In 1999, Texas House Bill 1777 required companies that provide telecommunications services within a municipality to compensate the municipality for use of public rights-of-way. Texas state law also gives a certificated telecommunications carrier the right to recover, on a pro rata basis, the amount paid to a municipality from its customers who are within the boundaries of the municipality. The charge may be separately stated on the customer's bill. The Municipal Franchise Fee offsets the costs that local telephone companies must pay municipalities for use of public rights-of-way in Texas.
The rate varies based on municipality and type of customer.