Localities at NATOA Eager for Fully Seated FCC

Delay in getting a fifth member on the FCC is preventing the commission from acting on some key issues for local governments, said NATOA annual conference panelists Tuesday. Localities may need to explore new ways to maintain franchise fee revenue as more people cut pay TV for over-the-top services like Netflix, said others.

Joe Biden’s delay filling out the commission is the longest of any president besides Jimmy Carter and Richard Nixon, said National League of Cities Principal Associate-Technology and Communications Angelina Panettieri. The FCC can’t act on more controversial issues, she said. Getting two Democratic nominations by year-end could be difficult, said Tim Lay of Spiegel and McDiarmid. It’s "not a quick process normally," agreed Panettieri, since even before it gets to the Senate there must be vetting and private meetings with senators. "Without any signs of life, we're really running up against that deadline."

If the commission had five members, it might try to reverse an FCC order invalidating a telecom services fee charged by Eugene, Oregon, which was at issue in a recent 6th U.S. Circuit Court of Appeals case, said Lay. The 6th Circuit rejected rehearing last month (see 2108030011) of the court’s decision partly rejecting a consolidated challenge to the FCC 2019 cable local franchise authority order, said Lay, outside counsel for Eugene. The city probably will file an appeal at the Supreme Court by the Nov. 1 deadline, he said. Separately, NCTA could file cert on a 1st U.S. Circuit Court of Appeals ruling upholding Maine's public, educational and government access channel carriage provisions (see 2108040022), said Lay: Maine’s PEG law could become a blueprint for other states.

A 2-2 FCC can’t revisit previous small-cells orders that were mostly upheld in courts, said Lay. SCOTUS declined in June to take up the case (see 2106280052). The agency might not take up the subject even with a 3-2 commission, he noted: “If it were to go back, it would take a lot of lobbying by local governments.” The FCC, meanwhile, faces no shot clock to tackle RF safety in response to a D.C. Circuit remand of a 2019 order (see 2106280052), said Lay. Local government attorney Ken Fellman agreed in the session’s chat, writing “it is likely we'll be waiting a long time.”

Some more states could make small-cell laws attempting to streamline 5G deployment by preempting localities in the right of way, but at the pace of “follow-up showers to the storm,” he said. Panettieri agreed: “Yes, there’s a slowdown. Yes, more are coming.” More than 30 states have such laws and one bill is pending gubernatorial OK in California (see 2109030016).

Cable companies are facing substantial TV customer losses while gaining broadband subscribers, said Moss and Barnett's Brian Grogan on another panel. But TV revenue is up due to increased prices, offsetting possible reductions in franchise fee revenue for cities, the attorney said. Franchise revenue isn’t dramatically decreasing, but that trend doesn’t seem sustainable since companies can't keep increasing prices and cord cutting will continue, said Fellman. Localities can’t regulate OTT companies unless they own a cable system, though localities might be able to argue they can assess a cable operator’s revenue from OTT services accessed over its system, he said. Fellman predicted cable companies would fight that idea nationally.

Some states might have different laws governing franchise fees, said Grogan, noting some pending lawsuits by cities that claim companies like Netflix are subject to state law and owe fees despite federal rules. NATOA General Counsel Nancy Werner wrote in the chat that if courts agree with the cities filing suits, "we might see more interest in tackling the OTT/cable revenue decline issue at the state level … with an eye toward more companies that benefit from local [right of way] actually paying for it.”

NATOA’s 2022 annual conference will be in person in Denver, Executive Director Tonya Rideout said, welcoming conference attendees to the association’s second straight virtual edition.