Litigation Seen as Next Step, After FCC's 3-2 LFA Vote

Alliance for Community Media President Mike Wassenaar said litigation on the pre-emption issue is likely, and also on the franchise fee definition issue that was highlighted by Starks. He said it's not clear who the parties will be. Starks in his dissent said the FCC was taking an "expansive and unprecedented reading" of what franchise fee means. He said expanding it to include cable-related in-kind contributions "will upend decades of settled regulatory determinations ... and cause a seismic shift in the relationship between LFAs and providers," giving cable operators far more leverage.

Wassenaar said he also expects a further rulemaking, pointing to Commissioner Mike O'Rielly's saying he will advocate a "fundamental overhaul" of the franchising regime, with a focus on further curbing "creatively harmful efforts" by franchise authorities.

The party-line split was expected (see 1907300037) and some LFA and public, educational and government access interests said a legal challenge is likely (see 1907160035). Critics of the order said discussions about details of litigation, including timing, will likely come after the final language is released.

"Local journalism is disappearing," Commissioner Jessica Rosenworcel said, saying the agency dropped the ball on a chance to reinvigorate such localism when it cut PEG going beyond setting "reasonable limits" on statutory franchise fees, and instead jeopardizes daily operations of PEG stations. She said the absence of cable ISP commitments to expanding broadband capacity if the FCC took these steps "speaks volumes," she said. The item "is unnecessary, unsupported by law or precedent, and risks causing grave harm to local communities," Starks said.

The cable industry applauded the approval. "Consumers expect and deserve next-generation broadband networks and [that shouldn't be] slowed by some localities’ attempts to evade Congress’s statutory framework and impose duplicative taxes and fees," NCTA Chairman Michael Powell said. America's Communications Association said the LFA action was "based on real-world problems smaller cable operators face, sound readings of the statute, and pro-competitive policies." It said the order "correctly balance[s] the FCC’s mandate to establish national communications policy with the right of state and local government to oversee their public assets.”

The U.S. Chamber of Commerce said the order "will cut down on the excessive fees" charged by localities, in turn lowering costs for consumers and also improving their internet access.

LFAs and PEG operators should take any disappointment to Congress, Chairman Ajit Pai said. "The job of administrative agencies like ours is not to rewrite laws set forth by Congress," he said. "It is to implement those laws." PEG operators and local governments would like to exclude more than just PEG capital costs from the franchise fee definition, but "that's not what the statute says," Pai said.

Cable and broadband bills have been treated like "a piggy bank to line government coffers,” Commissioner Brendan Carr said. “Those illegal taxes only raise our costs, make it harder to access the Internet, and curb competition." He said abuse by some LFAs “has consequences. Money that could otherwise be spent on network deployments and upgrades is instead diverted to the government’s own pockets." He said the various edits he proposed were incorporated.

The order "provides a windfall to largely monopoly cable companies on the backs of local communities," NATOA said. It said the weight of comments from local governments, PEG access providers and members of Congress objecting to the order vastly outnumbered the few commenters that backed it, but the FCC "decided to drastically rewrite federal law and wipe out 35 years of cable franchise agreements that had been negotiated based on mutual understanding of what the law meant." It said some communities may shutter PEG operations as a result.

PEG and allies, “probably correctly,” see that cable “will place a too-high value on the local channel slot as a way to lower their costs,” CCG Consulting President Doug Dawson blogged Thursday. But the rules change was “probably inevitable,” with cord cutting inevitably whittling away franchise fees and even diminishing the requirement of having a franchise. “If Congress ever passes another telecom act, they will probably consider deregulating both cable TV and landline voice,” he said.

O'Rielly said the FCC "will be watching closely" that franchise authorities don't try to sidestep the changes in the order. He said Congress should see what the FCC has done and consider its own "ambitious but much-needed review of Title VI" of the Communications Act.

Meeting Notebook

The FCC voted to implement new rules to help ensure callers to 911 using multiline telephone systems (MLTS) (such as in hotels, office buildings or college campuses) can dial out directly without using a prefix, such as "9" (see 1907310006). The agency was mandated to come up with the new rules after Congress voted unanimously for Kari's Law (see 1802160032) in response to the murder of Kari Hunt. Her father, Hank Hunt, who pushed for the legislation, was at the Thursday meeting. Commissioner Jessica Rosenworcel called the moment bittersweet. "I'm afraid our efforts don't go far enough," she said, especially because the changes mandating that MLTS equipment can dial 911 directly are required only on a going-forward basis. Rosenworcel urged the FCC to educate the public that it was possible, even after these new rules, adopted in docket 18-161, that their particular MLTS phones do not dial 911 directly. She also wanted the FCC to adopt a specific timeline for bringing MLTS managers into compliance and to specify what types of equipment upgrades would trigger the new requirements. She said she supported a Further NPRM on the issues.

Thursday's 5-0 FCC approval of streamlined small satellite licensing procedures, which was expected (see 1907250023), was a springboard for some commissioners to urge a variety of further space-related revisions. Rosenworcel again sought review of the FCC’s orbital debris rules (see 1905090031) and said the agency needs to conclude its proceeding on spectrum needs for commercial space launch. She also said the FCC needs a seat on the National Space Council, which is made up of a variety of executive agencies including NASA and the departments of Transportation and State. “Cutting the FCC out of this discussion is a mistake,” she said. Also urging movement on the orbital debris and launch spectrum proceedings, Starks said the agency needs to encourage “more spectrally efficient” satellite systems by considering a system’s spectrum efficiency in areas like review of applications in future NGSO processing rounds. Pai said space has been a priority in his administration. He said the streamlined incensing option doesn't replace the Part 25, Part 5 and Part 97 application processes. He said there's no reason smallsats, "with the life expectancy of a guinea pig," should be regulated the same way as vastly bigger satellites that will be in orbit for centuries. The additional licensing regime "can only serve and encourage continued investment in the small satellite communications, imaging and remote sensing markets" while helping boost the U.S. commercial satellite industry, the while helping ensure continued American innovation and leadership in the overall commercial satellite industry.” the Satellite Industry Association said. Asked about the orbital debris proceeding, Commissioner Mike O’Rielly said the FCC is continuing to work with other agencies to find a balance of proper jurisdictions: "It's not something I think is stagnant; it's not rushing forth."

The FCC approved 5-0, without any objections, rules for an upcoming auction of more than 17,000 numbers in the recently opened 833 toll-free code. Commissioners approved application, bidding and post-auction procedures for the FCC's first-of-its-kind auction, to be held Dec. 17. There was no discussion of industry concerns that responsible organizations that don’t meet reporting requirements face a potential 60-day suspension from the SMS 800 Toll-Free Number Registry. “The 833 auction will serve as an experiment in using competitive bidding to assign toll free numbers equitably and efficiently,” Pai said: “With this vote, we move one step closer to this first-of-its-kind auction by adopting detailed application, bidding, and post-auction procedures.” The FCC noted many of the numbers for sale “are easy to remember, such as 833-LAWYERS or 833-333-3333.” The FCC previously selected Somos to administer the auction. The agency bills the auction as "an experiment in using competitive bidding as a way to assign toll free numbers.”

Asked about DOJ’s recent agreement with Sprint/T-Mobile and Dish Network (see 1907260071), Pai told reporters the FCC itself won important concessions in its earlier negotiations (see 1905200051). “We believe the commitments we've gotten from the parties, especially nationwide deployment of 5G to some 99 percent of the country within six years, broadband offering, some of the other benefits, will be very much in the public interest,” he said. The FCC will look at whether Dish is a “credible buyer” of prepaid, spectrum and other assets from T-Mobile/Sprint and whether “they have an incentive and ability to compete,” he said. Pai said he will circulate a draft order “soon” on the T-Mobile/Sprint transaction.