Public-access channels fearing funding cuts received a temporary reprieve as the Federal Communication Commission exempted the channels while approving new rules that limit how much cities can charge cable TV providers in franchise fees.
The PEG channels — short for public, educational and governmental access — are often one of the few local sources televising city council meetings, particularly in rural areas where broadband is unavailable.
But the FCC was clear that cities must include “in-kind” contributions as part of the up-to-5% cable franchise fee. Local governments charge the fee to cable TV providers in exchange for the right-of-way access to install or repair cable lines in the streets. The FCC, which posted the order on Friday, said it would later revisit whether PEG channels should also be considered as part of the 5% cap.
“We dodged a bullet on the PEG channels, but the fight isn’t going away,” said Ken Fellman, legal counsel for the Colorado Communications and Utility Alliance, which represents about 60 local governments. “One way or another, the order is a financial hit on communities with PEG programming.”
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PEG channels, like DGOV TV run by city employees in Durango, got a shout-out from Commissioner Geoffrey Starks, who noted how the channel stepped up and used drones to cover last summer’s 416 Fire and in 2015, the Gold King Mine spill of 3 million gallons of sludge that turned the Animas River yellow.
“Reductions in funding will likely mean PEG channels will be cut altogether, leaving the city without a way to warn citizens when a disaster strikes,” Starks wrote in his dissent.
It’s a concern shared by people living in Durango.
“Our value for emergency communications and information to the public is growing regularly,” Victor Locke, a Durango city employee who operates the channel, said in an interview. “We are getting more and more phone calls, especially concerning our over-the-air signals.”
Cable companies often add PEG channels to their service for free. The FCC said it would revisit “within the next year” whether a company’s offer to host the channel for free should be counted in the 5% cap.
The cable industry has long had to pay franchise fees to cities in exchange for right-of-way access. The Cable Act of 1984 caps the amount to 5% of a customer’s TV bill.
But the amount a city makes from franchise fees has declined, largely because more customers dropped cable TV service. Last year in Denver, for example, the city received nearly $1.2 million less in franchise fees despite a growing population.
Cable providers also often give extra perks to a community, such as broadcasting the PEG channel or offering video and internet service for free to government offices. The in-kind services plus franchise fees often exceed the 5% cap set by law, which is the reason the FCC ruled that local governments had to stop the practice.
“In addition to being unlawful, this practice discourages broadband investment, deployment, and innovation by cable operators,” according to the FCC’s statement.
The FCC also reminded the local governments that the law doesn’t allow them to regulate broadband internet service, even if it is running on cable lines in a city.
In a statement, Michael Powell, president of NCTA – The Internet & Television Association, said the FCC action “will both protect consumers from excessive fees and taxes and help speed broadband deployment in communities across America.”
The FCC order was supported by Chairman Ajit Pai and Commissioners Michael O’Rielly and Brendan Carr.
In a statement, Pai said every dollar a company pays to a city in extra fees means one less dollar spent on broadband infrastructure. Costs are passed on to the consumer anyway. Pai acknowledged that PEG operators and many local governments won’t like the decision, but the law is the law.
“The solution is simple: change the law,” Pai wrote. “The job of administrative agencies like ours is not to rewrite laws set forth by Congress. It is to implement those laws.”
Commissioners Jessica Rosenworcel dissented along with Starks.
In a statement, Rosenworcel said she feared the move will continue to reduce the amount of local news in communities that have already seen their local news sources decline or close. She chastised members who say limiting fees would ease regulations and broadband providers would finally offer adequate internet in rural communities.
“But comb through the text of this decision,” she wrote. “You will not find a single commitment made to providing more broadband service in remote communities. There is no enforceable obligation to expand broadband capacity.”
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John Masters, executive director of GrassRoots Community Network in Aspen, said the station couldn’t survive just on franchise fees and has long looked for other revenue sources. It rents out equipment and charges nearby cities to televise city meetings. The FCC decision didn’t surprise him, though.
“Obviously the cable industry has more or better lobbyists than local municipalities,” Masters said in an email. “… This is why more municipalities, like the cities of Glenwood Springs and Aspen, which GrassRoots serves, develop their own broadband services. This week we switched from Comcast to Aspen’s broadband because Comcast couldn’t deliver the speeds and dependability we require to upload and download community video content.”
The FCC’s ruling limits limits local government’s negotiations and could invalidate agreements cities have long had with their local cable TV service provider, said Alan DeLollis, president of the Colorado Communications and Utility Alliance.
“Suffice it to say the FCC has put a heavy thumb on the scale in favor of the industry over local communities,” DeLollis said in an email. “After over 35 years of agreements being made and practices normalized, this small majority of bureaucrats is telling jurisdictions that our own rights of way — the public’s property — shouldn’t be valued in certain ways, even after contracts have been agreed to and signed.”
The FCC still has to issue a final order, which could come within weeks or months. That will help clarify what Colorado communities are facing, Fellman said.
“There’s a concern that benefits cities and counties receive from cable franchises may go away,” Fellman said. “Some benefits, like free service to public buildings, which is specifically called out in the FCC order, will be lost. Other benefits may be lost as well, but it will take more time to analyze the order before we understand the full scope of the preemption.”