Legal Updates on Cable Franchise Fees and Regulations
Recent legal developments in the City of Eugene v. FCC case and NCTA v. Frey case regarding cable-related franchise fees, non-monetary requirements, and regulatory changes. The Sixth Circuit rulings impact how franchise fees are calculated, the value of non-monetary requirements, and the role of the FCC in preemption. Learn about fair market value considerations, mixed-use rules, and potential future actions in the cable industry.
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Presentation Transcript
Jeff Bayne jeffrey.bayne@spiegelmcd.com SPIEGEL & MCDIARMID LLP
City of Eugene v. FCC (Sixth Circuit 2021) August 2019: FCC issues Third Report & Order on Section 621(a)(1) of the Cable Act Cable-related, non-monetary franchise requirements count towards franchise fee cap $$$ Free and discounted services $$$ PEG support payments (franchises after 1984) $$$ PEG access facilities PEG capital costs PEG transport facilities ??? PEG channel capacity $$$ I-Nets Built-Out Requirements Customer Service Requirements SPIEGEL & MCDIARMID LLP
City of Eugene v. FCC (Sixth Circuit 2021) How to value these non-monetary requirements? Fair Market Value Mixed-Use Rule Franchising authorities can t regulate non-cable services except as expressly permitted in the Cable Act Preemption of Other State & Local Requirements State and local governments can t impose fees or requirements on non-cable services provided over a cable system SPIEGEL & MCDIARMID LLP
City of Eugene v. FCC (Sixth Circuit 2021) ACM, local governments, and others appeal Sixth Circuit: Upholds FCC s ruling that cable-related, non-monetary franchise requirements count towards 5% Franchise Fee cap BUT reverses FCC on how to calculate their value Fair Market Value Operator s marginal cost FCC s Mixed-Use Rule only gets in the way, but upholds the FCC s preemption ruling SPIEGEL & MCDIARMID LLP
City of Eugene v. FCC (Sixth Circuit 2021) Rehearing denied; Supreme Court doesn t take case What happens next? Implementation issues Changes to Cable Act? Future FCC action? SPIEGEL & MCDIARMID LLP
NCTA v. Frey (First Circuit 2021) 2019: Maine enacts An Act to Ensure Nondiscriminatory Treatment of Public, Educational and Government Access Channels by Cable Operators Within the last several years, cable operators began taking steps that made it more difficult to find and watch PEG channels. So ME adopts: Basic Tier Provision Anti-Channel Slamming Provision PEG HD Provision provisions Electronic Programming Guide Provision SPIEGEL & MCDIARMID Line Extension Provision LLP
NCTA v. Frey (First Circuit 2021) Cable Operators (NCTA) sue in federal court Claims ME Law violates federal Cable Act Claims PEG provisions violate First Amendment District Court rules for ME ME law provisions are consumer protection allowed under Cable Act unless specifically preempted None of the PEG provisions are specifically preempted NCTA failed to show infringement on cable operators First Amendment rights SPIEGEL & MCDIARMID LLP
NCTA v. Frey (First Circuit 2021) NCTA appeals (not First Amendment claim) Court asks for FCC s view; FCC declines First Circuit upholds Maine Law Even if not consumer protection, PEG provisions don t violate Cable Act s more general inconsistent with standard Rejects NCTA s facial challenge to Line Extension provision, but it could be challenged in particular franchise renewals SPIEGEL & MCDIARMID LLP
NCTA v. Frey (First Circuit 2021) What happens next? Implementation issues in ME First Circuit ruling binding in ME, MA, NH, PR, and RI Similar action in other states? State law Franchise requirements Future focus on consumer protection ? SPIEGEL & MCDIARMID LLP
