More than 40 states sued the FCC this week over a portion of the cable franchise rules passed in August. Cities say the ruling will cost them millions by letting cable TV providers partly pay them with services like free air time instead of money. Some 46 cities are asking federal appeals courts to wind back the order; they say the new ruling will force them to cut their budgets for schools and governments or raise taxes.
Cable providers say they won’t be as willing to invest in broadband, including building infrastructure, if they have to provide public access TV and other telecom services on top of franchise fees they are required to pay, reports Bloomberg.
The order took effect September 26. That’s when NCTA-The Internet and Television Association President/CEO Michael Powell said: “American consumers expect and deserve next generation broadband networks and shouldn’t have to see that progress slowed by some localities’ attempts to evade Congress’ statutory framework and impose duplicative taxes and fees.”
The Commission sees the ruling as part of its effort to help companies’ deploy next-gen wireless networks. Chairman Ajit Pai has said every dollar spent on costs beyond the five percent franchise fee cap is a dollar that cable companies could instead spend on wireless upgrades.
However, cities see it differently, predicting a chilling effect, according to Angelina Panettieri, principal associate for technology and communications for the National League of Cities. The cities, plus eight counties and the state of Hawaii, filed seven petitions in three different circuit courts, according to Bloomberg. Most of the cases are being consolidated in the U.S. Court of Appeals for the Ninth Circuit, according to Bloomberg.
The cable industry hopes a ruling will clarify which services can count towards a fee. Franchise fees are capped at five percent of an operator’s cable service revenue in each jurisdiction. The FCC order lets cable providers calculate and subtract from the five percent the market value of cable-related, non-monetary contributions, such as public access channels and free advertising. The order also prevents localities from regulating the companies’ broadband internet services.
Cable operators pay $3 billion per year in franchise fees to state and local governments, according to NCTA. Consumer welfare losses, such as inadequate or no internet access, would total up to $40 billion by 2023 if operators reduce upgrades, according to a study commissioned by NCTA.
November 22, 2019