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FCC vote threatens free cable services municipalities have long enjoyed

FCC chairman Ajit Pai says cutting the fees paid to municipalities will leave more money for cable companies to invest in new services.J. Scott Applewhite/Associated Press/File 2019/Associated Press

WASHINGTON — Cable systems provide towns and cities with public-access channels that broadcast school board and city council meetings, as well as networks like the one that keeps New York City’s firefighters connected to the Internet.

The services are free, but that may be about to change. The Federal Communications Commission on Thursday decided that cable providers such as Comcast Corp. and Charter Communications Inc. should assign a value to the channels and data networks, and then reduce fees owed to localities by that amount.

The proposal, from FCC chairman Ajit Pai, who leads a Republican majority, succeeded on a 3-2 vote with both Democrats dissenting. Pai said cutting fees would leave more money for cable companies to invest in new services. “We will reduce costs for consumers and expedite the deployment of next-generation services,” he said.


Mayors anticipate a budget squeeze and expressed alarm about a change to arrangements that in many cases were negotiated long ago. “Local governments around the country would be forced to make difficult decisions,” cities including Atlanta, Boston, Dallas, and Rye, N.Y., said in documents filed with the FCC.

The decision “risks grave harms” to municipalities, said FCC Commissioner Geoffrey Starks, a Democrat.

Thursday’s vote was another example of the FCC under Pai trimming local efforts to regulate phone and cable companies. Last year, it limited their power over cell tower sites, citing the need to spur growth of fast-communications networks — a priority backed by President Trump.

At issue are in-kind services that cities, towns, and counties receive in addition to fees, which are capped at 5 percent of revenue. Examples of the services include discounts for seniors, channels for community use, and informational networks that link government buildings.

The FCC decided to classify in-kind offerings as fees, subject to the 5 percent limit.


Cable providers backed the move. The FCC’s action will “help rein in abusive practices and overreaching” by municipal officials, the NCTA – Internet & Television Association, a trade group with members including Comcast and Charter — said in a filing. It cited what it called abuses that included a requirement in Minnesota to deliver cable service to municipal liquor stores and golf courses, maintaining fiber connections with colleges in a Maryland county, and demands to extend service with 550 miles of new lines in Vermont.

Cable operator Altice USA in a filing said that because it needs permits to lay lines, it’s difficult to resist municipalities’ requests. “The result is that the company is confronted with demands for payments or grant concessions above the cap” and “consumers bear the added cost.”

The cable industry pays about $3 billion annually in fees, the NCTA said. Revenue was about $132 billion in 2018, according to statistics compiled by Bloomberg Intelligence.

Cities feel burned. Existing law lets cities impose both fees and obligations, and the FCC is muddling the two, the cities said in their filing. The US Conference of Mayors on July 1 passed a resolution saying the FCC proposals “undermine local authority, turn public property over to private interests, and remove longstanding community benefits.”

The cities offered Dallas as an example, saying values placed by cable providers on community channels could be high enough to slash about $10 million from annual fees of around $12 million — or even eliminate fees entirely.


New York City will absorb “adverse and significant impact” from the change, Michael Pastor, general counsel for the city’s Department of Information Technology & Telecommunications, told the FCC in a July 25 filing. He didn’t provide an estimate of the potential cost to the city.

As an example of what’s at stake, the city’s informational network feeds cable TV and Internet service into every firehouse and carries public safety messages, Pastor wrote.

There are no alternatives aside from building a parallel network that would take years “and cost a massive amount,” Pastor wrote. “The stark reality is that the cities will be forced to pay extortionate fees” because the alternative would be to disrupt municipal services, he wrote.

Democratic members of Congress had asked the FCC not to move forward.

The change is “very concerning,” Senators Kirsten Gillibrand and Chuck Schumer, both Democrats, said in a July 25 letter to Pai.

Fifteen senators, including 14 Democrats and independent Bernie Sanders of Vermont, in a July 29 letter to Pai said the change puts municipalities in a no-win situation, needing to choose between requiring support for the community channels, or free cable service to schools and libraries.