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Terry Cowgill
A Charter Communications Spectrum van parked on Main Street in Great Barrington. If the FCC's proposed rule changes are approved, media companies like Charter would benefit while access to local government proceedings would be severely curtailed.

FCC is at it again: Proposed changes to benefit big cable, harm local access channels

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By Thursday, Nov 15, 2018 News 11

Editor’s Note: This story has been revised to include a letter from state Sen. Adam Hinds to FCC Chairman Ajit Pai concerning the proposed rule changes.

Berkshire County — If new rules are adopted by the Federal Communications Commission, local public-access cable stations such as CTSB could go out of business, leaving local residents without options for keeping a close eye on their town governments or school districts.

As it did last year with the repeal of net neutrality, the FCC has stirred up a hornet’s nest of discord in Berkshire County and beyond. Those who run the county’s three access channels say the new rules, which would severely impact their revenue streams, would likely put them out of business and deprive the public of valuable programming available nowhere else.

Federal Communications Commission Chairman Ajit Pai

Under existing FCC rules, towns and cities nationwide are allowed to negotiate franchise agreements with cable television providers. Those municipalities can require in the agreements that the cable companies meet certain community needs such as setting aside channels for public, educational or governmental (PEG) channels. These needs are funded by a franchise fee in the cable bill customers receive each month.

However, the FCC’s proposal would permit cable companies to assign a value to these channels, deem them in-kind contributions and then subtract that amount, and the value they place on any other in-kind contributions, from the franchise fees the cable company pays the local community, known legally as the local franchising authority.

These in-kind contributions could include free or reduced cable connections to town halls, backhaul of signals, interactive program guides, or perhaps channel spectrums allotted to the PEGs themselves, according to the northeast region of the Alliance for Community Media, a trade organization.

“The result would be to charge these ‘expenses’ back against the franchise fee and essentially undermine the intent of the Cable Act,” Mike Wassenaar, spokesman for the alliance, said in a news release. “The national impact on PEG Access and local municipalities could be devastating.”

That means those who enjoy catching up on what’s going on in their town halls could be in for a shock if the new rules are adopted. That also means bad news for fans of open government.

Shawn Serre. Photo courtesy Pittsfield Community Television

“Our work is critical, especially in the small towns,” Shawn Serre, executive director of Pittsfield Community Television, said in an interview. “If they put us out of business, we can’t do any of these things.”

To make matters worse, cable access channels have seen their revenue streams shrink as more people abandon cable in favor of various internet-based video streaming devices such as Roku, Amazon Prime Video and Apple TV. So when consumers cut the cable television cord, they no longer pay a franchise fee, which reduces the operating revenues of the PEGs.

To view the proposed FCC rule changes, click here. Or click here to read the FCC press release, which essentially functions as a brief executive summary. One can only guess as to what the FCC’s motives are, but the sources The Edge contacted were not shy about doing just that.

“Corporate greed—that’s all this is,” Serre said.

Asked whether the new rules were designed to steer new revenue streams toward the cable companies in an era of cord-cutting, Serre replied, “That’s pretty much the way it’s going to play out.”

“They’re trying to offset the losses,” added Leo Mahoney, station manager of Community Television of the Southern Berkshires in Lee. “The cable companies are bleeding because of the cord-cutters. This move is a way for them to start recouping.”

To be fair, the rule changes have been proposed by the FCC itself and not Charter, Comcast or any of the other cable behemoths. But suspicions run deep that the cable lobby had exerted lobbying muscle on the FCC for rules changes that would enhance revenues in an era of some decline.

Media and First Amendment attorney Paul Rapp. Photo: Richard Lovrich

Paul Rapp is an attorney based in Berkshire County whose practice includes media and First Amendment law.

“It’s nonsense,” Rapp said of the proposed rule changes. “It’s just more of the FCC giving away money to big cable, which they’ve done repeatedly since Pai became commissioner.”

It was a reference to Ajit V. Pai, a former associate general counsel at Verizon, who was appointed chairman of the FCC by President Trump and was said to be the prime impetus behind the controversial repeal of net neutrality.

One of the premises of that move—as in the case of the current proposed rule changes, as well—is that putting corporations on a longer leash will uncork economic potential. Rapp threw cold water on that idea.

“There is the old mantra that, if you loosen regulations, it will spur new investment,” Rapp opined. “I don’t buy it. These are government-created monopolies handed to publicly traded companies and they have a duty to maximize shareholder value.”

Linda Miller, center, chair of the Five Town Cable Advisory Committee at a December 2017 meeting. To her right is member Steven Moritz of Lee and to her left is Rene Wood of Sheffield. Photo: Terry Cowgill

“It’s happening because a corporation named Charter asked for it,” said Linda Miller, who chairs the Five Town Cable Advisory Committee. “That’s called Trump tactics.”

Well, why is the FCC proposing to change the rules to make it difficult, if not impossible, for the PEGs to survive? The text of the proposed rule changes is almost 32 pages long and cites lots of case law. The headline on the press release from the FCC calls the rule change a “proposal to reduce barriers to infrastructure investment.”

A one-page statement from one of the FCC commissioners, Michael O’Rielly, makes the case more succinctly for the proposed rule changes:

First, it correctly proposes to count cable-related ‘in-kind’ contributions against the cap on franchise fees. The absence of such a limitation leaves franchise authorities with the ability to end-run the fee cap, making a mockery of the law.

And this isn’t simply a theoretical issue, as there are concrete instances in which franchise authorities have already abused their powers to force these ‘contributions.’

Beyond violating their legal authority, such efforts have many destructive impacts, including directly increasing consumer costs and indirectly harming the ability of providers to deploy and offer service.

In other words, towns have “abused their powers” and coerced the cable companies into paying for items that should more properly be funded by others. And the franchise fees directly increase consumer costs, indirectly harming the ability of cable companies to expand and innovate.

Michael Powell, president of the Internet & Television Association and former FCC chairman

When contacted by The Edge, Charter-Spectrum, the widely unpopular cable company that serves almost all of Berkshire County, simply referred us to a 66-page comment posted on the proposed FCC rule changes by the Internet & Television Association (formerly the National Cable & Telecommunications Association), a trade organization representing cable companies and currently headed by former FCC chairman Michael Powell.

Not surprisingly, that document “applauds the Commission’s ongoing efforts to reduce barriers to deployment of advanced cable infrastructure for broadband.” The association further says the proposed rule changes “would help rein in abusive practices and overreaching by franchising authorities, who have long ignored the five-percent cap on franchise fees and the clear limitations on their ability to regulate non-cable services offered over cable systems, to the ultimate detriment of consumers.”

Southern Berkshire residents have had a rocky relationship with Charter from the get-go. Not long after acquiring Time Warner in 2016, Charter angered customers by insisting that basic cable subscribers rent digital-analog converters.

In addition, even under pressure from high-profile Massachusetts lawmakers, Charter has refused to restore the Springfield channels it deleted from its lineup, leaving viewers with local news from Albany and environs. And last month, angry residents of Egremont voted to abandon an agreement with the company to wire the town after being notified it would cost Egremont taxpayers an additional $600,000.

Sen. Ed Markey, D-Mass., at a town hall-style meeting at Barrington Stage Company in Pittsfield in October 2017. Photo: Terry Cowgill

In Massachusetts, advocates for the local access channels have turned to Sen. Edward Markey, an acknowledged leader on telecommunications issues, for help. Markey has serious concerns about the proposed FCC rule changes.

Markey and 10 other senators wrote an Oct. 29 letter to Pai objecting to the fact that the proposal would “alter, at the cable operators’ discretion, the terms of the local franchise agreements,” thereby putting “at risk critical funding for public, education, governmental stations, as well as broadband connections to schools and other public buildings.”

Indeed, it appears the new rules, if approved, would simply void the applicable sections of the current franchise agreements.

Other senators signing the letter include Sens. Tammy Baldwin, D-Wisc.; Maggie Hassan, D-N.H.; Ben Cardin, D-Md.; Jeff Merkley, D-Ore.; Bernie Sanders, I-Vt.; Gary Peters, D-Mich.; Ron Wyden, D-Ore.; Pat Leahy, D-Vt.; Richard Blumenthal, D-Conn.; and Elizabeth Warren, D-Mass.

Markey said there are more than 1,500 public, educational and governmental studios/operations and an estimated 3,000 PEG channels in the U.S. Religious programming, for example, represents 30 percent of local access programming. Tens of thousands of hours of programming is produced by veterans, seniors, the disabled and ethnic, minority and second language groups, Markey said.

Lee High School sophomore Quinn Burnell on the set of ‘The Buzz,’ a CTSB program that showcases news in the region’s schools. Photo courtesy Community Television for the Southern Berkshires

Most, if not all, PEG organizations are nonprofits. CTSB, a 501(c)(3) nonprofit, is a public-access television station available partly online and fully to Charter-Spectrum cable TV subscribers in Great Barrington, Lee, Lenox, Sheffield and Stockbridge. It produces not only videos of government meetings but educational shows such as “The Buzz,” a new show started by a Lee High School student.

The channel has an annual budget of roughly $400,000 that covers the salaries of four staff members and the debt service of its new studios and solar array at Quarry Hill Business Park in Lee. Click here to see CTSB’s most recently available IRS 990 filing. PCTV is a larger operation and has an operating budget of roughly $700,000. Click here to see PCTV’s 2016 IRS 990 filing.

Mahoney said CTSB has enough cash in reserve to meet expenses for only about a year. He said the agreement for the five towns in Charter’s southern Berkshire franchise does not expire until 2023. The region served by PCTV has six years remaining on its agreement.

The last day to make a formal comment on the proposed rule changes was yesterday, but responses to the comments will be accepted for another month.

“Our constituents watch PEG channels to monitor local government proceedings, hear the latest news from nearby college campuses, and consume other locally produced programming including emergency alerts and directives,” Markey and the other senators said in their letter to Pai. “We fear this proposal will result in a dire drop in resources for PEG channels throughout the nation.”

State Sen. Adam Hinds, D-Pittsfield, has also written a letter to Pai expressing his concerns about the proposed rule changes and the “tentative conclusions set forth” in the FCC document that could impact the PEG channels. Click here to read the full letter. Among the most salient passages:

“These organizations have long worked hand-in-hand with people, schools, organizations and municipalities in my district to improve important television programming to the community,” Hinds wrote.

“This coverage has included important programming such as city council meetings, school committee meetings, graduations, veterans and elderly shows, sporting events and so many other programs. It is difficult to describe the value this programming brings to our residents, our schools and our entire community.”


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11 Comments   Add Comment

  1. John Breasted says:

    11-16-2018

    Thank you for this very informative article, Terry.

    I am old enough to remember reading in The Nation magazine in 1970 about the genesis of cable television and about its great promise as an alternative to the junk on the commercial broadcast networks. Even then, the magazine’s editors warned that the enabling federal legislation would create unconscionable broadcast and commercial monopolies, as I remember. Not a television watcher then and for most of the next 28 years, I did not pay much mind to the political details.

    Years later I was pleased to see that the cable TV industry had been required by the US Congress to fund full, gavel-to-gavel commercial-free C-Span coverage of US Senate and House proceedings, which I understood was later extended to selected legislative committee hearings. When I finally started to watch some cable TV in 1998, I found watching such hearings to be fascinating, even if I suspected that they were a politically necessary sop by the cable industry in grudging return for the lucrative giveaway The Nation said the cable franchises had received from Congress.

    C-Span1 and CTSB in 1998 and for some years after were available without extra charge in the basic cable package offered at my apartment complex. But all three were gradually moved to higher “tiers” by the cable company, Time Warner or whatever it was in those years.

    I have refused to pay extra for coverage that I thought should remain in the basic package, consistent with what I took to be Congress’s original legislative intention, so for years now I have had no cable access to CTSB at home (I know there is now some online access to it), and none to C-Span, except in certain motels when traveling (most don’t carry it).

    I have often thought about seeking appointment to the Five Town Cable Advisory Committee, but have not done so because it seems that that committee is essentially legally powerless in this matter. In government enabled monopoly capitalism, we get the very best laws that corporate lobbyists can buy. So it goes, as I think Kurt Vonnegut used to say.

    I am grateful to Linda Miller, her Advisory Committee members, State Senator Hinds, and US Senator Markey for keeping a spotlight on this issue.

  2. John says:

    Turn off the TV. There is so much more in life and to do. Read a book, go for a hike, knit, go paint your kitchen, volunteer,go fishing. Where do I stop? There is also the radio with so many stations. At night, turn it to AM and listen to some far away radio station.
    I have never paid 2 cents for cable TV.
    There is so much more in life.

    1. Mickey Friedman says:

      So happy John you’re so happy reading, hiking, knitting, fishing but there’s no need for you to sneer at those who find exceedingly interesting programming on TV. Like watching Mookie Betts make extraordinary catches, great British mysteries, watching Congressional hearings and looking our politicians in the eye. So while you can rejoice having turned off your TV, those of us who regard television as offering us a world of wonder are furious at the FCC’s most recent attempt to deny us local coverage merely to add to the already bloated profit margins of the cable industry.

  3. Terry Cowgill says:

    Thanks John B. for your thoughtful reply. As for the other John, please read the article before commenting. This has nothing to do with whether you like cable or about people “getting a life.” Rather, it has everything to do with the end of local cable access channels, open government and the ability of taxpayers to keep tabs on what public officials are doing. I assume you’re in favor of that?

  4. Cable Watchdog says:

    Nice work on this article. WCVB channel 5 ABC affiliate made it seem in the 15 second news story that the consumer will save money. What a joke if you think that will happen.. Pai will push this through regardless of what the public or congress wants. If these rules are put into place it will edit active cable licenses all over the country. The 501c3 non-profit charitable organization that I belong has never taken advantage of the mega cable TV corporation Charter Spectrum. I asked the staff how much in the past 10 years they have had for an annual operating budget. They said 100,000 to 190,000. That funding comes from the consumers not Charter Spectrum, not the city or town your live. This will affect small charitable organizations the most as town and school based PEG centers already have funding. This is a direct assault on small 501c3 non profit organizations and nothing else. Call your federal senators, call the White House (if that is possible) call your congressperson, shame the cable company.

  5. Leo Mahoney says:

    Terry,
    Thank you for a detailed explanation of this horrific situation. I will keep you posted of any new developments.
    Leo Mahoney
    CTSB Station Manager
    413-243-8211

  6. Jim Balfanz says:

    Sadly, anyone believing that your/our elected representatives are actually going to do anything to stop this are mistaken. – UNLESS we can collectively come together to get them to act.

    When nothing was really done with regard to the violations of the contracts already signed with the Pittsfield and Five Town Community stations in South County, you have to know that unless every subscriber actually does something about protesting what they are planning to do, nothing will change.

    If anything ever called for an all out protest, this is something that everyone who understands the ramifications of their intentions, should come together and DEMAND action – REAL ACTION from every single elected official.

    Just my brief opinion, but am ready to back it with what I can do to assist in the effort to STOP this from happening in Berkshire County.

    1. DB says:

      Morning JB
      Wow you are certainly fired up about this. But you forgot ot to blame Hillary, Obama and the democrats. It’s still early. Can we just assume it’s all their faults?

      1. Jim Balfanz says:

        No, DB. I’ll just “check out,” and leave the fight to you. The three you list are responsible for many things and will end up giving this subject “lip service,’ a few letters and a “poke in the nose,” but they won’t do anything meaningful to change the direction that this is heading. Good luck “sitting on your backside, and letting it happen.”

      2. Jim Balfanz says:

        You may assume anything you want, DB. I don’t choose to assume it. It is enough that it makes an ass out of u. The facts I’ve written previously regarding you, your fellow Democrats, your Leader from behind and the most corrupt woman politician in American history are just that – FACTS.

        But, not to worry you now have new “young and vibrant” leaders for your “cause.” Problem is that they are not smart enough to figure out how to pay for an apartment on a salary of $174,000, let along help actually solve the problems of illegal immigration, and more.

  7. Bobbtoday says:

    Does Pai still work for or receive any remuneration from Verizon?

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