Several Galveston County communities are considering joining a dispute against telecommunications giant Comcast over franchise fee underpayments that could total millions of dollars.
Federal law dictates that cities can charge franchise fees of up to 5 percent of a cable operator’s gross revenues, said Thomas Brocato, an attorney representing 36 cities in the region.
“The language in the contracts spell out how they make those payments,” Brocato said.
Recent city audits throughout the region have shown that Comcast might be underpaying those franchise fees and officials are now working on the next steps, Brocato said.
Comcast officials Friday said they couldn’t comment on specific issues, but said they were open to discussing the matter.
“Franchise fees audits are a common practice between municipalities and cable operators,” said Ray Purser, vice president for external affairs for Comcast’s Houston region. “When we receive an audit request, we fully comply with the request and work with the municipalities on any overpayments or underpayments on franchise fees.”
Texas City and Santa Fe have both had agenda items this month to discuss issues related to Comcast and the underpayment of franchise fees, officials said.
“We are just disputing their payments and calculations of franchise fees,” Texas City Mayor Matt Doyle said. “We’ve all decided to join together to at least challenge it.”
“It’s not gigantic numbers for us,” Doyle said. “Maybe somewhere between $50,000 and $80,000 that they’ve underpaid us. But it’s just right is right. And for them, it’s a big number and worth arguing about. We believe our calculations are correct and we aren’t going to say ‘oh, just because you won’t pay, we’re going to roll over.’”
Area communities aren’t alone in accusing Comcast of underpaying franchise fees.
City officials in Springfield, Ill., began negotiating with Comcast in November over what they said was substantial underpayment of franchise fees, according to the State Journal-Register.
Audits in Dallas and Minneapolis, among others, also showed Comcast had underpaid on franchise fees, according to records.
“Each city can go back at least four years and possibly further,” Brocato said. “We’re still putting together the exact numbers, but it could be a significant amount.”
More Galveston County cities could also join the dispute, but haven’t had time to discuss the matter yet, Brocato said.
“By mid-January, we should know more where the group stands,” Brocato said.
Community officials said they hope to come to an agreement with Comcast, but Brocato said a lawsuit could be in the future.
“After all the cities have had a chance to chat about the issue, we can confirm the next steps,” Brocato said. “It could be anything from litigation to trying to work something out with Comcast.”