TCAA, in conjunction with the Texas Municipal League, files amicus briefs and comments in support of cities on many issues. To keep up to date on the status of these issues, go to https://www.tml.org/p/AmicusBriefUpdate_121218.pdf.
F.C.C. Preemption – PEG Channels: MB Docket No. 05-311, In the Matter of Implementation of Section 621(a)(1) of the Cable Communications Policy Act of 1984 as Amended by the Cable Television Consumer Protection and Competition Act of 1992 at the Federal Communications Commission. This action is a Further Notice of Proposed Rulemaking (FNPRM) relating to an FCC proposal that would allow cable companies to deduct the fair market value of a wide range of franchise obligations, including PEG channel capacity and other PEG-related franchise requirements, from their existing franchise fee payments. If the FCC’s proposed new rules are adopted, cities that operate PEG channels will see reductions in franchise fee payments from cable operators. The League is participating in a coalition of cities that filed these comments on the proposal.
The coalition argues that the FCC’s proposals ignore the historical context of cable regulation and the structure and function of the Cable Act. The proposed findings in the FNPRM violate the plain language of the statute, which authorizes franchise authorities to both collect franchise fees and to impose franchise requirements on cable operators. To achieve the proposed result, the FCC must torture the statute’s definition of franchise fee beyond recognition and ignore the Sixth Circuit’s findings in Montgomery County v. FCC, 863 F.3d 485 (6th Cir. 2017) (holding in a challenge to previous FCC orders that the FCC’s interpretation of “franchise fee,” as defined in Cable Act section providing that any cable operator may be required under terms of franchise to pay franchise fee, as including in-kind cable-related noncash exactions was arbitrary and capricious under the Administrative Procedure Act, where FCC offered no explanation as to why statutory text allowed it to treat “in-kind” cable-related exactions as franchise fees.). In addition, years of FCC rulings have distinguished franchise fees from cable franchise obligations.
Finally, the FCC seeks comment on whether to apply these problematic interpretations to cable franchises in states that adopted state-level franchising. While the FCC’s existing interpretations are a poor fit for locally granted franchises, they are especially troublesome when the franchise is mandated by state law. State franchises, crafted by industry, were often adopted in the name of facilitating competitive entry into cable services, but often use terms that are broader to those in the Cable Act, such a granting franchises to video service providers, not just cable operators. Imposing the FCC’s existing interpretations would void the existing state trade-offs and put localities in an impossible position. Without a more sound factual understanding of state franchises, the Commission’s proposals are so vague as to require, at a minimum, a further notice to explain what the application of these policies would mean for state-level franchises.
The comments were filed on November 14, 2018.