XII. User Fee
DIVCA calls for the Commission to determine and collect a user fee for state video franchise holders. Just as we can impose fees on most other entities providing service pursuant to Commission jurisdiction, DIVCA provides for us to place the state video franchise holder's fee payments into a subaccount of our Utilities Reimbursement Account.380 User fees paid to the Commission should "produce enough, and only enough, revenues to fund the commission with (1) its authorized expenditures for each fiscal year to regulate . . . applicants and holders of a state franchise to be a video service provider, less the amount to be paid from [other] special accounts . . , reimbursements, federal funds, and the unencumbered balance from the preceding year; (2) an appropriate reserve; and (3) any adjustment appropriated by the Legislature."381
Pursuant to this statutory guidance, the draft General Order determined the amount required for the Commission to perform its video franchising functions. We also developed a system whereby state video franchise holders would pay their user fee in quarterly installments. Each state video franchise holder's user fee would be based on its total number of customers in proportion to the total number of customers for all state video franchise holders. In setting specific fees, we tentatively required state video franchise holders to provide us quarterly customer data, so that we could adjust the quarterly user fee payments to reflect the number of a state video franchise holder's customers.
We proposed an alternative mechanism for assessing fees for our first fiscal year of acting as the state video franchising authority (Year 1). Given that most state video franchise holders likely will have few or no customers in the first fiscal year, we proposed that the total amount of money required for Commission operations should be funded by fees divided equally among all state video franchise holders.
Based on the comments and further review of DIVCA, this section clarifies and modifies aspects of the proposed user fee. Specific topics addressed include (i) compliance with the federal Cable Act; (ii) determination of our video franchising program budget; and (iii) calculation and collection of user fees.
A. Federal Cable Act Compliance
Public Utilities Code § 442(b) states that the user fees for supporting the Commission's state video franchising activities "shall be determined and imposed by the commission consistent with the requirements of Section 542 of Title 47 of the United States Code." Section 542 limits the amount of a federally-defined "franchise fee" to five percent of a video service provider's gross revenues in a twelve-month period.382 This limit, however, does not apply to the following, among other items: (1) "any tax, fee, or assessment of general applicability (including any such tax, fee, or assessment imposed on both utilities and cable operators or their services but not including a tax, fee, or assessment which is unduly discriminatory against cable operators or cable subscribers)"; or (2) "requirements or charges incidental to the awarding or enforcing of the franchise, including payments for bonds, security funds, letters of credit, insurance, indemnification, penalties, or liquidated damages."383
League of Cities/SCAN NATOA criticizes the Commission for failing to find that the Commission's fees are not "franchise fees" as defined by Section 542 of the Federal Communications Act.384 Absent such a finding, League of Cities/SCAN NATOA states that "the Commission's fees would appear to be contrary to the Legislature's express mandate that local governments must be kept financially whole."385
Accordingly, League of Cities/SCAN NATOA urges the Commission to find that the user fee is a "fee of general applicability" and therefore, excluded from the federal definition of "franchise fee."386 League of Cities/SCAN NATOA adds that applicants should be required to certify that Commission fees are not franchise fees.387
Los Angeles contends that the Commission should acknowledge that the user fee paid to the Commission by state video franchise holders is "not a franchise fee within the meaning [of] federal law, and in no way impacts the obligation of state franchises to pay to local governments the full franchise fee imposed pursuant to Section 5860 of AB 2987."388
Oakland asserts that it is "important that the Commission's rules distinguish the user fee by recognizing that it is not a franchise fee within the meaning of federal law, and therefore has no impact on the obligation of state franchisees to pay to local governments the full franchise fee imposed pursuant to Section 5860 of AB 2987."389 According to Oakland, "it seems clear that in AB 2987, the legislature intended that the user fee be a `fee of general applicability.'"390
Pasadena and Joint Cities maintain that the Commission should "calculate and administer all DIVCA fees in a manner that does not create or appear to create legal justifications for offsetting these fees, wholly or in part, against franchise fees owed local governments."391 In addition, Pasadena and Joint Cities contend that the state video franchise application should be amended to require an agreement by the applicant that fees assessed by the Commission or by the State of California do not constitute franchise fees and may not be used to offset any fees or obligations owed to local governments.392
In response to local governments' requests, we clarify that the Commission's user fees are not "franchise fees" as defined by Section 542 of the Federal Communications Act.393 Any fees levied by the Commission pursuant to DIVCA are either fees of "general applicability"394 or fees "incidental to the awarding or enforcing of the franchise."395 Consistent with the intent of Public Utilities Code § 442(b), we will enforce our rules in a manner that does not permit state video franchise holders to use our fees as an offset against franchise fees owed to local governments.396
But while we respect concerns regarding the Commission's fees, we do not amend the application to stipulate that our user fees shall not be used to offset franchise fees owed to local entities.397 If every requirement, condition, and obligation contained in DIVCA were to be reflected in the application, the application form would quickly become unwieldy. Moreover, we find that the Commission's analysis here sufficiently protects local entities' ability to collect franchise fees required by DIVCA.
B. Commission Budget
This section reviews and addresses comments regarding the budget for our state video franchise program. The OIR tentatively set the Fiscal Year 2007-2008 budget at $1 million. Although we decline to make any major modifications to the amount of the budget for Fiscal Year 2007-2008, we provide further clarification regarding the basis for our state video program budget.
Joint Cities are "generally supportive of funding the division in a manner sufficient to satisfy the regulatory authority granted to the Commission under DIVCA."398 Joint Cities, however, requests "clarification regarding specifics of this budget (e.g., identification of the five largest expenses by category and amount)."399
Greenlining calls our proposed video franchising budget "inadequate.400 It notes that based on an estimated 6.8 million cable customers in the state, "this amounts to just 15 cents a subscriber."401 In contrast, Greenlining suggests a "minimum first year fee" of $2 to $3 million.402 It argues that this figure is what will be needed "for the Commission to be equipped to fully implement its policies and fulfill its legislative mandates without unforeseen budget constraints."403 Along with Oakland, Greenlining adds that there is not enough funding to staff DRA appropriately.404
League of Cities/SCAN NATOA disagrees with parties that recommend an increase to the proposed year-one estimate. It argues that an increase would "expand the Commission's regulatory role beyond the clear boundaries of AB 2987."405
League of Cities/SCAN NATOA further argues that the Commission's first year expenses "appear to be excessive."406 They cite four different reasons in support of this position. First, "the application process is intended to be quick and ministerial in nature."407 Second, "the Commission will likely see only a handful of applications in the first year."408 Third, "the only other significant costs to the Commission under AB 2987 will be the reviews of reports and investigations related to build-out and anti-discrimination provisions . . . [which] will not trigger significant Commission activity for nearly two years."409 Fourth, "the impact that those fees could potentially have on local revenues would be most profound now, when they will have to be shared among a limited number of state franchise holders."410 Given these concerns, League of Cities/SCAN NATOA asks for more information regarding how our state video franchising budget was derived.411
AT&T urges the Commission to make it clear that it "will ensure that the total annual user fee for video franchise holders will reflect the limited duties delegated to the Commission under AB 2987."412 Accordingly, AT&T urges the Commission to enunciate "explicit criteria it will apply in determining the annual user fee for video franchise holders."413 In particular, AT&T calls for the Commission to "state that: (a) the total user fee to be collected from statewide video franchise holders will be commensurate with only the incremental budgetary needs of the Commission in administering AB 2987; and (b) such fees shall reflect the limited duties related to franchise application processing (§ 5840), specified anti-discrimination requirements (§ 5890), reporting of employment (§ 5920) and deployment (§ 5960), basic telephone price increases (§§ 5940 and 5950), and specified annual (§§ 401 and 440-444) fees."414
The budget for our state video franchising program shall be established in accordance with the clear guidance found in DIVCA.415 Pursuant to Public Utilities Code § 401(b), the user fee will "produce enough, and only enough, revenues to fund the commission with (1) its authorized expenditures for each fiscal year to regulate . . . applicants and holders of a state franchise to be a video service provider, less the amount to be paid from special accounts except those established by this article, reimbursements, federal funds, and the unencumbered balance from the preceding year; (2) an appropriate reserve; and (3) any adjustment appropriated by the Legislature."416 This user fee necessarily includes funding for DRA, whose budget is included in the Commission budget as a separate line item.
In response to requests for details on the Commission's video franchising budget,417 we point parties to the Governor's Budget for the Commission during Fiscal Year 2007-2008, which is available online at http://www.ebudget.ca.gov/DDf/GovernorsBudget/8000/8660.pdf. The Budget includes $950,000 and 10.3 positions to implement DIVCA. This Budget, when considered in light of our responsibilities pursuant to DIVCA, should alleviate any party's concerns that our budget either is too great or too small.418
We further observe that affected parties have ample opportunities to raise issues concerning the size of our annual budget and scope of our activities. The Commission's budget is subject to oversight by both the Administration and the Legislature. Moreover, if we find in practice that our budget needs to be modified, we retain the right to augment our budget as necessary, pursuant to approval by the Department of Finance.
C. Procedures for Calculating and Collecting User Fees
This section reviews the many different comments on calculation and collection of the user fee. We modify both the Year 1 and subsequent user fees in response to parties' comments.
DRA raises concerns about using the number of subscribers to determine the amount of the fee. It argues that it "has long supported revenue-based fees assessed per subscriber according to usage, and see[s] no reason in this proceeding to depart from that preference."419
Verizon argues that the Commission's proposed system for collecting fees is "too complex and administratively burdensome for both Commission staff and the holders, and therefore prone to human error, delay, and confusion."420 According to Verizon, we should establish a user fee mechanism "in the same manner [as the telecommunications user fee] and allow providers to pay their assessment quarterly."421 Verizon asserts that "[t]he dates should be aligned with the telecommunications user fee so that providers pay on the 15th of the month following the close of the quarter, thus minimizing the number of separate reporting dates and reports, and the possibility of error."422 It adds that consistency between the two programs would "streamline the process for all concerned," and the proposed reporting schedule is "not well-aligned with the availability of Verizon's month-end data."423
With respect to Year 1 fees, Verizon argues that to "avoid undue burden[s] on smaller holders who may apply during the initial year, the Commission should consider apportioning the total budget estimate among holders on a pro rata basis by either intrastate telephone revenues or telephone lines."424 It reasons that "all holders during the first year will almost certainly be telephone corporations."425
"AT&T California supports the Commission's payment proposals and appreciates the OIR's efforts to allocate user fees equitably among video subscribers."426 AT&T states that the proposed method in the OIR "is an equitable and appropriate method that balances the burden of user fees on video franchise holders according to their market position."427
AT&T asserts that Verizon's alternate proposal relies upon "irrelevant factors for the purpose of determining video user fees."428 AT&T argues that "tying the amount of a . . . user fee to the number of telephone lines or intrastate telephone revenues does not make sense for new franchise holders because they are all similarly situated - without a single video customer."429
AT&T also is critical of DRA's proposal. AT&T finds that "DRA's proposal for a revenue-based assessment according to usage is inappropriate for video franchise holders which are not public utilities and for which the Commission's duties are limited."430
Greenlining asserts that the Commission's "proposed methodology for determining each video franchise holder's user fees is appropriate."431 According to Greenlining, "[u]tilizing the number of statewide subscribers as reported each quarter will ensure that fees are accurate and relevant to the cable consumer base."432
Greenlining, however, voices concerns regarding the possibility that "Verizon and AT&T may be forced to pay almost all of these first year user fees."433 In response, Greenlining proposes two alternative solutions. First, Greenlining "suggests that this first year fee be prorated by subscriber over a four year period. That is, Verizon and AT&T pay the first year fee but receive subsequent rebates based on total subscribers from 2008-2010."434 Second, Greenlining recommends that we delay collection of the first year user fee, combine the first and second year fee payments in Year Two, and "borrow up to $2 million, payable in 2009 after the fees for 2008 are collected."435 Greenlining notes that "every major bank in California would be willing to finance this at a preferred rate of interest."436
Small LECs raises strong concerns about the Year 1 user fee allocation proposal. According to Small LECs, the proposal is "grossly inequitable to smaller video providers."437 Small LECs reasons that small providers "could bear a disproportionately large share of total program costs relative to their small customer bases."438 This cost could create an "enormous disincentive to smaller video providers who might otherwise apply for franchises in the first year of the program."439 Moreover, Small LECs asserts that the OIR's proposal for allocating user fees after Year 1 implicitly acknowledges the principle that small providers should not bear a responsibility for franchising costs that is equal to the responsibility of large providers with millions of customers.440
Small LECs recommends replacing the Commission's proposal with one in which the Year 1 costs of the program are divided among state video franchise holders with customers, on a pro rata subscriber basis.441 Alternatively, "if no providers have subscribers by September 15, 2007," Small LECs contends that "the Commission should apportion payments based on a calculation of the total population covered by a franchise."442
In reply comments, Small LECs specifically urges us to "allocate the first-year user fee expenses to holders based on the anticipated number of households within each holder's state-issued franchise footprint."443 Small LECs adds that the Verizon proposal "could be workable, but only if all of the applicants in the first year are telephone companies."444
SureWest's argues that "[i]t is unfair that only companies holding state-issued video franchises in Year 1 must cover the Commission's higher start-up implementation costs."445 It contends that the plan for Year 1 fees "is economically, unduly burdensome on small video providers such as SureWest."446
SureWest recommends the Commission always "base its user fee on potential households within the service areas covered by a state-issued video franchise."447 For Year 1 fees, SureWest urges the Commission to amortize "the Commission's Year One regulatory costs over a period of years based on households covered by state franchises issued."448
SureWest raises several concerns with Verizon's alternate proposal for allocating Year 1 fees. First, SureWest questions whether Voice over Internet Protocol lines will be included when calculating the user fee.449 Second, SureWest argues that "there is no direct nexus between telephone lines and the decision to file for a state-issued franchise." 450 Third, SureWest contends that it is important that non-telephone companies that apply for a state video franchise also share in the cost.451
Joint Cities argue that the Commission could reduce its user fee by raising the application fee.452 It advocates our imposing an application fee of an amount between $7,500 and $10,000.453
The League of Cities/SCAN NATOA supports an amortization schedule to pay for Year 1 costs.454 League of Cities/SCAN NATOA also argues that the Commission could avoid problems with its user fee by establishing additional task-specific fees, which would enable the Commission to recover its costs.455 For example, League of Cities/SCAN NATOA asserts that the Commission should assess fees for franchise amendments in order to recover the cost of staff time spent processing the amendments.456 League of Cities/SCAN NATOA contends that these additional fees will "likely reduce the amount of the Commission's annual assessment fee and would be less likely to be considered franchise fees under 47 U.S.C. § 542."457
In determining how to set and collect user fees, we are mindful of the guidance of Public Utilities Code § 5810(a)(3). The statute states that it "is the intent of the Legislature that, although video service providers are not public utilities or common carriers, the commission shall collect any fees . . . in the same manner and under the same terms as it collects fees from . . . public utilit[ies] . . . ."458 Any user fees levied by the Commission should "not discriminate against video service providers or their subscribers."459
Given the legislative intent articulated in Public Utilities Code § 5810(a)(3), we conclude that we should make our user fees more like the fees we impose on utilities. Utilities' fees are calculated pursuant to revenue-based model, so we find that we should employ a revenue-based model in the video context.
We, like DRA and Verizon, also recognize that there are significant policy and administrative benefits to harmonizing our collection of user fees.460 When relying upon a revenue-based system that uses our traditional payment schedule, the Commission can draw upon its significant experience in employing the revenue-based model for other utilities' fees. Use of a revenue-based model aligns our treatment of state video franchise holders with our treatment of public utilities subject to our jurisdiction. Moreover, we expect that state video franchise holders already will be compiling gross revenue data, because DIVCA requires them to pay a gross revenue-based franchise fee to local entities.461
Accordingly, we developed a fee process for Fiscal Year 2008-2009 and all future years that mirrors our practices in collection of public utilities' user fees. Under this process, the user fee shall be based upon the percentage of all state video franchise holders' gross state video franchise revenues that is attributable to an individual state video franchise holder. The Commission shall annually determine the fee to be paid by each state video franchise holder. The calculation will rely upon reported annual state video revenues, as defined in Public Utilities Code § 5860(d). These state video revenues for the prior calendar year will be used to calculate a user fee per dollar of revenue for the next fiscal year. For example, the user fee for Fiscal Year 2008-2009 will be based on gross state video franchise revenues recorded in calendar year 2007. Consistent with standard Commission practice, the Commission will adopt the user fee per dollar of revenue before the start of Fiscal Year 2008-2009. The user fee shall be calculated to produce a total amount equal to the amount established in the authorized Commission video franchise program budget for the same fiscal year.
The payment schedule will depend upon the amount of the state video franchise holder's gross state video franchise revenues.462 State video franchise holders with annual gross state video franchise revenues of $750,000 or less shall pay the fee to the Commission on an annual basis on or before January 15. State video franchise holders with annual gross state video franchise video revenues greater than $750,000 shall pay the user fee to the Commission on a quarterly basis, between the first and fifteenth days of July, October, January, and April.
If the Commission collects a fee in error during a Fiscal Year, it shall issue refunds pursuant to Public Utilities Code § 442(e). As proposed in the OIR, the Commission shall refund the amount no later than three months after discovering the error.
Finally, we decline to replace or reduce our annual user fee with task-specific user fees advocated by League of Cities/SCAN NATOA and Joint Cities. As explained above, we prefer for our annual user fee to be consistent with fees assessed on utilities subject to our jurisdiction.
While it is preferable in subsequent years, a revenue-based model for user fees is insufficient to support the Commission's initial operations as the state video franchising authority. We expect that state video franchise holders will have little or no revenues from their video services during Year 1, although we expect that our start-up costs will be significant.
Under these circumstances, we conclude that it is preferable to base our user fees on the number of households that may serve as future sources of a state video franchise holder's revenue. We find that this system more fairly appropriates the fee burden on state video franchise holders based upon the size of their potential customer base, which is listed in applicants' applications.
For Fiscal Year 2007-2008, each state video franchise holder will be required to pay an annual user fee based upon its pro rata share of households existing in its proposed video service area as of the most recent publicly available U.S. Census. Applicants must submit this information at the time of application.
State video franchise holders that have franchises issued by or before November 30, 2007 will be required to pay the full Fiscal Year 2007-2008 user fee by March 31, 2008. The Commission will calculate the amount owed for Fiscal Year 2007-2008 and determine the amount due per household and the resulting amount due for each carrier in a Commission resolution adopted no later than January 31, 2008.
State video franchise holders that have franchises issued at any time during Fiscal Year 2007-2008 will pay for the full Fiscal Year 2007-2008. Those state video franchise holders whose application for a franchise is approved too late for inclusion in the resolution adopting a user fee for Fiscal Year 2007-2008 shall calculate a user fee based on the number of households in their service territory at the rate set in the resolution. This user fee will be due either on March 31, 2008 or thirty calendar days after issuance of the franchise.
In designing the revised Year 1 user fee mechanism, we paid particular attention to Small LECs' and SureWest's comments.463 We are sensitive to their concern that the OIR fee proposal could create "enormous disincentive to smaller video providers who might otherwise apply for franchises in the first year of the program."464 We do not desire to stymie competition posed by these smaller video service providers. DIVCA was designed to "create a fair and level playing field" that encourages "the most technologically advanced" services to reach "all California communities," including rural areas served by small video service providers.465 Basing the user fee on a state video franchise holder's potential customers appears to best respond to this legislative intent.466
Other parties' comments are less convincing. Regarding Verizon's proposal, we find that it would be unfair to base user fees on "telephone revenues or telephone lines," because there is no direct nexus between telephone lines and provision of video service. 467 The mere fact that some state video franchise holders also will offer telephone service is no reason to tie the user fee to telephone lines, particularly since some Year 1 applicants may not offer telephone service. It would be unfair if we allowed some state video franchise holders to avoid pay Year 1 user fees.
Both of Greenlining's Year 1 proposals have serious flaws too. First, Greenlining's proposal to allow Verizon and AT&T to seek rebates in following years is unnecessary and may be unduly cumbersome to administer. It is fair to place the burden of the Commission's work on the companies that are most responsible for this work, i.e., the companies that are using our services in Year 1. Also rebates may be complicated if a number of companies apply for state video franchises in Year 1. Second, Greenlining's proposal to charge Year 1 user fees in Year 2 is untenable, because the Commission has an obligation to collect fees in the year in which the Governor has authorized our spending.468
380 Id. at § 440(b).
381 Id. at § 401(b).
382 47 U.S.C. § 542(b).
383 Id. at § 542(g)(2).
384 League of Cities/SCAN NATOA Opening Comments at 5.
385 Id.
386 Id.
387 Id.
388 Los Angeles County Opening Comments at 4.
389 Oakland Opening Comments at 5.
390 Id. at 6.
391 Pasadena Opening Comments at 4; Joint Cities Opening Comments at 15.
392 Pasadena Opening Comments at 4; Joint Cities Opening Comments at 15.
393 See League of Cities/SCAN NATOA Opening Comments at 5 (urging this clarification); Los Angeles County Opening Comments at 4 (same); Oakland Opening Comments at 5 (same); Pasadena Opening Comments at 4 (same); Joint Cities Opening Comments at 15 (same).
394 See 47 U.S.C. § 542(g)(2) (establishing that the term "franchise fee," as defined by Section 542, does not include "any tax, fee, or assessment of general applicability").
395 See id. (establishing that the term "franchise fee," as defined by Section 542, does not include "requirements or charges incidental to the awarding or enforcing of the franchise").
396 See Cal. Pub. Util. Code § 442(b) (declaring that the Commission's user fees "shall be determined and imposed by the commission consistent with the requirements of Section 542 of Title 47 of the United States Code").
397 See League of Cities/SCAN NATOA Opening Comments at 5 (requesting an amendment to the application); Pasadena Opening Comments at 4 (same); Joint Cities Opening Comments at 15 (same).
398 Joint Cities Opening Comments at 16.
399 Id.
400 Greenlining Opening Comments at 7.
401 Id.
402 Id. at 8.
403 Id.
404 Greenlining Reply Comments at 7; Oakland Opening Comments at 4.
405 League of Cities/SCAN NATOA Reply Comments at 3.
406 League of Cities/SCAN NATOA Opening Comments at 6.
407 Id.
408 Id.
409 Id. at 7.
410 Id.
411 Id.
412 AT&T Opening Comments at 11-12.
413 Id. at 12.
414 Id.
415 Without modification by the Legislature, Public Utilities Code § 401(b) guidelines apply to the program budget for this fiscal year and all subsequent fiscal years. We find that this legislative direction is sufficient response to AT&T's and League of Cities/SCAN NATOA's requests for delineation of specific criteria we will use in developing future user fees. League of Cities/SCAN NATOA Reply Comments at 3; AT&T Opening Comments at 12. We add that user fees only will be used for functions within the statutory authority of the Commission and DRA, as articulated in Sections III and XV.
416 Cal. Pub. Util. Code § 401(b) (emphasis added).
417 See Joint Cities Opening Comments at 16 (asking for clarification regarding specifics of this budget); League of Cities/SCAN NATOA Opening Comments at 7 (same).
418 We observe that our state video franchising responsibilities are greater than what League of Cities/SCAN NATOA asserts. We find that League of Cities/SCAN NATOA makes two unfounded assumptions when arguing that our budget is too great. First, League of Cities/SCAN NATOA provides no evidence as to why "the Commission will likely see only a handful of applications in the first year." League of Cities/SCAN NATOA Opening Comments at 6. Second, the League of Cities/SCAN NATOA claims that the "only other significant costs to the Commission under AB 2987 will be the reviews of reports and investigations related to build-out and anti-discrimination provisions." League of Cities/SCAN NATOA Opening Comments at 7. This assessment fails to account for amendments to applications and reporting requirements we must fulfill pursuant to DIVCA.
419 DRA Opening Comments at 7.
420 Verizon Opening Comments at 24.
421 Id.
422 Id.
423 Id.
424 Id. at 23.
425 Id.
426 AT&T Opening Comments at 11.
427 AT&T Reply Comments at 13.
428 Id.
429 Id.
430 Id.
431 Greenlining Opening Comments at 7.
432 Id.
433 Id.
434 Id.
435 Id. at 8.
436 Id. at 8.
437 Small LECs Opening Comments at 2.
438 Id. at 3.
439 Id.
440 Id.
441 Id. at 4.
442 Id.
443 Small LECS Reply Comments at 7.
444 Id.
445 SureWest Reply Comments at 11.
446 SureWest Opening Comments at 14.
447 Id. at 15.
448 SureWest Reply Comments at 11.
449 Id.
450 Id.
451 Id.
452 Joint Cities Opening Comments at 16.
453 Id.
454 League of Cities/SCAN NATOA Reply Comments at 3.
455 League of Cities/SCAN NATOA Opening Comments at 7.
456 Id. at 8.
457 Id.
458 Cal. Pub. Util. Code § 5810(a)(3).
459 Id. at § 5810(a)(3).
460 DRA Opening Comments at 7 (calling for better alignment of video user fees with utility user fees); Verizon Opening Comments at 24 (same).
461 See Cal. Pub. Util. Code § 5860 (requiring state video franchise holders to pay local entities a franchise fee that is based upon gross revenues).
462 See id. at § 433 (establishing a fee payment schedule based on gross intrastate revenues above or below a threshold of $750,000).
463 Small LECS and SureWest (respectively) urge us to adopt a user fee based upon the "anticipated number of households" or "potential households" within a state video franchise holder's footprint. Small LECS Reply Comments at 7; SureWest Opening Comments at 15.
464 Small LECs Opening Comments at 3.
465 Cal. Pub. Util. Code § 5810(a)(2)(A)-(B).
466 We find no factual basis for SureWest's and Small LECs' fears that AT&T and Verizon will not apply for a state video franchise, and thus, leave Year 1 user fees to be shouldered by a small number of video service providers. SureWest Opening Comments on the PD at 3; Small LECs Opening Comments on the PD at 3. If, however, AT&T and Verizon do not apply for a state video franchise in Year 1, then parties are invited to file a petition to modify this decision and propose a method for assessing fees that will not act as a barrier to entry.
467 Verizon Opening Comments at 23.
468 Greenlining Opening Comments at 7-8.
