FCC Updates on Draft Rules for Cable Access TV

July 22, 2019

The FCC issued its draft Order on Cable Franchising this past Thursday, and we’ve been studying the proposal along with legal colleagues across the country. Here’s a quick look at what you should know:

The Order accepts the notion that cable channels are somehow “in-kind” support that can be counted against the 5% franchise fee cap in the Cable Act, but then defers any action on the matter because doing so would be difficult and harmful. This is a victory of sorts for our members, but ACM believes that this will leave the door open for cable companies to keep trying to diminish benefits that communities rightly deserve under the Act.

The Order also outlines what is and is not “in-kind” support, looking at what is “essential to cable service” a term that is not defined, nor is in the Cable Act. This will continue to cause problems across the country, where we will have to argue that Interactive Program Guides are “essential”.

It also limits the channel capacity local authorities can seek under the Act – underlining that local communities can only ask for “adequate” capacity – how many channels and whether they are HD is thus still up for contention at the local level.

The Commission did accept the idea that durable goods such as equipment used for operating PEG channels and producing content are actually capital. It seems crazy that we had to argue for close to a year for what any accountant or anyone who has actually run a business knows. But thanks to you and other members across the country we prevailed on this.

Perhaps the biggest loss for communities in the Order is the preemption of local governments from being able to tax telecommunications services provided by the cable industry even though the right of way is being used. This specifically seeks to defund local communities who have the ability under their state law to tax all telecom providers equally and now creates a disparity between cable and non-cable providers.

I use the example of a store that sells gasoline, clothing and soda pop– all of which may have a different tax associated with it. Taxing all these items doesn’t mean we are double or triple taxing the store. It just means the company sells different things which are still subject to local or state authority. This part of the Order seems to be an overreach by the FCC’s authority, and it probably will be challenged in court.

What’s Next? The FCC is scheduled to vote on the matter on August 1 and rules will be effective after publication in the Federal Register. Communities should still contact their members of Congress to make sure that final rules do not harm PEG channels and communities. In fact Rep. Jahana Hayes of Connecticut just sent a letter with her concerns. The deadline for those comments is July 25.

We will be sending you a sample press statement you can use for local press, and you can find videos that can be used for distribution to the press or on your channels and social media on our website. Folks in Philadelphia put together a press conference on Friday that you can share as well.

We will also be working with municipal colleagues on ex parte meetings with the FCC in the next ten days to try to make final arguments about the rulemaking to see if anything can be altered to benefit communities. When the Final Order is published, we will provide you with analysis of how the Order affects your operations. Some communities that rely on Institutional Network run by cable companies, for example, will see harmful effects as operating costs will be counted against franchise fees.

Thanks again to everyone for your hard work in this process – it has made a difference!

Mike Wassenaar
ACM President & CEO