Fees Bringing in More than Enough

Published September 1, 2008

Research by the Texas Public Policy Foundation, a nonprofit, free-market research institute based in Austin, shows Texas consumers in the state’s 10 largest cities have paid more than $4 billion in franchise fees for various private-sector services over the past 10 years.

Telephone, cable, electric, gas, and other franchise fees could be cut as much as $500 million per year and still leave more than enough money for management and maintenance of the public right of way by cities, the foundation’s research has found.

In addition to franchise fees, companies pay for the use of the right of way in various other ways that can rival the expense of franchise fees. These are charges and expenses related directly to the costs of operating in the right of way, such as pole attachment fees, make-ready engineering and construction costs, and permitting fees and expenses.

Cities claim franchise fees are not taxes, but rental payments for the use of public property by private companies that must be a value-based fee to maximize revenue on behalf of the public.

Those fees are passed straight through to consumers, however. Thus members of the public are paying rent to cities they live in for the use of public right of way.

Bill Peacock