On May 26, the Sixth Circuit Court upheld the reforms to cable franchising fees spearheaded by former Federal Communications Commissioner (FCC) Chairman Ajit Pai and current FCC Commissioner Brendan Carr. NTU has long supported these efforts and are grateful to see this pro-taxpayer change upheld.
Cable companies must obtain a franchising agreement from local franchising authorities (LFAs), and under the Cable Act of 1984, LFAs are able to impose a fee of up to 5 percent on gross revenues of cable operators from the operations of cable systems. This cap was intended to strike a fair balance by both compensating local governments for use of their public rights-of-way and ensuring fees did not skyrocket for consumers. However, some local governments found ways around this rule and attempted to use their power to force cable companies to perform ludicrous tasks through in-kind contributions. NTU Director of Federal Affairs, Thomas Aiello, flagged this exploitative practice in 2020 letter to lawmakers:
In fact, a report by the FCC highlighted just some of the laughable requirements some companies have to meet in order to service customers, noting “the Commission cited the following as examples of in-kind contributions unrelated to the provision of cable services: traffic light control systems; a requirement to prepay $1 million in franchise fees and to fund a $50,000 scholarship; a $13 million “wish list” in Tampa, Florida; a request for video hookup for a Christmas celebration and money for wildflower seeds in New York; and a request for fiber on traffic lights to monitor traffic in Virginia.”
The Court’s ruling that these in-kind contributions must count towards the 5 percent fee will reduce barriers to deployment and help lower prices for consumers. Former Chairman Pai and Commissioner Carr’s tireless efforts have delivered yet another win for taxpayers.