the total bill assessed as a [franchise](/usc/47/522.md?p=9) fee and the identity of the [franchising authority](/usc/47/522.md?p=10) to which the fee is paid.
  - (2) The amount of the total bill assessed to satisfy any requirements imposed on the [cable operator](/usc/47/522.md?p=5) by the [franchise](/usc/47/522.md?p=9) agreement to support public, educational, or governmental [channels](/usc/47/522.md?p=4) or the use of such [channels](/usc/47/522.md?p=4).
  - (3) The amount of any other fee, tax, assessment, or charge of any kind imposed by any governmental authority on the transaction between the [operator](/usc/47/153.md?p=38-A) and the subscriber.
- (d) **Court actions; reflection of costs in rate structures—** In any court action under [subsection (c)](#c), the [franchising authority](/usc/47/522.md?p=10) shall demonstrate that the rate structure reflects all costs of the [franchise](/usc/47/522.md?p=9) fees.
- (e) **Decreases passed through to subscribers—** Any [cable operator](/usc/47/522.md?p=5) shall pass through to subscribers the amount of any decrease in a [franchise](/usc/47/522.md?p=9) fee.
- (f) **Itemization of franchise fee in bill—** A [cable operator](/usc/47/522.md?p=5) may designate that portion of a subscriber’s bill attributable to the [franchise](/usc/47/522.md?p=9) fee as a separate item on the bill.
- (g) **“Franchise fee” defined—** For the purposes of this section—
  - (1) the term “[franchise](/usc/47/522.md?p=9) fee” includes any tax, fee, or assessment of any kind imposed by a [franchising authority](/usc/47/522.md?p=10) or other governmental entity on a [cable operator](/usc/47/522.md?p=5) or cable subscriber, or both, solely because of their status as such;
  - (2) the term “[franchise](/usc/47/522.md?p=9) fee” does not include—
    - (A) any tax, fee, or assessment of general applicability (including any such tax, fee, or assessment imposed on both utilities and [cable operators](/usc/47/522.md?p=5) or their services but not including a tax, fee, or assessment which is unduly discriminatory against [cable operators](/usc/47/522.md?p=5) or cable subscribers);
    - (B) in the case of any [franchise](/usc/47/522.md?p=9) in effect on October 30, 1984, payments which are required by the [franchise](/usc/47/522.md?p=9) to be made by the [cable operator](/usc/47/522.md?p=5) during the term of such [franchise](/usc/47/522.md?p=9) for, or in support of the use of, [public, educational, or governmental access facilities](/usc/47/522.md?p=16);
    - (C) in the case of any [franchise](/usc/47/522.md?p=9) granted after October 30, 1984, capital costs which are required by the [franchise](/usc/47/522.md?p=9) to be incurred by the [cable operator](/usc/47/522.md?p=5) for [public, educational, or governmental access facilities](/usc/47/522.md?p=16);
    - (D) requirements or charges incidental to the awarding or enforcing of the [franchise](/usc/47/522.md?p=9), including payments for bonds, security funds, letters of credit, insurance, indemnification, penalties, or liquidated damages; or
    - (E) any fee imposed under title 17.
- (h) **Uncompensated services; taxes, fees and other assessments; limitation on fees—**
  - (1) Nothing in this chapter shall be construed to limit any authority of a [franchising authority](/usc/47/522.md?p=10) to impose a tax, fee, or other assessment of any kind on any [person](/usc/47/522.md?p=15) (other than a [cable operator](/usc/47/522.md?p=5)) with respect to [cable service](/usc/47/522.md?p=6) or other communications service provided by such [person](/usc/47/522.md?p=15) over a [cable system](/usc/47/522.md?p=7) for which charges are assessed to subscribers but not received by the [cable operator](/usc/47/522.md?p=5).
  - (2) For any 12-month period, the fees paid by such [person](/usc/47/522.md?p=15) with respect to any such [cable service](/usc/47/522.md?p=6) or other communications service shall not exceed 5 percent of such [person](/usc/47/522.md?p=15)’s gross revenues derived in such period from the provision of such service over the [cable system](/usc/47/522.md?p=7).
- (i) **Regulatory authority of Federal agencies—** Any [Federal agency](/usc/47/522.md?p=8) may not regulate the amount of the [franchise](/usc/47/522.md?p=9) fees paid by a [cable operator](/usc/47/522.md?p=5), or regulate the use of funds derived from such fees, except as provided in this section.

## Source credit

(June 19, 1934, ch. 652, title VI, § 622, as added Pub. L. 98–549, § 2, Oct. 30, 1984, 98 Stat. 2787; amended Pub. L. 102–385, § 14, Oct. 5, 1992, 106 Stat. 1489; Pub. L. 104–104, title III, § 303(b), Feb. 8, 1996, 110 Stat. 125.)

## Notes

### Editorial Notes

### References in Text

This chapter, referred to in subsec. (h)(1), was in the original “this Act”, meaning act June 19, 1934, ch. 652, 48 Stat. 1064, known as the Communications Act of 1934, which is classified principally to this chapter. For complete classification of this Act to the Code, see section 609 of this title and Tables.

### Amendments

1996—Subsec. (b). Pub. L. 104–104 inserted “to provide cable services” before period at end of first sentence.

1992—Subsec. (c). Pub. L. 102–385 amended subsec. (c) generally. Prior to amendment, subsec. (c) read as follows: “A cable operator may pass through to subscribers the amount of any increase in a franchise fee, unless the franchising authority demonstrates that the rate structure specified in the franchise reflects all costs of franchise fees and so notifies the cable operator in writing.”

### Statutory Notes and Related Subsidiaries

### Effective Date of 1992 Amendment

Amendment by Pub. L. 102–385 effective 60 days after Oct. 5, 1992, see section 28 of Pub. L. 102–385, set out as a note under section 325 of this title.

### Effective Date

Section effective 60 days after Oct. 30, 1984, except where otherwise expressly provided, see section 9(a) of Pub. L. 98–549, set out as a note under section 521 of this title.