Cable-Delivered Streaming Services Seen Raising Franchise Fee Questions
LONG BEACH, Calif. -- The growing gray area of streaming services being delivered by cable providers needs to be addressed by local franchise authorities (LFA), speakers urged at NATOA’s annual conference Wednesday. Keller & Heckman localities lawyer Sean Stokes said since states' broadband equity, access and deployment (BEAD) program funding proposals need to show steps carriers will take to reduce costs and barriers to deployment, carriers will likely use this as an invitation to look for more limits on municipal authority over the management of rights of way or pole attachments. He called it “a rerun” of the same pushes made for deployment reforms to aid 5G rollouts.
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Cable operators, looking to get out of franchise fees, are trying to define services based on the end customer and not on the product being delivered, said Garth Ashpaugh, president of Ashpaugh & Sculco, a localities consultancy on rights-of-way financial issues. He said services like Comcast's Now TV virtual MVPD service for its internet-only customers arguably should fall within the definition of cable service. He called cable arguments that such streaming video services are delivered via IP "a distinction without a difference" since cable service increasingly includes IP-enabled services.
The cable industry "has been pushing things" because localities individually lack resources to challenge them, said Best Best localities lawyer Gerry Lederer: “At some point we're going to have to take the challenge forward” and argue streaming video delivered over cable systems is a cable service, he said.
Renewals of cable LFA agreements, which had been on hold during the pendency of the FCC's LFA in-kind services proceeding, have picked up again, speakers said. “We are swamped” with renewal work that had been on pause because neither side wanted to move until there was clarity on how in-kind benefits would be valued, said Lederer. Numerous local franchising authorities are having budget struggles as franchise fees are dropping precipitously, while renewals have “ridiculous” terms being offered to localities, said Lawrence Cooper, general counsel-D.C. Office of Cable TV, Film, Music and Entertainment.
LFAs are now in the third generation of franchising, Lederer said. First-gen agreements were often 20 years long, with LFAs often not asking much of cable operators, he said. Second-gen agreements were “a lot richer,” costing cable operators more, and they saw the benefits of just trying to extend existing agreements, he said. The challenge facing LFAs in the emerging third generation, after the FCC order, is deciding whether it’s better to hold onto the terms of those existing agreements, he said.
Cable TV and community media consultant Sue Buske said she’s seeing a growing number of cable system LFA proposals that include language letting companies still operate in rights of way when no longer offering cable service. “That’s something coming up all over the place,” she said.
Some states might not have received as much in BEAD allocations as potentially expected because their broadband offices weren’t ramped up enough to effectively make the case for more funding, Stokes said. States receiving particularly sizable BEAD funding amounts should be able to put significant funds toward their underserved, and not just unserved, he said.
The new FCC broadband maps are vastly better than in the past, but multidwelling units have been one area of weakness, said Jorge Fuenzalida, digital infrastructure consultancy JLA Advisors managing partner. A notable number have been added back in recent weeks after challenges, he said. BEAD funding has some providers “playing offense,” hurrying to fill in unserved areas before a competitor moves in, Fuenzalida said. The challenge with that is the time crunch, with BEAD funding imminent, he said.
Digital equity -- ensuring internet access “is fast, open and fair for everyone” -- is a major FCC priority, said Consumer and Governmental Affairs Bureau Chief Alejandro Roark. Citing the ongoing improvements to the agency’s broadband maps, Roark said the commission is “getting to a place where we have a product we’re really proud of.” By spring, broadband nutrition labels should start rolling out, he said. He urged state and locality advocacy for additional affordable connectivity program funding.