FCC issues new rules for cable franchising
In March, the Federal Communications Commission (FCC) officially released an order that will reduce local governments’ authority to regulate cable franchises. FCC officials say the order is necessary because local cable franchises can pose an “unreasonable barrier” to companies seeking to enter local markets. In response, several local government associations have teamed up to protest the order. On April 3, the coalition filed petitions for review of the order with the Third, Fourth and Sixth Circuit Federal Courts.
The 3,800 local franchise authorities across the country approve the placement of cable television equipment in rights-of-way and on city or county property. The cable provider and the authority negotiate service standards, build-out schedules and government access, says Jeff Arnold, deputy legislative director for the Washington-based National Association of Counties (NACo). “Until now, the process has worked very efficiently,” Arnold says.
In 2005, several telephone companies, which plan to combine cable television service with high-speed Internet access and telephone services, began to petition the FCC for a change in the regulations, saying it could not work with the current system. The FCC agreed and released an order last month that says local authorities often engage in drawn-out negotiations with no time limits, and sometimes make unreasonable build-out requirements, requests for “in-kind” payments and demands for public, educational and government access. The order stipulates that those actions violate the Communications Act of 1934, which prohibits “unreasonable” barriers to franchise applications.
To eliminate the barriers, the FCC issued new rules that will override any local laws and regulations that impose greater restrictions on market entry. The new rules include a time limit for negotiations, prohibit local franchising authorities from placing unreasonable build-out limits on franchise applicants, and limit the franchise fees that they can require from applicants. Because the FCC determined that it did not have enough information to set limits on state franchising authorities, the new rules apply only to county and city authorities.
San Antonio, Texas-based AT&T applauded the FCC ruling. “The FCC’s order establishes reasonable time frames for localities to negotiate the terms of competitive entry for new video providers,” said a company statement.
But, local government associations, including NACo, the Washington-based U.S. Conference of Mayors (USCM), the National League of Cities and the International City/County Management Association, strongly disagree with the FCC order and the agency’s authority to rule on the subject, saying franchising should be left to local authorities. The coalition also has created a Web site, www.thetruthontelecomreform.org, detailing its side of the issue.
Arvada, Colo., Mayor Ken Fellman, who has been leading USCM’s fight against the new FCC rules, says that cable franchising is a local decision and only local authorities can determine how much competition for cable service a community requires.
Fellman says he worries that the proposed limits on build-out requirements means companies may exclude low-income communities that may not be profitable. As for time limits on negotiations, Fellman says that the companies sometimes make special requests, causing delays.
Cable companies use public property to make money, Fellman says, so they must consider the public interest. Still, he says, at the end of the day, cities and counties want competition for cable franchises. “It should not come at the expense of local authority and the ability to meet local needs,” he says.
The order is available at www.fcc.gov, and the FCC is seeking public comment.
The FCC’s new rules for local cable franchises are:
- Negotiations over terms cannot exceed 90 days in most cases.
- Local franchise authorities cannot place build-out requirements on franchise applicants.
- Local authorities cannot charge excessive fees.