Katie Piotrowska is an analyst and a member of the Azavar Government Solutions team, which focuses on maximizing tax revenue for local governments in Illinois and in other states. Katie specializes in cable franchise audits - ensuring that cable franchise fee revenue is being accurately assessed and appropriately remitted.
In this interview, we learn about cable franchise audits and how new technologies are enabling more efficient analysis municipal geographic boundaries. We also discuss the importance of gross revenue calculation within cable audits and how the statute of limitations can affect cable providers and municipalities.
Question: What are your daily responsibilities as an analyst and what is your primary focus area?
Answer: I manage the cable franchise fee audits, which means I conduct the address audits using our proprietary software as well as some GIS tools that I’ve introduced to the process. I also communicate the findings to our clients and answer any questions that they might have.
Question: What types of GIS tools did you bring into the organization?
Answer: I have a background in urban planning and I used some GIS tools in my studies. The one that I use is called ArcMap and basically it allows me to visualize information and see if there are patterns or inconsistencies between what kind of address database the municipality has in their system versus what the cable company has in their system. It’s really a great tool to see these sorts of patterns and dive deeper into the analysis.
Question: Can you explain what a gross revenue calculation has to do with cable audit?
Answer: Cable companies basically pay five percent of their gross revenues as a franchise fee to the municipalities that they operate in. With gross revenue audits, we review the books and records of the cable providers’ database and then determine if the cable provider may not have included an item as part of their gross revenue, which they should be paying franchise fees on.
Question: Are there other collection issues for cable versus another type of utility?
Answer: Because cable companies don’t service all areas within a municipality, for example, if we find that a thousand addresses were incorrectly coded in their database, we’re not remitting franchise fees to that particular municipality.
Not every one of those addresses is going to be a cable subscriber, so that adds a layer of complexity to the cable audits versus utilities like gas or electric companies.
Question: Are there any additional major differences between cable and other utilities?
Answer: The processes that cable companies use to handle some of their information is also a little different. They can be quite strict about letting us see subscriber-specific information and have very strict privacy rules.
We actually have to go on site to one of their local offices and review the data in question accompanied by their staff, so they can answer any questions that we might have. We’re not able to remove any of that data because they consider it private.
Question: Is the data provided by the cable providers in a digital format?
Answer: It’s in digital format. They have a digital billing system that controls what we get to see. But they let us investigate any actions that we need.
Question: How often does the statute of limitations affect cable providers?
Answer: There’s a state statute that limits us to a four-year look-back period from when the franchisees were supposed to be paid, unless they have a franchise agreement that predates 2011. Those communities are grandfathered in.
Question: In terms of your capabilities, what do you think are your key strengths as an analyst?
Answer: I think my background in urban planning really helped me understand the relationship between land use and tax revenues, in addition to my GIS skills that I learned while attending graduate school. I was able to pick up the tools and understand how to visually make sense of the information and discover any patterns or inconsistencies within that data.
I also think being detail-oriented is essential in this position. I can sometimes comb through thousands of addresses to find ones that are incorrectly coded, so being detail-oriented is very important.
Question: Are your clients often surprised at some of the things that you’re able to uncover?
Answer: It certainly varies from client to client. Some clients are quite knowledgeable about how much franchise fee revenue they should be receiving. Once I present the findings to them, they understand where those amounts came from, whereas other clients may be less knowledgeable. Sometimes they’re not sure how much they should be getting and once we talk to them and present the findings, they’re often surprised that they’ve been missing out on this much revenue for a long time.
Question: Have you had many challenging or surprising situations during audits?
Answer: I was working on a project recently that was started back in 2011 and the cable company wasn’t really cooperating with us for a while. Therefore, we had to engage our attorneys to help push the process forward. It wasn’t easy, but thankfully we’ve been able to work through the issues and achieve some great results for our client.
Question: Are there consistent lessons that you’ve learned from conducting audits with cable franchises?
Answer: One of the things I’ve noticed is that if a municipality has irregular geographic boundaries, they’re bound to have some kind of mistakes in terms of cable franchise fees going to the wrong place. I’ve been seeing that as a consistent pattern.
Question: What do you think is the future for cable audits and dealing with cable franchises for municipalities?
Answer: I attended a cable-focused conference last month and one of the most talked-about topics was how online streaming is changing the face of the cable industry. Data shows that there has been a decrease in cable subscribers nationwide. Therefore, municipalities are also losing their per subscriber franchise fees.
I think municipalities will have to adapt to that changing future and find ways to offset the losses of those traditional cable subscribers. They will also need to be more vigilant in terms of auditing their own vendors to make sure they are receiving all the revenues that they’re owned.