Comcast Invites NATOA to Talk Franchise Fees 'Equity'

Comcast wants to chat with local government associations about why only cable operators pay franchise fees, said Senior Vice President-Government Affairs Klayton Fennell Wednesday at NATOA’s virtual annual conference. Localities haven't had impacts from two recent court decisions on public, educational and government (PEG) channels, NATOA officials said in an interview. FCC staffers updated NATOA on local-federal engagement efforts.

With customers cutting cable for over-the-top potentially reducing local franchise fee revenue, local attorney Ken Fellman suggested Tuesday that localities could try to assess a cable operator’s revenue from OTT (see 2109210073). Federal rules prevent localities from treating OTT companies as cablers. Some cities are suing streaming companies to collect fees.

“Competitive equity -- including the payment of franchise fees by one type of provider -- is a timely discussion,” Fennell replied in a live chat during a prerecorded cable industry panel. He said that “would be a great conversation” with groups including NATOA, National League of Cities, National Association of Counties and U.S. Conference of Mayors. NATOA General Counsel Nancy Werner responded that they should talk.

"We've hit a moment when there is true convergence and competition across lines of service among providers that use different technology platforms," Fennell messaged us. "It does seem to be a natural moment to discuss and consider technology neutrality as folks consider the appropriate regulatory oversight, fees, and taxes."

NATOA is waiting to see how cable companies adjust practices after the 6th U.S. Circuit Court of Appeals (see 2108030011) partly rejected a challenge to the FCC 2019 cable local franchise authority order, Werner told us. “My sense is that the cable industry is still trying to work out how to respond” to the court disagreeing with the FCC about using fair market value for in-kind costs, said Werner. The 6th Circuit said an operator’s marginal cost should be used. That won’t have much effect in San Francisco and elsewhere in state franchise states where localities don’t negotiate franchises, said NATOA President Brian Roberts, a policy analyst for the California city/county.

Werner sees “a lot of interest” in concepts from Maine’s PEG access law that was upheld in the 1st Circuit, defeating an NCTA challenge (see 2108040022). It’s being litigated so there’s going to be some time to see how it works at the state level, she said. The law requires cable broadband networks to extend to areas that meet certain population density and PEG channel information be available on online channel guides. PEG channels stepped up during this pandemic to make government meetings accessible, said Werner. That plus the larger discussion about a dearth of local media in many areas “might spur more conversations around the country to figure out how people can continue to access local programming like PEG channels,” she said: Maine’s law is “one step in that direction.”

The Intergovernmental Advisory Committee’s “term could be extended, but we haven’t discussed that yet,” said Consumer and Governmental Affairs Bureau Deputy Chief Barbara Esbin on a live panel with other FCC staff. The two-year term ends Sept. 22, 2022. “We’re trying to schedule their first full meeting for this fall,” Esbin said, and “are very anxious to get them back to work and anticipate great things.”

“Not to my knowledge” has the FCC started working on a system whereby state authorities could transfer consumer complaints to the federal commission, said CGB Associate Chief Eduard Bartholme. Then-Commissioner Jessica Rosenworcel, now acting chairwoman, supported that idea at a NARUC conference last summer (see 2007220053). It sounds like the FTC sentinel system, he said. “If the acting chairwoman mentioned it as something she’d be interested in, I guess we’ll find out more.” Under its current process, the FCC prefers that state and local governments direct consumers to the agency’s complaint process rather than filing complaints individually or in bulk on consumers’ behalf, said Bartholme.

Charter Communications learned make-ready is a big financial challenge as it deployed broadband, said Group Vice President-State Government Affairs Marva Johnson during the cable panel. Charter has had “as much as a 35% overhead just for managing make-ready costs, which include utility pole replacement,” she said. A New York state project to deploy service to 60,000 rural locations was expected to cost about $300 million, including about $100 million for make-ready, “the cost to repair a utility pole so that we can add a broadband attachment." About 75% of that was to “replace wooden poles that were not strong enough or were not tall enough to support a broadband attachment,” she said.

Charter sometimes must attach to 10 poles to get to one rural customer, said Johnson: In cities, one pole often connects multiple homes. Aerial attachments are the fastest way to deploy broadband, the official wrote in response to a question in live chat. Putting plant underground “is sometimes an alternative,” but takes extra time, she said.