NATOA Speakers: Localities Should Explore Broadband Franchising Opportunities

Faced with increasingly reduced cable franchise fees, local franchise authorities (LFA) must focus on getting broadband providers to enter franchise agreements with them for use of local rights of way (ROW), speakers said Wednesday during NATOA's annual local government conference. But the broadband franchising path must go through statehouses and the FCC, with changes to LFAs' authority needed at the federal and state levels, they noted. In addition, speakers mentioned LFAs' consumer protection role as they addressed the audience of mostly local government officials.

“Some sort of change has to happen,” and that often necessitates state legislature and FCC action, said localities lawyer Mike Bradley of Bradley Werner. Minnesota’s Equal Access to Broadband Act (HF-4182) -- which would let cities negotiate franchise agreements with broadband operators using public rights of way -- never reached a floor vote. However, it could serve as an example of an approach municipalities could pursue, he said. Though it was a first-time effort, HF-4182 saw "really, really good" support and went far in the legislative process, Bradley said.

Localities lawyer Mike Watza of Kitch Attorneys and Counselors said the communications entertainment tax/rights-of-way use fee approaches of Chicago and Florida also could be emulated. Should municipalities be unable to gain the legal authority needed at the state level, litigation might be needed, Watza said. Multiple communities, he noted, have sued streaming services for franchise fees.

The line between traditional cable TV service and streaming is increasingly murky, consultant Garth Ashpaugh of Ashpaugh & Sculco noted. He pointed to Comcast offering the same channels, such as Acorn, both as a linear cable channel or via one of its streaming options, but municipalities can charge franchise fees only for the linear service's subscribers, he said. “Those are the battles we need to fight,” Ashpaugh said.

Some states might have authority to franchise broadband tucked away in their constitutions, Bradley said. The charters of home rule cities -- which can have the same administrative powers as a state in their municipal jurisdiction -- sometimes include language that allows franchising broadband, he said. Bradley challenged arguments that the Communications Act doesn't allow franchising broadband; he said the first cable franchises got their authority under Title I of the Communications Act, before the Cable Act was approved, and for now broadband remains a Title I service while the FCC's reclassification of broadband is on hold as it is challenged in federal court.

Bradley urged local officials in the audience to lobby for repeal of the FCC's mixed-use rule, which bars local governments from regulating non-cable services delivered over a cable network. He also urged lobbying against the American Broadband Deployment Act (HR-3557), which would preempt cable franchising authority and ROW compensation.

Multiple speakers argued that streaming services still qualify as a cable service and should be subject to cable franchise fees. Pointing to the Cable Act, Bradley said the definition of cable service is technology-neutral and there’s no exclusion for streaming in the cable service definition. He said the 7th Circuit U.S. Court of Appeals’ decision rejecting efforts in Illinois to charge streamers franchise fees (see 2310160015) didn't address whether streaming video programming that a cable operator provides over its system is a cable service under federal law.

Pointing to the FCC’s pending early termination fees ban and prorated refunds mandate (see 2312130019), localities lawyer Tim Lay of Best Best said while the agency might adopt consumer protection rules, enforcement is the localities' job. The ETF proceeding, he said, raises the question of whether LFAs could oversee billing practices for non-cable services, such as broadband, when it’s bundled with video service.

Under general police powers, local communities can make consumer protection rules, with the Cable Act protecting local authorities to set customer service requirements, said Rick Ellrod, Fairfax County, Virginia, communications policy and regulation division director. Broadband access doesn't strictly fall under Cable Act rules, but the services travel over the same system, so the same complaints could overlap the services. It depends on the state, he said, but local governments could have authority under state law to adopt consumer protection rules for internet services.

Good internet access is a must-have for households, but communities having disparate levels of access often hampers effective delivery of services like telemedicine and online education, said Amina Fazlullah, Common Sense senior director-equity policy. She said there's considerable consumer interest in broadband labeling because of confusion around plans and offerings.