FCC may be paving the way to defund community media

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Published date: 
Thursday, October 18, 2018 - 1:05pm

Our friends at Open Signal have asked for help in fighting against proposed rule changes by the FCC  that, if enacted, will result in a severe reduction in local government regulatory authority, substantial loss of revenue for the City of Portland, and may defund community media throughout the country.  They're hosting a letter writing party to stand up to the FCC and stop the changes on Tuesday October 30th at 6:30pm at Open Signal.

Here is a registration link for the workshop to help people write and submit their comments.

If you want to submit a comment on your own, please do so before the due date: November 15th

1. Visit the FCC's website at Bit.ly/SaveCommunityMedia
2. Click on '+ Express'
3. Fill in your information

Here's to tell us more about it:

The proposed policy, 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, and implementation of the Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment policy make major changes to existing policy which, when combined, will cause serious and potentially catastrophic local regulatory and funding problems for cities and community media nationwide.

The three major changes that will hurt cities and community media are:

  1. The City’s ability to regulate businesses using the public rights of way will be severely reduced.
  2. The City’s ability to charge reasonable fees for access to the public rights of way for cable television, mixed use services, and ISPs would be eliminated resulting in millions of dollars in lost revenue in our community alone, and billions of lost revenue nationwide.
  3. The City’s ability to negotiate cable television franchises that include public benefits at no cost to the City will be eliminated, and may result in lost revenue for the City, or the elimination of Public, Educational and Government (PEG) community media services.

Regulation Terms and Understanding the Public Rights of Way

The public rights of way are those areas that are owned and managed by the City for the public benefit. This includes sidewalks, streets, public easements, and other spaces where utilities install poles and antennas, bury pipes, or run wires to deliver services to your home. Businesses delivering services using the rights of way pay the City fees for construction, maintenance and access to these spaces. The revenue from these fees provide a large portion of the funds that support City services.

Oregon statute [Or. Rev. Stat. § 221.515 (2001)] states that municipalities may collect a privilege tax for the use of rights-of- way, not to exceed 7% of the gross revenues (earned within the municipality) of a telecommunications provider.

Some of the businesses using the rights of way are considered utilities. A utility is defined as a business or service, which may be publicly or privately owned, engaged in supplying the public generally with an essential commodity or service, such as electricity, gas, water, or transportation. Utilities are regulated at local, state and federal levels to ensure costs of service are fair, service to all community members is equal, and that these essential services are available to everyone in the community regardless of neighborhood, income level or ethnicity.

Some of the businesses using the rights of way are considered telecommunications providers which establishes them as common carriers. A common carrier is any business entity whose main business is transporting things on behalf of people. This includes mail delivery, railroads, package delivery services, taxis, public transportation, and telecommunications services starting with telegraph (it’s an old law) and evolving with technology to include telephone and cable television.

Common carrier law ensures that the business being paid to transport goods, people, or data must do so in a way that is agnostic to the thing being transported¹. Common carriers are required to provide these services to all community members equally and at a fair price regardless of the thing being transported, and regardless of the neighborhood, income level, ethnicity, etc. of the person requesting the service. Common carriers are regulated like utilities at the local, state and federal level.

When the Open Internet (Net Neutrality) rules were implemented by the FCC in 2015 ISPs were designated as telecommunications providers, and were subject to local, state and federal regulation to ensure their services were non-discriminatory based on the content being requested over the system, and in the way they operated within a community.

When the current FCC replaced the Open Internet rules with the Restoring Internet Freedom rules they removed the telecommunications provider designation from ISPs which eliminated the ability for local, state or federal regulation of these businesses beyond basic infrastructure compliance. These businesses are currently identified as Information Services ². The FCC has asserted that this definition excludes ISPs from common carrier responsibilities.

By continuing this assertion through these major proposed and enacted policies the FCC has effectively abdicated their own responsibility (handing policing authority over to the FTC), removed all meaningful regulatory capacity from local municipalities and states, and have diminished the ability of local municipalities to charge for access to the rights of way.

This means the City cannot require ISPs to be good neighbors, to contribute to the upkeep of the City or City services, to provide the community with a basic level of customer service (or any customer service), to build out their systems to everyone in the community regardless of the income level/potential of the neighborhood, to provide services at the same rate to all community members, and so on.

And if the City or State determined that it wanted to enact its own Net Neutrality rules as a requirement of having access to the rights of way, this policy will remove their legal ability to do so. Local communities will have no control, will see no benefit, and will lose revenue that supports essential local services.

Cable companies will continue to be regulated as a telecommunications provider (common carrier), but if this policy is enacted, it’s very likely that the cable television companies will petition for a change in their designation from a telecommunications provider to an information services provider.

Mixed-use providers (cable companies that also offer broadband internet services) will be regulated as a common carrier for their cable television service, and as an information service for their internet and data services.

Fees for Access to the Public Rights of Way

The City’s responsibility for the management of the rights of way is extensive and impacts everyone in the community. City bureaus manage and coordinate access for a variety of public, and private infrastructure builds that use the rights of way.

The City must ensure that they are approving access to businesses and service providers who will be able to complete the project once they have begun, who will complete their projects on or before schedule, that essential services will not be interrupted as a result of the approved project, that construction is to code and won’t end up killing anyone, and so on. There is an extensive vetting process for obtaining access to the rights of way.

In addition to this, the City manages the rights of way to ensure they support the needs of the community for transportation and access to their individual properties.

And last, but not least, the City acts as an agent between the property owner and the business providing the service. If the City didn’t play this role, the business would have to employ hundreds, maybe thousands of people specifically to make direct connection to each individual property owner to negotiate services and prices.

Rates would be different from person to person, and very likely, entire neighborhoods would be without power, water or telephone services. This is possible because of City level policy, dedicated bureaus and services supporting construction and planning citywide, and thoughtful regulation that supports both businesses and the community.

The FCC’s proposed policy limits the City to charging for application fees and minimal maintenance fees. As a result of this the City will lose millions of dollars in revenue each year³.

Local Franchise Authority, Public Benefit Services and Reductions in Funding for PEG

The Cable Act identifies federally regulated aspects of cable television services. This includes a provision for cable channels dedicated to PEG programming, and a “franchise fee” paid by the cable operator to the City or local municipality in which the cable service is provided.

The franchise fee is limited to 5% of the cable operator’s gross revenues derived in a 12-month period from the operation of the cable system to provide cable services. This revenue funds City services as well as provides capital funding for Open Signal - Portland Community Media center and other PEG providers in the City. This structure exists in communities all over the country.

At the City level the Local Franchise Authority (LFA) negotiates remaining aspects of the franchise agreement which results in additional “in-kind” benefits that support City or community needs such as:

  • The I-Net (a low cost, municipal information network that provides high speed internet and data services to Governments and Schools)
  • Community Capital Grants program - which allows the City to provide technology grants to schools and nonprofits
  • The Electronic Program Guide - allows for inclusion of community media channel listings in the cable operators program guide
  • Live feeds from locations such as City Hall that transport the live program through the PEG cable channels

The proposed policy will allow the cable operator to put a fair market value on the “in-kind” services and subtract that value from the 5% of gross funds derived from cable services. This means, these in-kind services are no longer in-kind.

The cable company will be able to set their interpretation of the fair market value of all of the in-kind services, including the value of the cable channels set aside for PEG programming. The value of the channels alone could be in the millions of dollars. If this policy is enacted, the City will be in the position of having to decide whether retaining the Community Media infrastructure is worth the loss of millions of dollars of revenue to the general fund. We don’t want the City to have to make that decision.

What is the Reason for the Change in Policy?

The FCC is attempting to reduce regulation of cable and internet service providers in general. Their opinion is that current regulation and right of way access fees impede innovation, slow deployment of new services, and are financially burdensome. They are not able to provide statistics to support this opinion, and in fact, they request this data from cable operators and information service providers within the policy document.

In addition to this basic assumption being unfounded, it is obvious from revenue statistics that cable providers, mixed-use providers and information service providers are realizing large profits for the services provided within the current regulatory environment⁴.

Local municipalities have established reasonable and balanced regulatory environments that support business development as well as provide for the public benefit. The FCC policy would create an imbalance favoring these media businesses, and the cost of this would be born by every other business in the community through increased taxes and fees, and by individuals through reduction in City services which may include reduced police and fire coverage, cuts in after school programs, cuts in parks and recreation programs, cuts in services to seniors and the disabled, and so on.

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Footnotes

¹ Network Neutrality: A History of Common Carrier Laws 1884–2018

² A United States Supreme Court case in which the Court declared in a 6–3 decision that the administrative law principle of Chevron deference to statutory interpretations by administrative agencies tasked with executing the statute trumped the precedents of the United States Courts of Appeals unless the Court of Appeals had held that the statute was "unambiguous" under Chevron. The Supreme Court therefore upheld the Federal Communications Commission's determination that a cable Internet provider is an "information service", and not a "telecommunications service" and as such competing internet service providers (ISPs) like Brand X Internet were denied access to the cable and phone wires to provide home users with competing internet service. - National Cable & Telecommunications Association v. Brand X Internet Services, 545 U.S. 967 (2005)

Chevron deference test:

Two part test: First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.
If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute . . . Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute. —  Chevron U.S.A. v. NRDC467 U.S. 837, 842-43 (1984).

³ On October 2nd, 2018 the City of Portland convened a special City Council meeting to authorize the City Attorney’s Office to sue or join in lawsuits to fight the implementation of this FCC policy. At that meeting the Mayor stated that this policy would eliminate approximately $9.5 million dollars from the City’s general fund each year.

⁴ Comcast year end 2017 - BusinessWire.com