FCC’s Latest Orders Expand Broadband Funds and Cap Local Cable Franchise Fees

wifi signal and devicesThe Federal Communications Commission (FCC) issued three orders of interest (both good and bad) to local governments on August 1.

The FCC took action on the Rural Digital Opportunity Fund, Digital Opportunity Data Collection, and Cable-Related, In-Kind Contributions.

NACo reports:

The FCC approved a Notice of Proposed Rulemaking for the Rural Digital Opportunity Fund (RDOF), which would provide $20.4 billion over 10 years to help companies expand broadband in unserved remote areas.

Recognizing the inaccuracies of the FCC’s broadband coverage maps, the FCC took steps to improve the Form 477 process by proposing the Digital Opportunity Data Collection (DODC), a new process for collecting broadband data to better pinpoint where broadband service is lacking.

Lastly, on a 3-2 vote, the FCC adopted a Third Report and Order, which subjects cable-related, in-kind contributions to the statutory five percent franchise fee cap established under the Communications Act.

The Third Report and Order on cable-related in-kind contributions, which is set to go into effect on September 2, 2019, is particularly concerning for local governments’ revenue. NACo notes that the controversial order is expected to be challenged in federal court.

NLC provides some additional context on the Third Report and Order which is likely to reduce franchise revenues at the local level and preempt local authority over broadband and wireless services that are provided by cable companies:

When the order goes into effect, cable providers will be able to deduct the “fair market value” of any in-kind franchise obligations from their cash franchise payments. This includes any obligation other than build-out requirements, customer service requirements, PEG capital costs or channel placement value.

The order contains a “mixed-use” provision that preempts state and local authority over non-cable service and infrastructure on cable networks. An increasing number of residents get broadband service from their community’s incumbent cable provider…The order ensures that state and local governments are unable to regulate these broadband services and infrastructure and may not create franchise agreements for those services in the future.

For more information:

Recent FCC Orders Create Opportunities and Challenges for Counties (NACo)

What Do Local Leaders Need to Know about the FCC Cable Order? (NLC)

The Rural Digital Opportunity Fund (RDOF)

The Digital Opportunity Data Collection (DODC)

The Third Report and Order