OCA Audit Reports

Issued: April 2008

The City of Austin granted Austin CableVision a cable television franchise in 1981. The Austin CableVision franchise expired and was renewed in July 1996 with Austin CableVision’s successor, Time Warner Cable Television (TWC), operating under the franchise agreement. Under City Ordinance Number 960613-A, this cable franchise agreement runs for fifteen years and will expire in August 2011.

The franchise agreement between the City of Austin and TWC requires a payment of five percent of gross revenue derived within the franchise area. A 35 cent monthly fee per customer to fund the public, educational and governmental (PEG) access channels is also paid by TWC to the City. These payments from TWC are to compensate the City of Austin for the use of the public rights-of-way.

Legislative changes made in 2005 change the franchising authority from municipalities to the Public Utility Commission of Texas (PUCT) so TWC will be operating under a State franchise when the current franchise agreement between Austin and TWC expires. The City of Austin will still continue to receive the five percent franchise fee from TWC but the PEG fee will change from 35 cents per subscriber per month to one percent of gross revenues and these funds will no longer be allowed to fund access channel operating costs.

In reviewing TWC’s subscriber data to determine if the franchise fee and PEG fee payments are correct, we discovered that TWC did not consistently update their subscriber database to reflect a series of annexations following the 1996 franchise agreement. Our geocode analysis identified 12,139 miscoded subscriber accounts within the full-purpose annexed area that were not charged fees and there were 5,677 subscriber accounts in the extraterritorial jurisdiction (ETJ) that were erroneously charged fees. We also found that the City had properly sent annexation notifications to TWC.

As a result, TWC owes the City $1,072,148 in fees and interest. In addition, a significant number of the accounts identified are active accounts with TWC, and should continue to generate additional revenue for the City each month that they remain customers.

Download the entire text of our Time Warner Cable Television Franchise Fee Audit, Part I in Adobe Acrobat. You will need Adobe's Acrobat Reader to view these files. Or request a hard copy of this audit report, No. AU07108, by submitting this audit report request form.

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