FCC action undermines cities, towns and public interest

From the Beacon, Summer 2019

The Federal Communications Commission has taken another large step in its relentless drive to undermine municipal authority and grant a huge financial windfall to commercial cable companies, all at the expense of cities, towns and local public access stations and programming. While this is not a surprise, it is bad news for cities, towns and the public.

In July, the FCC issued its Third Report and Order regarding cable fees, which would allow cable operators to deduct certain in-kind contributions from the 5 percent franchise fee cap set by federal law. Currently these in-kind contributions are in addition to the basic franchise fee in each contract. Going forward, the FCC would allow cable operators to count these costs toward the 5 percent. This includes the fair market value of the non-capital obligations associated with public, educational and governmental (PEG) channels, I-Nets in municipal and school buildings, and agreements to provide cable service to public buildings at reduced cost.

The FCC’s order represents a radical change, undermining decades of common interpretation and implementation of federal law. While the order is considered to be prospective, meaning that cable operators cannot recoup past franchise fee payments, the FCC would apply it to existing franchise agreements. This is startling, because the FCC is attempting to overtly interfere with long-term contracts freely and consensually negotiated between two parties.

These negotiated contracts are results of hours of work between cable operators and local officials acting on behalf of their residents. Like all freely negotiated contracts, various concessions are made to create a document mutually agreeable and in the best interest of both parties. The FCC order would ignore the entire negotiation process, tip the scales, and give industry an unearned financial benefit.

PEG channels provide a variety of benefits to communities, including public access channels, educational access channels, and government access channels. Local franchise agreements commonly require cable operators to set aside capacity for PEG channels, which provide residents with the ability to watch their local government officials in action at council and select board meetings, town meetings, community forums, and dozens of similar sessions in dozens of settings. PEG channels provide opportunities for local candidates to address the public and are a good source for local election coverage. In short, PEG programming is an irreplaceable source of local programming for the public that is not otherwise available through commercial cable services.

The loss of revenue triggered by the FCC’s actions would force municipalities to either divert resources away from core municipal and school services in order to maintain existing PEG programming, or suffer a dramatic reduction in the scope of PEG channels, or lose the channels altogether. Additionally, some costs, such as I-Net capacity costs and access channel costs, are already passed along to subscribers by the cable operators. Allowing these companies to then deduct the fair market value from the franchise fee would create a windfall for these companies, essentially allowing them to double-recover.

For more than a year, the MMA has been working with the National League of Cities, the National Association of Telecommunications Officials and Advisors, and state municipal associations across the country to oppose the FCC’s proposed overreach. We have submitted official comments calling on the FCC to reject the proposals, and nearly 2,000 individuals and organizations from Massachusetts have submitted comments.

Unfortunately, even with a national network advocating for municipal and consumer interests, this has been an uphill fight. That’s because a majority of FCC commissioners are taking a highly ideological approach to their policy-making, with the clear intention of preventing communities and states from implementing meaningful local regulation. Because the issues are complex, press coverage has been marginal at best, and the commission does not feel pressured to be more transparent or consumer-friendly.

How can the FCC move ahead with such a giveaway to big cable companies? Because their domain is so technologically and legally complicated – covering all interstate and international communications by radio, television, wire, satellite and cable – the agency rarely makes it to the front page. The issues are difficult to explain in simple, media-friendly terms, so it is hard to raise public awareness when the FCC embarks on an anti-consumer policy.

The FCC splashed into public awareness in 2017 when it voted to repeal net neutrality, a ruling that will allow internet service providers to begin charging a premium for high-speed access to certain high-demand and popular products, such as video streaming. The telecommunications industry applauded the ruling (AT&T and Comcast, for example), but the internet content providers and all consumer groups were staunchly opposed (Netflix, Microsoft and Reddit, for example). Public opinion surveys show that more than 80 percent of the public strongly oppose the FCC decision. But the agency disregarded all of this opposition and plowed ahead.

Adding insult to injury, the FCC’s latest order would allow cable operators to construct and install facilities and equipment for non-cable services, such as small cells or other wireless deployments, in the public rights-of-way without any local regulation or compensation. Most cable franchise agreements do not include provisions related to the installation of non-cable facilities, and, consequently, local franchising authorities would be preempted from regulating these installations, raising aesthetic and public safety concerns.

This preemption would also extend to fees for the use of the rights-of-way, meaning cable companies would not have to compensate cities and towns for the additional use of public ways. This would be another unwarranted windfall to private cable companies, this time at the expense of the general public and local taxpayers.

Local governments have an important responsibility to protect the health, safety and welfare of residents, and the FCC’s preemption measures will compromise that traditional authority and work against the public interest. Cities and towns across the Commonwealth have worked with private businesses to build the best broadband and cable infrastructure possible for their residents, and have demonstrated restraint and reasonableness throughout this process. The FCC is ignoring the positive record here in Massachusetts, and is planning an Aug. 1 vote to grant final approval to the policy.

The MMA will continue to oppose any effort to restrict local authority, stymie local innovation, or limit the obligations that cable providers have to our communities – even if the battle is uphill and the outcome is preordained by today’s FCC.