An Unsettling Conclusion

It’s been interesting to follow the several class action cases in Michigan that have claimed that franchise fees are actually unauthorized taxes under Michigan state law. Courts have ruled (correctly so) that franchise fees are not taxes. Some of those rulings are on appeal.

In a twist, the City of Warren decided to settle the lawsuit brought by three Warren residents. The settlement agreed that all franchise fees had to be used for cable TV or “communications services.” The communications services allows Warren to pay for such items as their website, newsletters and other printed material mailed to residents. The settlement prevents the city from using franchise fees for other services such as the library.

Rather than understanding that shifting resources from the general fund to a “communications fund” means that those newsletters, calendars, the website, etc. will now be paid for using franchise fees, the Council President suggests that the franchise fee be lowered to 2 or 3 percent. The reduction in revenue for the City will run 40 to 60 percent or from $1.7 million down to a low of $670,000. The lowered amount will gut the budget of the City’s own government channels by over 50 percent.

Warren currently operates four government channels that provide 200 hours of locally produced non-repeat programming each week. The channels also provide over 100 hours of election coverage each election year. A member of the communications commission stated that the City has an “excess” of franchise fee revenues, but given that only $300 hundred thousand a year is above and beyond what is currently being used by the government channels it would hardly seem that Warren has a substantial excess of franchise fees. Reducing the franchise fees from 5 to 3 percent would save Warren cable subscribers about a dollar a month (that’s for expanded and premium subscribers, it would be much less for basic subs).

There are good arguments on both sides regarding the use of franchise fees for cable related services only vs. for general fund. Cities have certainly been strained in the last few years to keep up with ever increasing demand for services. But to use this settlement as a reason to now deeply reduce funding for government access (especially access with such a stellar production track record) seems…well…unseemly.

And it can hardly be what Cynthia Pfaelert and Dowell and Dora Taylor (plaintiffs) meant by bringing the suit in the first place.

Chilly Reception to Charter's Weather Plans

At 10 a.m. on December 27th, the temperature in Sault Ste. Marie was exactly zero. Just a week earlier on December 21st, it was even colder at the Sault Ste. Marie City Commission hearing. Seems their cable op, Charter Communications, offered to scale back the basic tier offering by six channels and reduce the monthly charge for basic by a whopping 99 cents as part of the new franchise agreement proposal.

One of the proposed channels to be eliminated was the Weather Channel. Makes sense given that Sault Ste. Marie sports a moderately temperate climate this time of year of snow, freezing rain, ice and more snow. Heaven knows the residents don't need to actually find out what weather is headed their way.

A man after my own heart, Commissioner William Munsell, said of the proposed agreement "This is crap."

It's not like Charter is completing eliminating the Weather Channel it's just that if citizens want to get it they'll have to pony up almost $46 a month for expanded basic. And there's not a darn thing that local government can do about that rate.

City Attorney Steve Cannello explained to the Evening News that "The cable lobby has done a better job than the municipal government lobby in the congress."

Makes sense.

Let's see, Cable Lobby = $65 billion a year income vs. Municipal Lobby = a few organizations like National Association of Telecommunications Officers and Advisors, League of Cities, Association of Counties, Mayor's groups and Municipal Lawyers thrown in here and there.

Cable Lobby = 24/7 on Capitol Hill, at the FCC, at the statehouses, on the golf course, opening day at Camden Yards, lavish receptions at the Russell Building, and of course those pesky checks for campaigns.

It's not a done deal yet. Seems the Commission has appointed Munsell and another Commissioner, Verna Lawrence, to meet with Charter representatives about the proposed agreement. My guess is there's probably more in the proposed franchise that is unacceptable to the Commission than just the elimination of the Weather Channel from the basic tier. But the Commission shouldn't have to endure being forced into a corner just because the cable guys got their way with deregulation. One of the key issues in the rewrite of the Telecom Act has got to be rate regulation on all the tiers, not just basic, putting the power back into the hands of local government in the interest of its citizens.