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IPI Applauds FCC Effort to Curb Municipal Abuse of Cable Franchise Authority

Institute for Policy Innovation

DALLAS – Institute for Policy Innovation (IPI) President Tom Giovanetti released the following statement:

We applaud the Federal Communications Commission (FCC) for its recent actions to clarify a number of issues related to local cable franchising for the benefits of consumers under Section 621 of the Cable Act.

The FCC’s actions would put an end to a number of harmful practices of some municipalities that abuse the Section 621 rules and increase costs to consumers. Specifically, the FCC’s new Section 621 order would ensure:

  • Treating the statutory 5% franchise fee cap as a real cap, which means that any additional requirements municipalities place on cable providers, such as in-kind contributions, must be included in and limited by the 5% franchise fee cap.
  • Prohibiting local municipalities from using their video franchising authority to regulate non-video products moving over the same cable, such as broadband internet service but also including unknown future innovative products and services.

Some municipalities have been using their local franchise authority to extort often unreasonable and absurd additional in-kind contributions from cable companies, above and beyond the statutory 5% cap. And because the local franchise authority holds the ultimate power of awarding or retracting the franchise, this gives them an inordinate amount of negotiating power.

Cable companies have little choice but to pass on these additional expenses to their customers, so local franchise authorities are essentially using their authority to pass additional taxes and fees onto consumers.

Additionally, some municipalities have attempted to impose additive fees and regulations to the provision of services other than video, such as broadband internet service, despite having no statutory authority to do so. The FCC’s Section 621 recent orders would provide a basis and further clarification for prohibiting such additive fees and regulations.

We appreciate the FCC’s aggressive efforts to protect consumer interests and ensure that out-of-control local governments don’t erect counterproductive barriers to increased adoption of broadband services throughout the country.