SPECIAL ACT 22-23 | The Wrong Study

The Transformation of SB278 into SA 22-23 | A Study

Special Act 22-23 authorizes a community media study. The study proposal first appeared as a full replacement a.k.a. strike all amendment¹ of Senate Bill 278² on the last day³ of a robust 2022 Connecticut Legislative Session. The amendment substitutes immediate action, modifying regulations, with a study.

A study can be a legitimate step toward informed future action. However, this legislative maneuver has embedded obstacles. And, as I was reminded by a Wallingford state legislator when discussing the viability of a veto, studies can lead to no action.

Do you know how many studies we authorize that are never done? Or never have actionable outcomes?

— a Wallingford State Representative

The study focus takes a full turn from the objectives of the draft legislation raised to ‘remediate’ a community media funding crisis. Instead of authorizing a revenue source revision, this Special Act is encumbered with preconditions; “The study shall include, as a prerequisite to any recommendations…”

It is designed to ‘… review (certified third-party nonprofit organizations) operations and current funding structures for both operational and capital needs, rather than all community media providers. Instead of a problem statement, or study goals, there are preconditions slanted toward limiting cable TV corporations’ community investments.

The amendment to a bill entitled “An Act Requiring Multichannel Video Programming Distributors to Pay a Community Access Programming Fee” is absent any mention of Multichannel Video Programming Distributors. It is now “An Act Concerning a Study of  Community Access Programming Operations.”

The movement of the full replacement amendment on May 4th was remarkable. However, there has been very little transparency as to why there was a Hail-Mary change rather than just letting the bill be among those not voted on in this session.

Its passage underscores the immense trust and esteem that all the Senators, and much of the legislative body, hold for Senator Needleman. An overwhelming affirmative vote took place without members of the legislative committee being privy to how a full replacement amendment came to be before them. An insider claims, without providing any context, that a study was “…wanted by PURA.” Others suggest that the appeal of consolidation won the day with a business-minded “common-sense solutions” leader. And others not close to the topic wondered almost audibly, “What harm could there be in a study of a matter that seemed complex from the onset?”

While there was an expectation that action would help remedy the financial concerns of community media in the near term, there was also lingering concern over litigation and the perception of taxing consumers in a nickel-and-dime fashion. Research shows people leave cable TV for two reasons: Cost and entertainment choice.

The Call for a VETO | What can be learned?

What can be learned from the calls for a veto? Several front-line nonprofits and their legislative representatives agreed that starting over may be better than starting from a place of brokenness or bias. Among those behind consideration of a Veto were frontline Community Media administrators previously absent from the lobbying process, Energy & Tech Committee members who voted ‘No’ on the amendment, and others who voted ‘Yes’, because they relied on hearsay. Several voting ‘Yes’ believed that what was before them as an amendment was the product of consensus.

Joint, and independent, requests were sent to the Governor to Veto SB 22-23. The Chairman of the Energy & Tech Committee was also notified of concerns and asked to consider a course change.

In my letter to the Governor, I suggested a one-wire solution which is also the solution mentioned in this blog post. I concluded with:  As a retired business analyst and an advocate for the ideals of community media, in many capacities since 1986, I can attest that much is broken. But this bill delays identifying a solution targets one type of provider for review, and puts cable company profits at the center of the expected outcomes.

The invitation to review the legislative outcomes went out to all organizations and individuals affiliated with the Alliance For Community Media CT (est. 2009). Several franchise areas were represented in the subsequent Zoom discussions. The discussion identified consensus on many, not all, concerns. Three strategic options were reviewed: -Take No Direct Action on SB278, Mobilize to Veto SB278, -Mobilize to identify concerns, and expedite the timeline. Participants delegated, regrouped, sought expert opinions, and discussed opinions. The informal consensus was reached on the following:

• Limiting the study to a subset of community media providers manifests implicit bias.
• Concerns about the following language “a prerequisite to any recommendations” and “an analysis and recommendations related to the state-wide consolidation” all while suggesting funding limits based on existing franchise areas.
• The timeline for the study is too long. It defers any legislative action to a short 2024 session.
• The bias of setting a fiscal cap on future cable corporation expenditures before a study is conducted. [Of particular note, the specificity of the fiscal timeframe is the three highest revenue-loss years, a 3-year period which had only one PEGPETIA capital grant cycle. It excludes the current PURA Docket 21-07-26, which authorizes the most substantial CPI increase in the history of the Annual Community Support Review process and includes some remediation of long-term baseline funding disparities.]

and recapped as

Please veto SB 278 as passed in amended form. The original bill sought improvements for the nonprofit community access organizations. The strike-all amendment, only visible on May 4, changes this to a study, delaying help for those nonprofits, suggesting that “state-wide consolidation” is a solution, and putting a “prerequisite” on any funding recommendations from the study. Delay and limits on the proposed study have the opposite effect of the original bill. … it would be better to start over again in 2023 than struggle with a flawed study.

And finally, we agreed that we must hang our hope on the broad exercise by PURA of this language “but need not be limited to.”

Questions most wished to have answered:

1. Can the due date of the study [December 15, 2023] be changed in the special session or advanced by PURA on its own to Jan 15, 2023?
2. Can the scope of the study be broader than the preconditions infer?
3. Can corporate providers of community media be a source of comparative data?

Wrong Study

The problem with SA 22-23 is that the ‘whole’ is not identified for study. A comprehensive study would include a review of all stakeholders’ interests. Data collection would identify consumer needs and connect, in some manner, to use of public rights-of-way. Equity would be for the consumer, not the cable provider.

Much of the focus to date has been on the fiscal sustainability of community media. Therefore, study recommendations should address revenue sources and criteria: reasonable, reliable, and sustainable with low-impact oversight. But we need an infrastructure transformation that aligns with our communities of interest in digital transformations. To accomplish this requires adaptive leadership. Ironically, a recent McKinsey Report concluded with a perfect construct of our current dilemma:

“What we have and what we don’t have is constructed by the decisions that are made on what data to collect, and what data not to collect. To have a data-informed environment is incredibly important, but that requires us to make decisions about what we’re collecting, what we’re interpreting, and how we’re interpreting it.”       

 –Tsedal Neeley, the Naylor Fitzhugh Professor of Business Administration at the Harvard Business School, The Digital Mindset: What It Real

A PURA Docket is not a study. We have over a decade of data without analysis from PURA Dockets. That data needs analysis to identify a way forward. Those who started this ball rolling toward where we find ourselves today, suggested a ‘study group’ of stakeholders. Study Groups are often long-term iterative engagements that devolve into deals and compromises rather than a collection of baseline data from which to draw conclusions.

All stakeholder data should be included: interviews, archival reports, and a survey based on decisions about what new data is to be collected. Data can also be a baseline for future reporting and accountability.

A comprehensive study would go further than how community media is underwritten. It would identify best practices. It would compare outcomes across all provider models such as community involvement, production volume, user access and satisfaction. It would identify factors that influence success or constrain outcomes. It would identify and suggest how to avoid current pitfalls. With such a study, there will be significant disappointment in the findings and identification of boundless opportunities.

Community Media Needs Assessment

A method of study is already conditionally prescribed by law. PURA could have ‘on its own motion’ or as an ‘order’ in Annual Review initiated a comprehensive study without a new legislative directive. PA 95-150 weakened by PA 07-253 amended 16-333 as regards assessments. Both public acts establish cable companies as the ultimate responsible party for community access. And the request by cable companies for data and analysis in Docket 21-07-26 provided a clear opening to initiate a study beyond the scope of a docket.

PA 95-150 is the law which requires cable TV companies to fund public access programming.

PURA was reminded of the needs assessment tool during the 2022 Annual Community Support Review Docket 21-07-26 when Comcast asked for analyzed cumulative data. If PURA was truly behind the transformation of the bill into a study, maybe the conditional nature of needs assessment was a concern. If they were actors in the process the word needs assessment could have been incorporated in the language of the amendment. PURA, predominantly lawyer, could have wanted a directive. If so, did they weigh in on the preconditions?

By law, applicants for cable franchises must pay for an assessment of community needs, conducted by an independent consultant. The act eliminates this requirement once an area is subject to effective competition.

A need presumes a gap between a current and desired state. One of the challenges in our collective story is the lack of consensus between all stakeholders on the desired state. Identification of solutions and opportunities requires clarification of the problem.

What is the problem? Lack of funding for community media? Lack of cost-effective operational practices? Lack of community involvement? Does it all begin with a policy failure? Is there a clear link between use of public resources to a significant community investment? How local is local? Should an urban neighborhood have the same access to tools, stage and training as a rural town? Who decides? What are the reasonable needs of a community?

Ultimately, a needs assessment would help draft an underlying policy from which to derive laws and regulations. Innovation in media delivery, and market shifts such as a new generation of cord-nevers who can not cut a cord they never had, should not devolve into valuing civic investment or cost-benefit analysis. But it has. Regardless of how citizen media is valued by those required to underwrite it, it is a significant community investment whose outcomes can address civic needs such as media literacy.

Can we agree to be forward-thinking about our historic roots?  Can a substantial community investment derived from use of public resources be optimized as a civic investment? It is a democracy movement after all.

Is Positive Transformation Possible with Study?

Has the community’s trust been breached? Have the nonprofit community TV providers been set up for failure? Time will tell.

Special Act 22-23 begins: The chairperson of the Public Utilities Regulatory Authority (PURA) shall conduct a study…

Can SPECIAL ACT 22-23  be transformed into the information-seeking-tool needed to advance Connecticut’s under-valued, under-used, under-funded and ultimately ‘unremarkable’ community media environment?

Can local journalism, citizen media, transparency in government, digital literacy training, advocacy storytelling, and lifelong and specialized learning opportunities, be the hallmark of our collective effort to uplift voices, talents and inspire community engagement?

Susan Huizenga, WPAA-TV Executive Director

Backstory: What Was The Legislative Intent?

The SB278 legislative initiative was a response to rapid declines in nonprofit community media revenue⁴. Certain advocates sought government authorization to charge the newest commercial enterprises in a manner similar to cable TV providers. Originally, SB278 sought to extend the assessment of a use fee on other entities using the same public rights-of-way and infrastructure as cable TV providers. In other words, with the same public interest consideration, any company that provides similar services (TV, or video content viewable on TV) using public resources should be charged.

Anyone familiar with how community media is funded is acutely aware that every instance of cable TV cord-cutting removes up to $10 a year from community media revenue. There is significant evidence of revenue loss; $1,000 for every 100 cords cut. One might assume that the cable TV industry is concurrently harmed by the exodus of cable TV viewers. This assumption is not correct. Earlier this year, I explored cable TV history and the rebranded industry’s skyrocketing revenue here.

A Joint Favorable, SB278, was raised out of committee on March 22 as a concept more than a fully formed bill. There was enough legislative support for remediation⁵, but no clear path forward. The chairman was entrusted with cultivating consensus language. A gargantuan task.

Based on the language of the amendment, and rumors as to who drafted it, I assumed that the bill raised out of committee poked one of the big bad wolves in this unending fairy tale about democracy: AT&T.

The direct consumer impact of the original SB278 proposal could be significantly less than $10 a year. Yet, SB278 was described as the most lobbied bill during a very impressive 2022 Connecticut Legislative Session. How did such an esoteric service, community media, garner so much coveted attention from our lobbied legislators? And why did the Office of Consumer Counsel extend so much advocacy time to a bill on community media?

Why? Because what happens in Connecticut could have an impact elsewhere for the cable companies. Keep that thought. 

Unfortunately, the details are entangled in the transformation of how consumers receive media, associated technological changes, and archaic and technical language in federal and state law and regulation. Technical language in legislation can unintentionally disable the intent of the law, always contributes to complexity, and adds to the prospects of litigation.

The regulation challenge of this infrastructure-usage relationship is not limited to America. As  Connecticut attempted to band-aid this revenue loss situation, Denmark approved a levy on global streaming services citing how a fragmented media landscape, “…can challenge the cohesion and democratic dialogue in our country.”

The devil is in the details.

– Senator Needleman, Energy & Technology Committee Chairperson

A levy is presumed to be a tax. In America, our levy is more like cheap rent. It is a nominal cost for the use of public resources. Even the Cable TV industry agrees it is not a tax. Subscriber bills describe the pass-through cost to customers as a ‘Regulatory Cost Recovery’ fee. The bill inserts explain, “It is neither a government mandate nor a tax.” As a pass-through, these funds, which is the case in the ongoing Frontier Bankruptcy, can not be treated as assets or income.

Technology companies have armies of well-paid lawyers and lobbyists intent on saving their companies more than they are paid. Big bucks. The cable television industry no longer brands itself as television. Together with AT&T, which entered and exited the Connecticut cable TV market leaving significant wounds, they continue to ignore the potential value of supporting local communities’ media creation. Their agenda is disconnected from public interests and use of public rights-of-way for commercial purposes.

The most complex Public, Educational, and Government Access In The Nation

I believe that SB278 was on a flawed course. It was addressing a symptom instead of the structural problems inherent in enabling relevant community media. But, the implied scope of the Special Act 22-23 study has even less to do with the problem. An unfunded study, conducted by one of the stakeholders in a flawed system, is not likely to reveal an adequate solution without strenuous advocacy.

The problem is the use of public rights-of-way for new profit making ventures without compensation, and how we got here:  Connecticut has the most complex, inequitable mechanism for providing Public, Educational, and Government Access and related funding in the nation. It is a hodgepodge of corporate, regional, town and mixed service applications with a variety of channel capacity allocations.

Franchise renewals all but disappeared with the entry of the now nearly defunct statewide cable franchise. AT&T, now a player in streaming services, crashed into the cable TV space around 2007. IPTV, which they claimed was not to be cable TV, disrupted the market. Their statewide franchise business strategy added complexity to regulations and further disrupted community media. Frontier acquired AT&T’s Network assets in 2014, inclusive of all its noncompliant obligations to community media.

In 2008, franchise renewals ceased; muting much of Public Act 95-150 inclusive of the once-required ‘needs assessments’ paid for by the cable companies. Franchising, occurring in 5 to 12-year intervals, was the opportunity to review operations & capital investment funds for community media. A combination of action, and inaction, left franchises, regardless of where franchises were in their cycle, with subscriber fees locked in as a base for the ‘new’ Annual Community Support Review process.

Certain advocates initiated legislative action for a capital expenditure grant program to address a portion of the funding hole created by the absence of active franchising. This gave rise to another less-than-ideal funding mechanism: PEGPETIA, a competitive grant program for select capital expenditures. The availability of these funds has been irregular. And truth be told, there was a presumption that the program would create a spigot of funds. Funds that would be available to stimulate content creation in addition to providing timely updates to community media and schools’ technology resources. OOOPs.