Localities Hoping FCC Isn't Interested in New Look at Cable Franchise Rules
Localities, scoring a significant win Wednesday before the 6th U.S. Circuit Court of Appeals on FCC rules for cable local franchising authorities (see 1707120031), now hope the agency's next step is to do nothing. Franchise agreement negotiations have been more confusing and protracted since the 2007 and 2015 orders challenged in the appeal, said local governments lawyer Brian Grogan of Moss & Barnett. With local franchising authorities and cable operators generally coming to mutually acceptable agreements in recent years despite FCC rules, hopefully the agency won't feel the need for new rulemaking following the court's mixed decision, said Joseph Van Eaton of Best Best, who represented plaintiffs Montgomery and Anne Arundel counties, Maryland, and Dubuque, Iowa, in the appeal of the orders on video franchising rules.
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The three-judge panel -- David McKeague, Rchard Griffin and Raymond Kethledge, with the decision penned by Kethedge -- granted in part the appeal and denied it in other areas. It rejected the FCC counting various in-kind charges toward franchise fees, agreeing with the locality petitioners that the orders scarcely explain the agency decision to expand the franchise fee definition to include in-kind cable-related exactions. The FCC and intervenors NCTA and USTelecom didn't comment.
The 6th Circuit decision "is not trivial," Alliance for Community Media President Michael Wassenaar said: FCC orders in 2007 and 2015 on local cable franchising authorities "had the effect of slowly strangling school districts, local governments and community television of money as 'in-kind' services have been denied, eliminated or counted against franchise fees. For hundreds of local governments and community television stations across the country, those 'in-kind' services mean that local programs can actually exist.”
The FCC also offers no valid reason for its application of the mixed-use rule -- which says local franchising authorities can only regulate cable services being provided over cable systems -- to stop local franchising authorities regulating non-telco services such as institutional networks by incumbent cable TV operators, the judges said. They vacated that rule as applied to incumbents. Incumbents generally aren't Title II carriers, and Van Eaton said if the FCC follows through on its rollback of Title II regulation of the internet, that would open the door to localities again being able to address Internet service issues as part of the cable franchising process. Separately Wednesday, Title II fans protested the FCC's plans (see 1707120017).
Some cable operators have pointed to the FCC orders to tell local franchise authorities they lack the ability to regulate institutional networks, but that should change now that the FCC, according to the 6th Circuit order, concedes the mixed-use rules weren't supposed to prevent regulating I-nets, Grogan said. The 6th Circuit shot down the localities' challenge of the FCC eliminating level-playing-field rules for new franchises while leaving most-favored-nation clauses in place, saying franchising authorities aren't required to give new cable providers better deals than incumbents, while nothing prevents franchising authorities from refusing to agree to MFN language when incumbent franchises come up for renewal.
The judges also took a shot at FCC's speed on its 2015 order that was in response to three petitions for reconsideration filed over its 2007 order. When remanding to the agency the issue of how cable-related extractions are franchise fees under the Communication Act, the 6th Circuit said the FCC "should do so expeditiously, rather than take another seven years to issue a proper order under the law."