Counties concerned that proposed FCC rule could jeopardize local finances

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NACo expresses concerns regarding the FCC’s proposed rule deregulating local franchising authorities FCC rule would consider certain contributions a “franchise fee,” jeopardizing revenue paid to counties to help support the maintenance of public rights-of-way

On November 14, NACo joined a coalition letter expressing concerns regarding the Federal Communications Commission’s (FCC) proposed rule usurping local franchising authorities. Under the proposed FCC rule, cable related, in-kind contributions required by local franchising authorities would be considered a “franchise fee.” Franchise fees are used by local governments to maintain public rights-of-ways used by cable companies. Local franchising authorities often require cable providers to offer in-kind contributions, such as public, educational or government (PEG) channels, as a condition to a franchise agreement. These in-kind contributions, including PEG channels, provide significant public benefits to communities, such as transparency and accountability through access to local and regional government meetings; educational programming including for-credit courses; coverage of local events; local election coverage; candidate forums; and public safety programming.

By considering in-kind contributions as a “franchise fee,” the proposed order would require that the expense incurred by cable operators providing PEG channels be subject to a statutory five percent franchise fee cap established under the Communications Act. Such a cap could contribute to a reduction of 30 to 40 percent in franchise fees if the proposed rule goes into effect resulting in a significant drop in resources for PEG channels.

The proposed FCC rule would also allow cable companies to deduct the fair market value of any services required by a franchise agreement. This would could have a disproportionate impact smaller communities, where the revenue generated from a cable TV channel in a small community is more valuable than that generated in a large urban area.

NACo will continue to engage with the FCC to further highlight the importance of in-kind contributions and the impact the proposed rule would have on PEG channels.

About Arthur Scott (Full Bio)

Associate Legislative Director – Political Outreach Manager

Arthur Scott serves as Associate Legislative Director for NACo’s Agriculture and Rural Affairs portfolio, lobbying on a broad range of issues facing rural counties. Arthur also serves as Political Outreach Manager for NACo developing and leveraging strategic partnerships to help address key county priorities in Congress and the Administration.

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