23-19-206. Video service provider fee — Definitions.

23-19-206. Video service provider fee — Definitions. (a) As used in this section: (1) “City subscriber” means a subscriber whose service address is in the jurisdictional limits of a city; (2) “County subscriber” means a subscriber whose service address is outside the jurisdictional limits of a city; (3)(A) “Gross revenue” shall be calculated in accordance with generally accepted accounting principles and means all consideration of any kind or nature, including without limitation cash, credit, property, and in-kind contributions, services, or goods derived by the holder of a certificate of franchise authority from the operation of the video service provider's network to provide video service within the political subdivision. (B) “Gross revenue” includes all consideration paid to the holder of a certificate of franchise authority and its affiliates only to the extent that the holder of a certificate of franchise authority or its affiliates are acting as a provider of video service under this subchapter, which includes the following: (i) All fees charged to subscribers for any video services provided by the holder of a certificate of franchise authority; (ii) Any fee imposed on the holder of a certificate of franchise authority by this subchapter that is passed through and paid by subscribers, including without limitation the video service fee; (iii) Compensation received by the holder of a certificate of franchise authority or its affiliates that is derived from the operation of the holder of a certificate of franchise authority's network to provide video service with respect to commissions that are paid to the holder of a certificate of franchise authority as compensation for promotion or exhibition of any products or services on the holder of certificate of franchise authority's network, including “home shopping” or a similar channel under subdivision (a)(3)(C)(v) of this section; and (iv) A pro rata portion of all revenue derived by the holder of a certificate of franchise authority or its affiliates under compensation arrangements for advertising derived from the operation of the holder of a certificate of franchise authority's network to provide the video service within a political subdivision under subdivision (a)(3)(B)(iii) of this section. The allocation is based on the number of subscribers in the political subdivision divided by the total number of subscribers in relation to the relevant regional or national compensation arrangement. Advertising commissions paid to third parties shall not be netted against advertising revenue included in gross revenue. Revenue of an affiliate derived from the affiliate's provision of video service is gross revenue to the extent the treatment of such revenue as revenue of the affiliate and not of the holder of a certificate of franchise authority has the effect, whether intentional or unintentional, of evading the payment of fees that would otherwise be paid to the political subdivision. In no event shall revenue of an affiliate be gross revenue to the holder of a certificate of franchise authority if such revenue is otherwise subject to fees to be paid to the political subdivision. (C) “Gross revenue” does not include: (i) Any revenue not actually received even if billed, such as bad debt; (ii) Nonvideo service revenues received by any affiliate or any other person in exchange for supplying goods or services used by the holder of a certificate of franchise authority to provide video service; (iii) Refunds, rebates, or discounts made to subscribers, leased-access providers, or a political subdivision; (iv) Any revenues from services classified as nonvideo service under federal law, including without limitation revenue received from telecommunications services, revenue received from information services but not excluding video services, and any other revenues attributed by the holder of a certificate of franchise authority to nonvideo service according to Federal Communications Commission rules, regulations, standards, or orders; (v) Any revenue paid by subscribers to home shopping programmers directly from the sale of merchandise through any home shopping channel offered as part of the video services but not excluding any commissions that are paid to the holder of a certificate of franchise authority as compensation for promotion or exhibition of any products or services on the holder of a certificate of franchise authority's network, such as a “home shopping” or a similar channel; (vi) The sale of video services for resale in which the purchaser is required by this subchapter to collect the fees from the purchaser's customer. This subchapter is not intended to limit state's rights under 47 U.S.C. § 542(h); (vii) The provision of video services to customers at no charge, including without limitation the provision of video services to public institutions, public schools, or governmental entities; (viii) Any tax of general applicability imposed upon the holder of a certificate of franchise authority or upon subscribers by a city, state, federal, or any other governmental entity and required to be collected by the holder of a certificate of franchise authority and remitted to the taxing entity, including sales and use tax, gross receipts tax, excise tax, utility users' tax, public service tax, communication taxes, and fees not imposed by this subchapter; (ix) Any foregone revenue from the holder of a certificate of franchise authority's provision of free or reduced cost video services to any person, including without limitation employees of the holder of a certificate of franchise authority, to the political subdivision and other public institutions or other institutions. However, any foregone revenue that the holder of a certificate of franchise authority chooses not to receive in exchange for trades, barters, services, or other items of value is included in gross revenue; (x) Sales of capital assets or sales of surplus equipment that are not used by the purchaser to receive video services from the holder of a certificate of franchise authority; (xi) Directory or Internet advertising revenue, including yellow pages, white pages, banner advertisement, and electronic publishing; and (xii) Reimbursement by programmers of marketing costs incurred by the holder of a franchise for the introduction of new programming that exceeds the actual costs; and (4) “Provider's network” means the optical spectrum wavelengths, bandwidth, or other current or future technological capacity used for the transmission of video programming over wireline directly to subscribers within the geographic area within the political subdivision as designated by the provider in its franchise. (b) A video service provider offering video service in a political subdivision under a certificate of franchise authority shall pay to the political subdivision where it provides video service a video service provider fee as may be required by the political subdivision under this section. (c) The video service provider's fee is: (1) Paid to the political subdivision where video service is provided quarterly, forty-five (45) days after the close of each calendar quarter; (2) Computed as a percentage of gross revenue; and (3) Beginning on the first day after the forty-fifth day after the close of the previous calendar quarter, simple interest at a rate equal to that for judgments shall apply to video service provider fee payments past due. (d) The political subdivision shall not require: (1) Except as otherwise provided in this section or § 23-19-205, any additional fee or charge from the video service provider; or (2) The use of a different calculation method. (e)(1) The video service provider fee is a percentage of gross revenue and determined by the political subdivision. (2)(A) If there is an incumbent video service provider providing video service in the political subdivision, the video service provider shall pay an amount equal to the percentage of gross revenue paid by an incumbent video service provider or five percent (5%), whichever is less. (B) If there is not an incumbent video service provider having a franchise agreement with the political subdivision or if a political subdivision has not previously established and assessed a fee to an incumbent video service provider, the political subdivision may establish the video service provider fee in an amount not in excess of five percent (5%) of the gross revenue. (C) The percentage of gross revenue shall apply equally to all video service providers in the political subdivision, regardless of whether they provide video service under a local franchise or a certificate of franchise authority. However, a fee shall not be imposed on any video service customer except pursuant to a valid franchise or pursuant to a certificate of franchise authority. (f)(1) A political subdivision shall provide ninety (90) days' notice to a video service provider operating in the political subdivision before establishing, increasing, or lowering a video service provider fee. (2) A video service provider fee or a change to the percentage level of an existing fee is not effective until ninety (90) days after the notice required in this subsection is given to the video service provider. (g) Payment of the fees required in this section shall accompany a written report that: (1) Identifies the amount of gross revenues received from subscribers for the provision of video service to subscribers; and (2) Allows for a proper compliance review by the political subdivision. (h)(1) A political subdivision may conduct an audit of a video service provider to ensure proper and accurate payment of the video service provider fee. (2) To conduct an audit, the political subdivision shall: (A) Provide reasonable advance written notice; (B) Audit the video service provider not more than one (1) time in a calendar year; and (C) At its discretion, review the books and records at the location in the jurisdiction where the books and records are kept or consent to review copies of the books and records provided electronically. (3) The political subdivision and the video service provider are responsible for their respective costs of the audit. (i) Payment of an undisputed amount or refund due to the political subdivision or the video service provider is required within sixty (60) days after it is recognized, plus the interest as computed on civil judgments. (j) The video service provider shall keep business records showing any gross revenue, even if there is a change in ownership, for at least three (3) years after the revenue is recognized by the video service provider in its books and records. (k) A video service provider may identify and collect the amount of the video service provider fee as a separate line item on the regular bill of each subscriber. (l)(1) Any city annexing lands shall notify a video service provider in writing of any such annexation, including a description of the territory annexed. (2) Beginning the first day of the calendar quarter occurring after the video service provider has received at least ninety (90) days' notice of annexation of customers into the city's corporate limits, subscribers within the annexed territory shall be considered city subscribers for purposes of this section.