Mayors Unite Against FCC Franchise Fee Reforms

Resolve to fight effort to count nonmonetary obligations toward 5% cap
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Over 200 mayors, Democrats, Republicans and independents, have voted to oppose the FCC's effort to let cable operators deduct nonmonetary obligations toward the 5% cap on franchise fees. 

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FCC chairman Ajit Pai has scheduled a vote at the Aug. 1 meeting on a Report and Order (R&O) to "prevent local authorities from unlawfully evading the 5% statutory cap on franchise fees," said Pai.  

The plan is to vote on an item that would make it clear that in-kind "exactions" by local franchising authorities do indeed count toward the cap. Those include "courtesy equipment, I-Net construction, network capacity, channels, grants, sponsorships, specially created programming, local retail facilities, cash 'contributions,' free advertising," and more according to NCTA-The Internet and Television Association, which backs the R&O. 

"Excessive fees and inappropriate regulations imposed by local governments deter broadband deployment and discourage investment in next-generation facilities and services," Pai said of the planned R&O. 

But at their annual meeting earlier this month in Honolulu, the U.S. Conference of Mayors unanimously adopted a pretty self-explanatory resolution: “Supporting Local Cable Franchising Including Non-monetary Obligations.”

Among the "wherefores" and "be it resolved's" in the resolution are these salient passages: 

"WHEREAS, the Federal Communications Commission is considering a proposal (05-311) that would allow cable companies to establish a market value for the nonfinancial franchise obligations and then allow the cable operators to deduct that amount from the franchise fees owed under the franchise agreements; and  

"WHEREAS, the FCC, in the same proceeding is suggesting that a cable operator needs no additional permission nor comply with any additional requirements when it accesses city property to offer non-cable services; and  

"WHEREAS, these FCC proposals undermine local authority, turn public property over to private interests and remove longstanding community benefits, resulting in consumer harm and impact to basic municipal services... 

"NOW, THEREFORE, BE IT RESOLVED that The United States Conference of Mayors affirms the importance of cable franchising in granting permission for cable companies to use valuable public property for their lines; in providing needed protections for municipalities, the public, and cable customers; and in tailoring franchise requirements and services to meet local needs; and  

"BE IT FURTHER RESOLVED, that The United States Conference of Mayors opposes any regulatory proceeding or legislation that seek to alter the terms of existing franchises, including any effort to require that non-financial obligations be subject to offset against franchise fees..." 

Resolutions express the will and wishes of those voting for them, but have no effect beyond that.

The chairman almost certainly has the votes to pass the R&O, so it will be up to the states to comply and confine their fees to relevant monies or challenge the decision.

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