Regulatory changes that chip away at basic safeguards are part of the ethos. Community TV is not immune. However, with so many variations in service models both in Connecticut and throughout the nation, it is hard to predict how this multi-layered and significant ‘accounting method proposal’ might become a give back of public rights obligations that currently fund Community TV in Connecticut and elsewhere.
WHAT SPECIFICALLY IS HAPPENING
FCC Notice of Proposed Rulemaking MB Docket No. 05-311 as regards Implementation of Section 621(a)(1) of the Cable Communications Policy Act of 1984 as Amended by the Cable Television Consumer Protection and Competition Act of 1992 has the potential to defund a prospectively close Community TV Stations across the nation. In some communities outside of CT the classification of funds as “capital costs” per the strict interpretation of federal regulations has caused facility closure due to their inability to fund operations.
TENTATIVE CONCLUSIONS BASED ON HEARINGS TO-DATE
• That cable-related, in-kind contributions required by LFAs (Local Franchising Authority) from cable operators as a condition or requirement of a franchise agreement should be treated as “franchise fees” subject to the statutory five percent franchise fee cap set forth in Section 622 of the Act, with one limited exception (A change in Accounting practices that is intended to offset fees now paid for air & polls rights of way.)
• That ‘capital costs’ for public, educational, and government channels required by the franchise are the only cable-related, in-kind contribution excluded from the statutory five percent franchise fee cap (This is handled differently in states like CT that have state-wide franchise oversight. These dollars currently go to the General Fund of State. In 1995 an additional pass-thru fee was added to cable bills. This fee costs Wallingford Subscribers of Comcast and Frontier $8.31 annually. WPAA-TV gets $6.65 per subscriber. Based on 2019 trending our projected income is approximately $82,000 annually, 2010 levels.)
• That the mixed-use network ruling should be applied to prohibit LFAs from using their video franchising authority to regulate non-cable services offered over cable systems (Gives cable companies insulation from fee payment for non-TV use of polls-air rights; thereby, defunding Community TV concurrent with innovations in distribution and changes in viewer behavior i.e. cord cutting, internet viewing only)
The impact in CT is certainly unclear and highly unpredictable. Unlike Massachusetts and R.I., Connecticut may have a firewall with its 1995 statewide franchise legislation. However, industry filings intend to circumvent state authority based on filed statements like:
State and local governments cannot avoid the limitations established by Congress by asserting some state or local (or general federal taxing) authority outside the Act and that cable companies should be prohibited from waiving restrictions in local franchising negotiations.
A majority of commissioners (three of the four) on the Federal Communications Commission (FCC) fully embrace the agenda of aggressively using federal power to diminish local communities abilities to obtain fair compensation for the private commercial use of rights-of-way and other public property by communications companies.
Why is there a proposed change in rules?
The real impetus to the cable industry’s pursuit of changes through FCC rulings is to ‘not allow’ current payment obligations within regulations to follow ‘newer’ media distribution methods. While video content viewing is on the rise the viewing platform is more likely to be Internet-based. With subscriber modifying viewing habits inclusive of unbundling TV-Internet-Phone and cord cutting; per capita revenues specific to cable TV are in decline. Declassification of cable TV distributed via Internet Protocol was successfully done by AT&T in CT in 2007; however, regulatory provisions for payment of rights of way fees remained. The current FCC docket intends to modify in-kind accounting practices to minimize cable company ‘contribution’ exposure.
WPAA-TV subscriber fee data shows that 2018 is the 1st year since 2010 that cable TV revenue declined. From our 2012 to 2017 data it would appear that competition kept cable subscribers committed to television viewing. However, 2019 is trending toward 2010 levels.
As presented in cable association filings [ 1 ] [ 2 ] all cable/video providers (feels a bit anti-trust like) seek to ‘value’ Cable TV Channels designated as PEG and apply that value to their rights-of-way obligations. The provider seeks to assess the channel’s ‘market value’ for in-kind off-set of ‘contribution’ obligations. The terms ‘franchise fee’ and ‘contributions’ mean different things within different communities.
How would the market value be assessed and by whom?
In 2016 WPAA-TV asked the Comcast Branford Franchise Advisory Council to review channel capacity in our area for cost-benefit, collaborative-based strategic planning. The impetus was to determine if a reduction in channel capacity by town potentially merging E & G or P & E channels could yield an increase in the sub fee that the cable companies would not pass along to subscribers. The local cable advisory council refused to put it on the agenda. As a consequence, there is no recent conversation in the public record about valuing a channel.
A regional channel was returned to AT&T in 2002. The Channel 21 give back happened during the AT&T to Comcast Franchise Transfer DPUC Docket 02-03-10. Our area got only 6 cents increase in the per subscriber fee ($5.06). In this negotiation, the company had the incentive to value a channel low. That is currently not the case. It could be argued now that a Local Access SD Channel required to be in the basic tier for all subscribers has more value than an HD Channel. Who is to say? Right now the valuing is proposed to be done by those benefiting by valuing high, so high that local communities might have to pay for channels.
All Community TV is not created or operated equally
Every community in CT has some form of Community TV with subscribers contributing from $4.82 to $11.04 annually for this community resource. The towns from Madison to Wallingford (Comcast Branford Franchise area) each have three channels per town for a total of twenty-one channels. Each community has operating budgets under $100,000. The service area of New Haven, Hamden, West Haven has a total of three channels and an operating budget of $775,000. Some communities have a large centralized public access channel serving several communities. These organizations may provide grants to municipalities for government & educational access. Some cable companies have staff providing oversight & training for use of company-owned facilities.
And then there are communities like Groton and Wallingford. These two communities diverge from all patterns of operations and funding. They use substantial tax dollars to fund Government and Education Access TV.
Note: A community the size of Wallingford in Massachusetts is likely to have three channels (PEG) supported by operating budgets of $250,000 to $775.000. Each town negotiates its own contract with the cable company.
More than one fund, A State Budget, and regulation
In CT Cable TV providers fund 1) General Fund (Tax on the gross receipts of all video providers ) 2) Pass-thru a fee assessed on subscribers to Community TV ranging from $4.82 to $11.04 annually and 3) Tech Grant Program (PEGPETIA Public Act 07-253) also levied on Satellite TV providers.
The pass-thru is the source of Community TV operational funding. It is not directly in the discussions nation-wide about accounting change because it is not assessed nation-wide. The General Fund dollars are the funds the language of FCC Docket targets. It is the same amount as the ‘contribution’ cited for the accounting change in the docket.
Since 2015, during CT Budget time, amendments have been used to sweep the Tech Grant Program dollars into the General Fund to help with the state budget crisis. When available as grants, this is the source of capital improvements fund for Community TV. Because of recent budget sweeps of PEGPETIA operators of PEGs speculate that there will be a ripple effect; and subsequent reduction in operation funding with any FCC rule change. With the diversity of channel capacity in CT it is hard to speculate more specifically.
It will not be the status quo; it will be worse:
In my opinion, fear of funding loss keeps innovative and responsive change from happening. CT regulations and management of Community TV is archaic and does not yield the best outcome for the investment required of cable company’s under the real need to value the rights of way they use. There is also a real need to determine what a community media resource should reasonably be expected to do now that our original functions might be done better, on different platforms.
There are some very dedicated community members who have worked within the margins of unrealistic budgets providing innovative services. There are people in this fringe industry fighting to keep their jobs. Everyday potential for better is lost in the competition for the eyeballs from our community rather than sparks of discovery in the creators and viewers with life connecting and make-a-difference content.
Could WPAA-TV survive significant funding changes?
That will be left for another post.
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Sources: Filings related to the docket and the US Conference of Mayors and and 42 years as a citizen media advocate in Connecticut.
US Conference of Mayor’s Letter to all Municipalities Sept. 2018
The FCC’s aggressive new posture – as set forth in three separate actions – is a clarion call to all mayors and cities that local governments’ property rights are now on the chopping block at the FCC. On 9.10.18 The Conference issued a statement conveying the Conference’s strong opposition to these recent FCC actions.
Background on FCC’s Recent Actions
Approved Aug 2018 – https://docs.fcc.gov/
Adopted September 26. The second action – https://docs.fcc.gov/
The third action related to Community TV – https://docs.fcc.gov/
Each of these actions represents a radical new interpretation of federal law that would undermine longstanding local rules and practices underpinning decades of public-private partnerships in deploying communications infrastructure.
In these actions, the FCC, as an unelected and largely unaccountable independent federal regulatory agency, is directly attacking the core authority of cities and other local governments (and even state governments). The FCC’s actions are deliberate and systematic, with the clear goal of granting a favored industry preferential access to state and local government property, both threatening and diminishing legitimate and traditional authorities of cities, counties and states to manage and receive fair compensation for their public property on behalf of their taxpayers.
While the FCC has always coveted local property and railed about local practices here and there to respond to the advocacy and interests of large communications companies, what is different in these actions is the unprecedented scale and ferocity of the FCC’s proposed intrusion into local government authority and fiscal affairs.