By: Katie McAuliffe
The United States Court of Appeals for the 6th Circuit ruled this week in favor of the Federal Communications Commission, upholding its order which broadened the types of accepted contributions made towards franchising fees and protected broadband from having such fees. This ruling will reduce barriers and make it easier for broadband providers to expand their networks and give coverage to Americans at a lower cost.
Franchising fees were a scheme devised as part of the 1984 Cable Act where section 622 of that law authorized a 5% fee on a cable operator’s revenue. The issue arose where municipalities were requiring that cable operators provide many in-kind contributions to public works including traffic light control systems and free cable to municipal liquor stores. These services, while having a clear monetary value, were not being applied to the 5% franchising fee and it became a way for municipalities to extort cable companies for services.
These in-kind contributions came at a cost to consumers where it created barriers for providers to expand their networks and reduce costs. In a time where closing the digital divide is most important, the 6th circuit’s ruling is benefit to consumers, cable operators, and upholds the rule of law.
FCC Commissioner Brendan Carr released statement following the ruling saying:
[The] decision is a good win for every American that wants better, faster, and cheaper Internet service… for too long, franchising authorities needlessly drove up the cost of building and maintain the infrastructure needed to eliminate the digital divide”
Here at Digital Liberty we have long supported the reform effort on this issue. Back in 2018 we lead a coalition urging the commission to change the franchising rules; and today we are happy that they have been affirmed by the 6th circuit.