Cities Big and Small Oppose Cable Franchise FNPRM; Industry Largely Backs It

MVPD allies disagreed with municipalities (see 1811070045) and backed much of the FNPRM, commenting by Wednesday-night's initial deadline (see 1810120044). Industry wants the FCC to limit franchise fees LFAs may impose on cable operators, as the FNPRM proposes. Wireline and cable pay-TV operators and their associations also back the proposal to bar "LFAs from using their video franchising authority to regulate the provision of most non-cable services, such as broadband Internet access service, offered over a cable system by an incumbent cable operator."

Among cities filing were New York, Los Angeles, Atlanta, Seattle, San Francisco, St. Louis, San Jose, Austin, Boston, Minneapolis, Philadelphia and Portland, Oregon, representing more than 20 million residents. Associations filing represented municipalities within states including Alabama, Minnesota, Washington, North Carolina and Iowa, with many millions more residents. Oppositions came from NATOA, the U.S. Conference of Mayors, National Association of Counties, National League of Cities and many more. The FCC declined to comment.

Cities and counties of all sizes, their associations, the state of Hawaii and others allied with local and PEG interests filed in numbers not usually seen in FCC proceedings, despite saying they're stretched thin with commission deregulation they often oppose (see 1810050003). "Localities [are] being woken up due to other issues" in telecom with the FCC, said Senior Counsel John Bergmayer of Public Knowledge, which also opposes the rulemaking. "Merits aside," he emailed us, it's "unwise for the Commission to perpetually pick fights with local governments and elected officials, nor in the long run is it a battle it can politically win."

NCTA seeks clarity that LFAs can't regulate non-cable services or require benefits or fees above the 5 percent franchise fee cap. Incumbent cable operators pay about $3 billion annually in state and local franchise fees, a spokesperson noted. Many "jurisdictions have come to rely on the franchising process not as a means of encouraging the deployment" but to "leverage ... financial commitments and obtain products and services," NCTA said. LFAs "seek excessive fees and all sorts of in-kind contributions." Cable systems "lack bargaining power to refuse these demands due to the stranded investment," the group said.

The FNPRM's tentative conclusions would let LFAs "protect their reasonable interests while ensuring they do not charge excessive fees or recover 'twice' for a cable operator’s access to public rights-of-way," said the American Cable Association. Such double charging, once for the franchise fee and the second time for other requirements, also would include some buildout requirements and PEG mandates, ACA said. It and NCTA declined comment beyond their filings. Including in-kind contributions in the 5 percent cap will limit cable price hikes, Verizon said. Barring LFA regulation of non-cable services and using a "light-touch" regulatory tack will facilitate broadband deployment, the wireline video provider said.

Thirty-four entities including Los Angeles County, Washington, D.C., the Texas Municipal League and Michigan Coalition to Protect Public Rights-Of-Way filed jointly. “The Commission has acknowledged that PEG channels benefit a community as a whole and served important public policy objectives such as increasing access to a wide diversity of viewpoints,” said the filing. “When the Commission first began to extensively regulate cable television it simultaneously imposed obligations on cable operators to provide PEG,” the local interests said. The FCC, they said, “cannot justify its proposal as an exception to the franchise fee definition.”

New York City said the FNPRM is “misleading” in reference to “free or discounted service” for LFAs, “as if a requirement of a public access channel or free service to a school” is for a franchising authority “as a corporate entity, distinguishable from the community." PEG "channels, and services to public institutions, are intended for the benefit of the community as a whole, not a state or local government,” it said. Philadelphia Community Access said counting cable-related in-kind services against franchise fees that Comcast and Verizon pay the city “would decimate our ability to provide services.”

NATOA and several other muni groups rejected the FNPRM, saying “cable franchise requirements such as PEG channels and customer service obligations are franchise fees." That's "not supported by the Cable Act or its legislative history,” they said. Hawaii said the proposal “would ignore one of the Cable Act’s explicit goals of providing cable access to all Americans, regardless of their socio-economic status.” It would give “arbitrary and unchecked discretion to cable operators to determine the ‘fair market value’ of various cable-related in-kind contributions,” leading to potential disagreements with “substantial litigation costs on local and state franchising authorities."

Though the FCC "believes it has the plenary authority to preempt state regulation of information services, as it does over telecommunications services," PK commented, "it does not." Citing net neutrality deregulation, the group said that "having classified broadband as an information service, the Commission has determined that it is an unregulated service that it lacks regulatory authority over."