comcast franchise fees - august 2020
Comcast Franchise Fees
Released: August 2020
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We undertook this audit at the request of City Council. Comcast provides cable services to customers and collects franchise fees from those customers. Comcast then pays franchise fees to the city of Atlanta as compensation for use of its public rights-of-way and easements. Citizens have expressed concerns that Comcast overcharged city subscribers and under-paid quarterly franchise fees owed the city. According to the city’s franchise agreement with Comcast, franchise fees are calculated as a percentage gross revenue. We assessed whether Comcast completely and accurately reported this revenue and paid franchise fees owed to the city between January 2017 through December 2019.
Our recommendations to the Chief Financial Officer are to ensure franchise fee payments are complete and accurate.
- Comcast errors in the 4th quarter of 2019 resulted in a net underpayment of $15,246 in franchise fee revenue to the city.
- Depending on how long the database has contained these errors, it is possible that the city may be due more in franchise fees since the effective date of the 2009 agreement.
- The city should periodically monitor the Comcast franchise fee agreement to confirm that Comcast is complying with agreement terms by requesting supplemental financial records, as needed, to support the quarterly franchise fee payments made.
- While franchise agreement audit functions seem to be consistent with audits that the Office of Revenue performs, city code does not explicitly identify the city department responsible for managing the Comcast franchise fee agreement.
- Comcast’s database of eligible service addresses appears to be missing 27,303 Atlanta addresses and incorrectly codes 2,181 addresses as being in the city.