PORTLAND, Maine—A Maine federal district judge has upheld a state law requiring cable operators to place public educational and government channels (PEG) in the basic tier and on lower channels in the vicinity of broadcast stations.

The law also requires cable ops to put the channels in program guides and retransmit them in HD if they are originated in HD. There was also a buildout requirement that operators "extend cable service to areas that have a population density of at least 15 residences per linear strand mile."

NCTA-The Internet & Television Association had challenged the law and was understandably unhappy with the decision.

“We are disappointed with the court’s ruling," NCTA said in a statement. "We continue to believe that Maine’s burdensome network build-out and PEG requirements conflict with federal law and should be preempted, and that the PEG mandates independently violate cable operators’ First Amendment rights. We are reviewing the ruling and considering next steps.”

In her decision, U.S. District Judge Nancy Torresen said that while there might be cases where PEG franchise requirements raise constitutional issues, this was not one of them. "[T]he Plaintiff has not met its burden of showing that the State’s PEG provisions infringe on cable operators’ First Amendment rights," she ruled. Instead, she said, "the State simply seeks to put PEG channels on equal footing with the vast majority of other channels" and to channel placements they had held before.

She said she agreed with the state that the PEG channel mandate was a consumer protection law and within its police power to respond to consumer complaints.

"The State, by requiring that PEG channels be placed near the local broadcast channels and on the basic tier, is exercising its police power to ensure that the PEG channels—considered vital to an informed citizenry—are widely and easily accessible," she wrote. "Anyone who has missed the first 10 minutes of a television program because she was scrolling through the channels in search of it knows that the process can diminish the quality of the viewing experience. As such, the channel placement requirements qualify as consumer protection."

As to the buildout requirements, the judge held that "because Maine’s municipal franchising authorities derive their power from the State, the Maine Legislature has the right to dictate the terms of municipal franchise agreements, including line extension requirements."

She did not say that all such extension requirements would necessarily be reasonable, but also said they were not all de facto unreasonable, as NCTA had argued, adding that cable ops could challenge such extensions on a case-by-case basis based on the individual fact record.

WASHINGTON—New legislation introduced in the U.S. Senate last week would prevent cable TV operators from claiming the expense of public, educational and government (PEG) channels as in-kind contributions to municipalities that can be subtracted from the franchise fees they pay to local communities.

The bill, “The Protecting Community Television Act,” was introduced by Senators Jeanne Shaheen (D-N.H.), Maggie Hassan (D-N.H.) and Ed Markey (D-Mass.).

In August 2019, the Federal Communications Commission voted to allow cable companies to designate a value for PEG channels provided to municipalities and deduct that value from the franchise fees they pay.

According to the authors of the bill, doing so puts local governments in the position of choosing between support for PEG channels covered in franchise agreements and other community institutions like schools and libraries.

The legislation makes clear the cable franchise fees only include monetary assessments—not in-kind contributions.

“We need to bolster, not weaken, support for community television stations, which is why I’m cosponsoring this important legislation,”” said Shaheen. “I’ll keep working to ensure these stations have the resources they need to continue their programming that educates and informs viewers across New Hampshire.”

Hassan noted that PEG channels are even more valuable in an era of lowered funding for news. “As far too many local news sources face cutbacks and even closure, New Hampshire’s community television stations play an increasingly essential role in providing Granite Staters with important information about their towns and cities,” she said.

Owen Provencher, president of the New Hampshire Coalition for Community Media, commended the senators for understanding the importance of PEG channels. "These hubs of community connection and engagement provide a valuable platform for access to the information cities and towns need to thrive and the opportunity to express the unique cultural needs and the voices of the people they serve,” he said.

In an op-ed in Current this week, leaders of local community access TV criticized the FCC’s vote last week to deregulate local cable franchise fees that they say could threaten the future of PEG (public, educational, governmental) channels.

In the column, Ernesto Aguilar, program director for the National Federation of Community Broadcasters, and Mike Wassenaar, president/CEO for the Alliance for Community Media, said the FCC’s move could “devastate” PEG stations, adding that current trends in media consolidation and a decreased public trust in the media are proof enough that access to local news and information is more vital than ever.

“PEG stations supported through the fees have widely been considered a hallmark of media localism,” the writers said. “For the elderly, working people, students and everyone, PEG channels have been a window into the intricacies of City Hall, the classroom of a town’s college and the insightful, creative journalism and storytelling offered on public-access television.”

A local PEG channel’s airing of candidate forums and public meetings can help spur public interest in elections, especially in rural communities that don’t have local broadcast affiliates, they said, citing numerous examples of PEG channel programming that have helped “reignite waning interest” in local elections.

“Now multiply that success to 1,500 channels across the country,” they wrote. “All of these affected cities are at risk because of the FCC order, which treats local communities with contempt.”

The op-ed is available here. 

WASHINGTON—The FCC this week adopted new rules that prohibit excessive franchise fees and explains that local governments may not regulate most non-cable services, including broadband internet access service, offered over a cable system. These rules are a response to a remand by the U.S. Court of Appeals for the Sixth Circuit and set forth how local franchising authorities may regulate cable operators pursuant to the Communications Act.

The rule was adopted despite an 11th hour effort from U.S. Senators, who told FCC Chairman Ajit Pai that the new regulations could threaten the future of cable access TV, which relies on such fees.

“If implemented, the Order puts at risk critical funding for public, educational or governmental (PEG) stations, which are vital resources for residents across the country,” the Senators wrote. “These stations connect Americans to their communities, catalyze civic engagement and keep us up to date on the local issues and activities that affect our lives.

“Your proposal would force local government to decide between supporting PEG stations and supporting other important services for critical community institutions like schools and public safety buildings,” the Senators added.

In all, 14 senators signed the letter, including Edward J. Markey (D.-MA) and Sen. Elizabeth Warren (D-MA).

Chairman Pai, Commissioners O’Rielly and Carr approved the adoption while Commissioners Rosenworcel and Starks dissented.

Rosenworcel said the adoption of the new rules could have a detrimental impact on local community coverage.

“This agency should seize opportunities to reinvigorate local newsgathering and community coverage,” she said. “In fact, that has traditionally been a hallmark of Federal Communications Commission media policy.

“But on that score, today’s decision misses the mark,” she added. “That’s because it cuts at public, educational and governmental channels across the country. It goes beyond placing reasonable limits on contributions subject to the statutory franchise fee and jeopardizes the day-to-day costs, like staff and overhead, required to run such stations. I’m not the only one with this concern. Take a look at the record. We’ve heard from thousands of communities across the country worried we are cutting the operations of so many local channels. I am saddened that this agency refuses to listen.”

Under the Communications Act, every local franchising authority and every cable operator that offers cable service must comply with the Act’s cable franchising provisions, and local franchising authorities may charge franchise fees that are capped at 5% of a cable operator’s revenue derived from the provision of cable service. But some local governments, through the practice of requiring “in-kind contributions,” have been imposing franchise fees that exceed the 5% cap. In addition to being unlawful, this practice discourages broadband investment, deployment and innovation by cable operators.

In order to rein in overreach by local franchising authorities, and facilitate the deployment of broadband infrastructure, the commission concluded today that, under the Act, cable-related, non-monetary contributions required by a local franchise are franchise fees subject to the statutory 5% cap with limited exceptions, including an exemption for certain capital costs related to public, educational and governmental access channels.

It has also prohibited, pursuant to the Act, local franchising authorities from regulating the provision of most non-cable services, including broadband internet access service, that cable operators offer over their cable systems.

In addition, the commission decided that any state or local regulation of a cable operator’s non-cable services that imposes obligations on franchised cable operators beyond what the Communications Act allows is preempted.

Finally, the commission concluded that requirements concerning local franchising authority regulation of cable operators should apply to state-level franchising actions and state regulations related to local franchising.