Proposed FCC Rule could cost counties millions in franchise fees by allowing cable companies to deduct the fair market value of public benefits, such as setting aside channels for county council or school board broadcasts, from the fees. 

The potential effects of the order are vast. Nationwide there are approximately 1,500 public, education, and government (PEG) stations and 3,000 channels that could be impacted.

From NACo County News:

In some smaller jurisdictions, [Mitsuko] Herrera noted, the “value” of the cable channel may be more (because value is not capped by the FCC) than what the jurisdiction receives in franchise fees.  “So effectively, the FCC is inviting cable operators to force smaller jurisdictions, where there is already limited newspaper and almost no television news, to pick between operating cable channels that provide the public with access to board meetings and community information, or receiving any funding from franchise fees,” she said.

….

In September, the FCC voted to confirm that a local franchise authority’s ability to regulate cable service does not extend to broadband and other non-cable TV services and that in-kind commitments those authorities get from providers as part of franchise agreements count toward the 5 percent franchise fee cap, with the exception of providing public, educational and government channels. The Commission is considering applying the proposed new rules to state-level franchising actions as well, not just local franchising.

A letter sent by a group of U.S. Senators led by Sen. Ed Markey highlights the challenges the proposed rule would have on local governments and their communities:

Our constituents watch PEG channels to monitor local government proceedings, hear the latest news from nearby college campuses, and consume other locally produced programming including emergency alerts and directives. Your proposal may jeopardize these important functions.

…

If this order is eventually adopted in its current form, cities and towns across the country may soon have to decide between supporting local PEG channels and supporting other critical institutions serving the public good. This is a lose-lose choice for LFAs [Local Franchising Authorities] and the residents they serve.

Comments on the proposed rule (MB Docket No. 05-311) are due November 14, 2018. Comments may be submitted online through the FCC’s Electronic Comment Filing System.

For more information:

FCC could slash county franchise fees (NACo County News)

Letter to Chairman Pai from U.S. Senators on Cable In-Kind Franchising Rule  (Senator Markey Letter)

Fact Sheet on Proposed Cable In-Kind Franchising Rule (FCC)

Proposed Rule on Cable In-Kind Franchising (Federal Register)