Twenty-two Texas cities are taking Charter Communications and its corporate predecessor, Time Warner Cable Texas LLC, to state district court for systematically underpaying franchise fees worth more than $1 million.
The lawsuit, filed Friday in Waco, accuses Time Warner Cable and Charter of cheating the Texas communities out of fees for using the public right-of-ways.
Austin attorney Thomas Brocato, representing the plaintiffs, alleges the city of Waco alone is owed several hundred thousand dollars, while nearly two dozen others could share a combined recovery in excess of $1 million if the suit is successful.
Earlier this year, 33 Texas cities filed a lawsuit against Charter Communications making similar allegations. In that case, an auditor found Spectrum had underreported more than $2.25 million allegedly owed to the cities.
The latest cities to file suit allege a recent detailed audit uncovered several instances where Time Warner Cable and Charter/Spectrum did not apply the 5% franchise fee on every transaction the two companies should have. The lawsuit claims the cable companies did not include “processing-reconnect fees” as gross revenue for the purpose of paying franchise fees. The companies also excluded revenue collected from chargeable commercial service calls and failed to fully report all advertising revenue earned showing local commercials on cable channels.
The lawsuit accuses the companies of intentionally underreporting, noting the underpayments continued despite the use of two different accounting methods used to calculate franchise fees due local communities.
Plaintiffs in the latest lawsuit include the cities of Allen, Arlington, Bedford, Belton, Carrollton, Cedar Hill, Colleyville, Coppell, Dalworthington Gardens, Euless, Fort Worth, Garland, Grand Prairie, Harker Heights, Hutto, Irving, Killeen, Lewisville, Mesquite, Rockwall, Rowlett and Wichita Falls.