Pending FCC ruling could affect cable franchises nationwide

by Steve Spain, Eureka Reporter

An imminent ruling by the Federal Communications Commission may toss municipal cable franchise agreements out the window. According to sources in Washington, D.C., the FCC is expected to rule next week on the ability of local governments to negotiate franchise contracts with cable and telecom operators.

A preliminary ruling on this subject was issued in March, whereby cable companies seeking to enter a new market would not have to negotiate franchise agreements. This order has subsequently been tied up in the 6th U.S. Circuit Court of Appeals.

The danger with the pending ruling, according to Anthony Riddle of the Alliance for Community Media, is the possibility that local control of public airwaves will be a thing of the past.

Few consumers are aware that airwaves are public resources, Riddle said. Airwaves are used for telephone and cable delivery.

Currently, the Federal Communications Act allows local governments to grant these public resources to private companies for profit. In exchange, municipalities can negotiate a franchise agreement, which ensures conditions such as public access to cable broadcasting through public, education and government channels, also known as PEG channels.

Humboldt County’s franchise agreement was solidified in April 2006, following years of consumer input and negotiations, said Sean McLaughlin, executive director of Access Humboldt. In the agreement, the county and six cities secured a commitment that the local cable operator would establish a Community Media Center, a 20-point optical fiber network and as many as seven PEG cable access channels.

The work of Access Humboldt since then has led to Digital Rio Dell, Digital Eureka and the Humboldt County libraries’ Wi-Fi project.

McLaughlin adds that the local agreement, which had been negotiated with Cox Communications, was made a condition of Suddenlink Communication’s acquisition of Cox last year. That contract may protect the current local agreement, he said.

“If the FCC had its way, none of this would be happening,” McLaughlin said. “They’re taking established contracts and pulling the foundation out from under them.”

A release from the FCC regarding the March ruling stated, “The Order addresses several ways by which local franchising authorities are unreasonably refusing to award competitive franchises. These include drawn-out local negotiations with no time limits; unreasonable build-out requirements; unreasonable requests for ‘in-kind’ payments ... and unreasonable demands with respect to public, educational and government access.”

In a dissenting opinion, FCC Commissioner Jonathan Adelstein stated, “The FCC is a regulatory agency, not a legislative body. In my years working on Capitol Hill, I learned enough to know that (the March) Order is legislation disguised as regulation. The courts will likely reverse such action.

“The (FCC) not only disregards current law and exceeds its authority, but it also usurps congressional prerogatives and ignores … the cannons of statutory construction, and the judicial remedy Congress already provided for unreasonable refusals.”

Riddle said the FCC’s increased decision-making role is part of a larger trend in government in which regulatory agencies such as the FCC, the Securities and Exchange Commission and the Federal Trade Commission are assuming powers that formerly were reserved for the legislative branch.

Congress has weighed the matter periodically since the Communication Act of 1934, taking legislative action in 1984, 1992 and 1996. An effort to enact legislation to end local franchising agreements failed last year in Congress, Riddle said.

He said lobbyists for the telecom corporations then took the identical wording to the FCC, where it only takes three votes to form a majority ruling.

An FCC ruling, though it originates from an executive agency, can only be challenged in the Senate with 60 votes, or in the House by a majority vote. The only other option is litigation, McLaughlin said.

Until the FCC issues the ruling, many questions remain. It is possible that California law may at least preserve current franchise agreements until a competitor enters the market, said Steve Traylor of the National Association of Telecommunications Officers and Advisors.

But Traylor also said the point can be made that satellite companies compete with cable operators. In that case, it could be the end for PEG cable franchise agreements in California.

“It’s kind of up in the air,” Traylor said.

“Suddenlink has been very proactive in supporting Access Humboldt and public, education and government access as well as PEG broadband services, but the parent company may not have the same level of commitment as local management.”

Traylor said indications from ex parte meetings and his sources in the FCC are that the ruling will come down in favor of telecom corporations over municipal government.

A source within the FCC concurred, stating under condition of anonymity that the vote is already determined between the commissioners at 3-2 — split along party lines with Republican appointees in the majority.

Officials from Suddenlink and the FCC could not be reached for comment.

article originally published at http://www.eurekareporter.com/ArticleDisplay.aspx?ArticleID=28447.

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