Ajit Pai's New Gift to Cable Companies Would Remove Taxes and Local Rules

Ajit Pai continues its multi-year fight against local broadband regulation with a plan that would prevent cities from using their authority over cable TV networks to regulate Internet access.

President Pai's proposal, to be voted on at the August 1 Federal Communications Commission meeting, would also limit the fees that municipalities can charge cable companies. Cable industry lobbyists have urged the FCC to prevent cities from charging broadband cable broadcasters' fees.

If approved, Pai's proposal would ban LFAs [local franchising authorities] to use their video franchising power to regulate most of the non-cable services, including broadband Internet services, offered by incumbent cable operators on cable systems. "Pai's Proposal Complains Title VI, the section on cable regulation that Congress added to the Communications Act with the 1984 Cable Act, does not explicitly provide for it.

Pai's proposal says:

These efforts seem to have followed the decision of the Oregon Supreme Court in City of Eugene v. Comcast, which confirmed the imposition by the local authorities of the franchise of a license fee of "telecommunications" of 7% for the provision of broadband services on a cable system free of copyright with mixed use installations. To solve this problem, we have now expressly waived any state or local requirement, imposed or not by a franchising authority, that would impose obligations on franchised cable operators beyond what Title VI allows.

Despite the decision of the Oregon Supreme Court against Comcast, Pai's plan states that "the majority of courts … have interpreted section 622 (b) as prohibiting states and localities to impose higher fees than those expressly authorized by Title VI ". Article 622 prevents local authorities from collecting more than 5% of the gross income of a cable operator during a period of 12 months.

Pai's proposal also stipulates that "in-kind" contributions required by local franchising authorities must be taken into account in the 5% ceiling ", with some exceptions, including an exemption from certain capital costs associated with channels of interest. Public, educational and governmental (PEG) access. "

FAC does not have the power to preempt, says the group

But does the FCC have the power to preempt these local taxes and requirements? Public Knowledge, a consumer group, says the FCC can not anticipate local broadband regulations because the FCC led by Pai has relinquished its authority over broadband. The FCC did so when it reclassified broadband as an information service as part of the repeal of the rules of internet neutrality, Public said Knowledge.

"After classifying broadband as an information service, the Commission determined that it was an unregulated service for which it had no power. "Public Knowledge wrote in a November 2018 filing in which it urged the FCC to abandon the plan. The FCC can not regulate or anticipate local regulations on "any service outside its jurisdiction under Title II of the Common Carrier Services or its Title I on" ancillary "matters to wireline communication," the group.

The FCC could "assert its subsidiary authority over broadband" by using its regulatory power "services falling within its general area of ​​competence" by wire or radio communications, Public Knowledge said, but the FCC refused to assert such an auxiliary authority in this case, it does not have the power to pre-empt, the group said.

Public Knowledge's argument is the same one used by state attorneys general and other parties to the dispute against the FCC's attempt to preempt network neutrality rules at the state level. This case is already under trial in the United States Court of Appeals for the District of Columbia Circuit, which could issue a decision at any time. The outcome of this case could affect future appeals of Pai's new pre-emption plan.

In another pre-emption effort, the FCC of Pai voted last week to eliminate part of the San Francisco order to promote broadband competition in apartment buildings and homes. other multi-tenant buildings. Pai's FCC has also pre-empted approximately $ 2 billion of local fees charged to mobile phone companies for the placement of equipment on public rights-of-way.

Decade plus the battle over fees

Cities and towns are fighting against FCC attempts to limit their authority over cable networks for more than a decade. Pai's plan stems from a July 2017 decision by the US Circuit Court of Appeal in a 2007 case concerning FCC orders.

The 2017 court decision overturned FCC's previous attempts to treat "in-kind" payments as "franchise fees" to reach the 5% cap, as well as an FCC attempt to " prohibit local franchising authorities from regulating the provision of non-telecommunication services by the incumbent cable providers. "The court remanded the case to the FCC, claiming that the commission had to explain what contributions in nature constituted franchise fees and constituted a valid legal basis for anticipating local regulations.

Pai's new proposal justifies preemption by referring to the language of the cable law that says "[a] The franchise authority may regulate the services, facilities and equipment provided by a cable operator only to the extent compatible with: [Title VI of the Act]. "

Pai advanced with this plan despite the opposition of the municipalities. The FCC's proposals "violate the clear language of the law that allows local franchise authorities (LFAs) to collect franchise fees and impose franchise obligations on cable operators," says a document filed by the FCC by dozens of local governments, including Anne Arundel County, Maryland; Boston, Massachusetts; Atlanta, Georgia; Dallas, Texas; the District of Columbia; Portland, Oregon; and Los Angeles, California.

The cable industry's main lobby group, NCTA, has urged the FCC to approve Pai's plan, saying the commission should "put an end to the damaging practices of local and national franchise authorities who ignore clear limits. of the Cable Act to the ultimate detriment of consumers. "The group said that the financial impact of local taxes" could weigh entirely on cable operators, on consumers or on both groups ".