Report Title:

Cable Television; Fees and Rates


Requires that cable franchise fees be calculated on subscriber and nonsubscriber related gross revenue. Prohibits a cable operator from passing through to subscribers that portion of franchise fees paid by the cable operator that are based on nonsubscriber related gross revenue.


S.B. NO.









relating to cable television.



SECTION 1. Section 440G-3, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Gross revenue" means all cash, credits, property of any kind or nature, or other consideration derived directly or indirectly by the cable operator, its affiliates, subsidiaries, parents, and any other person or entity in which the cable operator has a financial interest or which has a financial interest in the cable operator, arising from or attributable to operation of the cable system, including but not limited to revenue from:

(1) All charges for entertainment or non-entertainment services provided to subscribers;

(2) All charges for the insertion of commercial advertisements upon the cable system;

(3) All charges for the leased use of studios or channels;

(4) All charges for the installation, connection, and reinstatement of equipment necessary for the utilization of the cable system and the provision of subscriber and other service; and

(5) The sale, exchange, use, or cablecast of any programming developed for community use or institutional users.

"Gross revenue" includes the value of any goods, services, or other remuneration in nonmonetary form valued at contract price levels, received by the cable operator, its affiliates, subsidiaries, parents, and any other person or entity in which the cable operator has a financial interest or which has a financial interest in the cable operator, in consideration of the provision of advertising or other services in connection with the cable system."

SECTION 2. Section 440G-8, Hawaii Revised Statutes, is amended to read as follows:

"440G-8 Issuance of cable franchise authority; criteria; content. (a) The director is empowered to issue a cable franchise to construct or operate facilities for a cable system upon the terms and conditions provided in this chapter.

(b) The director, after a public hearing as provided in this chapter, shall issue a cable franchise to the applicant when the director is convinced that it is in the public interest to do so. In determining whether a cable franchise shall be issued, the director shall take into consideration, among other things, the content of the application or proposal, the public need for the proposed service, the ability of the applicant to offer safe, adequate, and reliable service at a reasonable cost to the subscribers, the suitability of the applicant, the financial responsibility of the applicant, the technical and operational ability of the applicant to perform efficiently the service for which authority is requested, any objections arising from the public hearing, the cable advisory committee established by this chapter, or elsewhere, and any other matters as the director deems appropriate in the circumstances.

(c) In determining the area which is to be serviced by the applicant, the director shall take into account the geography and topography of the proposed service area, and the present, planned, and potential expansion in facilities or cable services of the applicant's proposed cable system and existing cable systems.

(d) In determining the fees to be paid by the cable operator as a condition of the franchise, when fees are established as a percentage of the cable operator's gross revenue, the director shall calculate the fees on gross revenue as defined in section 440G-3.

[(d)] (e) In issuing a cable franchise under this chapter, the director is not restricted to approving or disapproving the application or proposal but may issue it for only partial exercise of the privilege sought or may attach to the exercise of the right granted by the cable franchise terms, limitations, and conditions which the director deems the public interest may require. The cable franchise shall be nonexclusive, shall include a description of the service area in which the cable system is to be constructed, extended, or operated and the approximate date on which the service is to commence and shall authorize the cable operator to provide service for a term of fifteen years."

SECTION 3. Section 440G-11, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) To the extent permitted by federal law, the director shall regulate rates to ensure that they are fair both to the public and to the cable operator[.]; provided that the director shall not permit a cable operator to pass through to subscribers that amount of franchise, access operating, or other fees paid by the cable operator that is based on nonsubscriber-related gross revenue."

SECTION 4. This Act shall apply prospectively and its passage shall not result in the retroactive assessment and collection of fees. The director of commerce and consumer affairs shall recalculate fees due under existing franchises in a manner consistent with this Act.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.