6th Circuit Hammers at FCC LFA Order, LFAs
A 6th U.S. Circuit Court of Appeals panel seemed skeptical both of aspects of the FCC's 2019 local franchise authority order and of LFAs' ability to charge separate fees for cable operators' right-of-way access for their cable and broadband services, during oral argument Thursday. The timing of a decision on the challenge, primarily by localities, of the FCC's 2019 local franchise authority order (see 1909120028) isn't clear, we're told.
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Judge Raymond Kethledge repeatedly poked at the state and local law preemption route the FCC took in the order and whether the LFAs were singling out cable operators or imposing laws of general application. He said the Cable Act "conspicuously" doesn't say it authorizes cable operator regulation by LFAs but says such regulation has to be consistent with the act. To preempt, he said the FCC needs to point to specific provisions that are violated or circumvented by LFAs imposing a fee or requirement, rather than saying Title VI of the act doesn't authorize it. FCC lawyer Maureen Flood said imposing cable franchise fees on non-cable services is that violation.
Kethledge said the FCC also invokes a section of the act that bars a franchising authority from requiring a cable operator to provide telecom services or facilities as conflicting with LFA fee imposition, but it's not clear how that fee ends up requiring a cable operator to provide telecom services. "I don't see any conflict at all here," he said. Arguably, LFAs are requiring provision of telecom services or facilities when a cable operator is required to get a second franchise, Flood said.
Kethledge also pressed Flood on the FCC order's valuation of in-kind services. He said the FCC focuses on fair-market value, because that's what LFAs would pay if the cable operator didn't provide the services, but "it seems to me the FCC has its payers mixed up." What an LFA would pay wouldn't be germane, he said, and instead the focus should be on what the cable operator is paying to provide that service. Flood said the FCC went with fair-market value mainly because of "administrability," since calculating actual cost would require cable operators to do cost studies. "That doesn't sound like putting a man on the moon," Kethledge said. Flood said there are numerous ways to value costs.
Judge Richard Griffin said he's "concerned" about conflicting with the Mozilla v. FCC precedent, regardless of FCC and NCTA arguments that it's an unrelated case. Flood said the D.C. Circuit in Mozilla shot down the FCC preempting law based on agency general policy of deregulation, but the LFA preemption has a statutory basis.
At another point, Griffin indicated he didn't think the respondent FCC had cited the clear congressional authorization it had to preempt state and local law with the LFA order.
Judge David McKeague and Tim Lay of Spiegel & McDiarmid, representing the petitioners, discussed LFAs levying fees based on cable revenue, plus non-cable fees, for the same right-of-way access. Lay said a cable operator can recover from its subscribers those cable franchise fees, and if it were also immune from telecom ROW fees, it would have a competitive advantage over LECs facing those fees. McKeague said those LECs' customers pay overhead that includes the fees, same as cable customers do.
Kethledge and Cheryl Leanza, also representing the petitioners, disagreed whether cable operators had a statutory buildout obligation, with Leanza asserting they don't, but the judge citing language requiring provision of service regardless of income level.