Chairman Pai Letter to Various Members of Congress Regarding the Impact of Statutory Cap on Franchise Fees on Funding for PEG Channels

Federal Communications Commission Chairman Ajit Pai wrote to various Members of Congress about the impact of an FCC order on the statutory cap on franchise fees has on funding for public, educational, or governmental (PEG) channels. Some Members of Congress wrote in support of the new FCC changes, others expressed concern. Chairman Pai replied to both, offering an explanation to the FCC's action. To those who were concerned about the order, he wrote, "Among other things, the Commission observed that Congress broadly defined franchise fees; indeed, with respect to PEG channels, it only excluded support payments with respect to franchises granted prior to October 30, 1984 as well as certain capital costs required by franchises granted after that date. The draft order therefore concludes that cable-related, in-kind contributions—including PEG-related contributions—are 'franchise fees' subject to the Act’s five-percent cap unless otherwise expressly excluded. At the same time, the order defers ruling on the complex issues raised by PEG channel capacity and concludes that the costs of providing PEG channel capacity should not be offset against the franchise fee cap until the Commission can address the issue on a more complete record. The draft order also broadens the Commission’s interpretation of an exclusion for certain PEG-related capital costs. These latter two conclusions directly address the concerns raised in your letter concerning the order’s potential impact on PEG programming."