FCC Enforces Franchising Laws to Promote Broadband Deployment

The Federal Communications Commission adopted new rules to prohibit excessive franchise fees. The Order explains that local governments may not regulate most non-cable services, including broadband Internet access service, offered over a cable system. These rules respond to a remand by the US Court of Appeals for the Sixth Circuit and set forth how local franchising authorities may regulate cable operators pursuant to the Communications Act.

In order to rein in overreach by local franchising authorities, and thereby facilitate the deployment of broadband infrastructure, the FCC concluded that, under the Act, cable-related, non-monetary contributions required by a local franchise are franchise fees subject to the statutory five percent 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 FCC 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 FCC 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. Together, these rules faithfully implement the terms of the Act and remove obstacles to the deployment of broadband.