Posted by: John Pestle, Partner – Varnum, Riddering, Schmidt & Howlett, LLP
PEG channel disputes have now moved (literally) to a new level. Historically, these were handled on a local level. Now as a new FCC case on PEG matters exemplifies, they are increasingly “federalized,” i.e., being shifted to the federal level. This post will briefly describe the reasons for this shift, put it in historical perspective, and note the related point that municipalities wishing to preserve PEG channels as they have traditionally been provided should file comments with the FCC by March 9.
Traditionally, local franchises have set forth the specifics on channels for public, education or governmental (PEG) use – - for example, the number of channels to be provided, funding for them, who would operate them, where a studio might be located, and so on.
Several things have changed to upset this situation: First, in some major states (such as Texas, California and Florida) franchising has been shifted to the state level with statutory provisions and franchise terms which discourage PEG channels. Second, cable operators have taken actions that discourage (and sometimes lead to the elimination of) PEG channels such as not agreeing to new channels, eliminating or consolidating existing channels, decreasing or eliminating PEG funding, and eliminating studios and other “in kind” support for PEG channels. A cynic might note that PEG channels take up space which otherwise might be used by programmers who would pay the cable company to have their channels carried (more shopping channels anyone?).
In a more recent action affecting PEG channels, Comcast (and other cable companies) have attempted to conserve channel space by providing PEG channels (but only PEG channels) solely in a digital format (digital channels take up less space on a cable system than older analog channels). However customers with older analog TV sets will have to get (and in many cases, pay the cable company for) a converter box in order to get PEG channels and, for example, see their city council meeting and the like. This converter box is different from the one necessary for older TVs to continue working with rabbit ears. Comcast has also proposed to put PEG channels into what some have viewed the “digital desert” (i.e., channels in the 900 range).
Concurrently, AT&T has attempted to put PEG channels on a separate and inferior video delivery system from that used for all its other channels. In essence, on AT&T systems, PEG signals are provided in a manner that makes them hard to access (hundreds of PEG channels located on “Channel 99,” with individual channels accessed slowly by a click-through menu), the actual picture is in a “You-Tube” internet type format and lacks the functionality (compatibility with digital video recorders, closed captioning and the like) of all other channels.
The upshot are three Petitions to the FCC relating to PEG channels: Two (by the City of Lansing and the Alliance for Community Media) challenge under federal law AT&T’s provision of PEG channels in a manner different and inferior to that of other channels. The third petition (Dearborn et al.) challenges Comcast’s actions as violating federal requirements that PEG channels be part of the “basic service tier” and other requirements.
In early February, the Obama FCC combined these three cases into one and solicited comments from all interested parties by March 9. As is perhaps obvious, this “federalization” of PEG channel matters follows somewhat naturally from the state cable legislation that is generally harmful to PEG and takes away the prior local forum for resolving PEG channel issues. Cities and PEG advocates are thus left only with the Federal Cable Act and Federal forums (FCC, Federal Courts) to defend PEG channels.
From a broader perspective, PEG Federalization bears some relation to the 2007 decisions by the Bush FCC towards federalizing the cable franchising process by setting standards for cable franchise grants and renewals, especially those involving phone companies seeking cable franchises. The FCC decisions asserted broad jurisdiction by the FCC over what heretofore had been viewed as purely local franchising matters, a position generally upheld by the Sixth Circuit Court of Appeals in 2008.
Viewed from a historical perspective, such federalization of cable matters follows classic patterns in utility regulation: Although we do not focus much on it these days, regulation of the classic utilities such as telephone, gas, and water at its inception was exclusively local through so-called “franchise regulation.” But as those utilities expanded to cover multiple franchise areas and then multiple states, regulation shifted from the local municipality to the state and often thence to the federal level. The specifics here are different but viewed from the sweep of the past 150 years the result is much the same – - the federalization of what had been previously largely local issues.
To come back to the immediate point, if a municipality is interested in preserving its PEG channels as they have traditionally been provided – - each on its own channel number, easily accessible, in high quality, and generally the same in accessibility, quality and features as local TV stations on cable – - make sure to file comments at the FCC by March 9. The relevant FCC documents, including information from its Public Notice on how to file, are available, among other places, on our web site at http://www.varnumlaw.com/serviceGroups/cableTV/cableFranchising/
Posted By: Joesph Van Eaton, Partner, Miller & Van Eaton, PLLC
AT&T’s entry into the video market has not been smooth. Unlike Verizon, which is building fiber to the home, AT&T is by and large upgrading its old copper wire system so that it can be used to provide video. Its design required it to place refrigerator-sized cabinets throughout communities – a move that forced many communities to develop new siting standards (it didn’t help that some of the cabinets exploded).
Now two challenges have been filed at the Federal Communications Commission, claiming that manner in which AT&T provides public, educational and government access violates the law. One challenge was filed by the City of Lansing, Michigan. A more detailed challenge was filed by a consortium of organizations that promote access, community colleges, local governments, and local government organizations. The lead petitioner is the Alliance for Community Media (“ACM”). The petition was filed by the law firm of Spiegel & McDiarmid.
As the ACM petition points out, AT&T does not really provide PEG channels. It provides what it calls a PEG “application” or “platform.” The PEG application does not function like a normal, commercial channel on the AT&T system: AT&T cannot pass through closed captioning for example. One of the reasons some community colleges joined in the FCC petition was because they are required to deliver programming with closed captioning. AT&T won’t deliver secondary audio signals (used to deliver programming in a second language) on PEG channels. A viewer cannot surf between commercial and PEG channels; PEG channels can’t be recorded while viewing another channel. There are significant quality issues as well. The FCC will now decide whether these deficiencies violate federal law.
The ACM petition raises only federal claims. More challenges may be on the way: the Illinois Attorney General has announced that AT&T provision of PEG access is under investigation by the state. Many communities could raise (and are considering raising) independent claims under state laws. Lansing filed a state court claim at the same time it filed its FCC claim.
These cases are serious, and at the very least should raise a red flag for attorneys in communities that plan to provide access programming to AT&T systems. It will be important to review any programming arrangements carefully to be sure that rights are not lost.
