International Municipal Lawyers Association - Local Government Blog

Federalization and FCC PEG Channel Preservation Case | March 6, 2009

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/


2 Comments »

  1. You have an interesting perspective. However, as much as the PEG Channel system is in use, the market for it is shrinking rapidly. When the PEG system came into use, private networks, Satellite services were to small to be of a concern, and the Internet could not deliver the material due to its slowness for access.

    However, today, there is a proliferation of private cable networks supplying programming to larger and larger markets, satellite has grown tremendously, and the traditional cable markets have shrunk. The question then becomes whether the cable franchise market is doing the best it can with its smaller market shares then in the past. From my point of perspective, I do not believe the franchise route is the most viable method for distributing the PEG content. Yet, we cannot eliminate PEG for those reasons.

    The local governmental units which receive the franchise fees are reducing the amount provided for the PEG channel operational costs. This in turn is drying up the ability to operate PEG channels and thus driving the intent for free flow of information to the public to a nonexistent state.

    Congress should get back into the problem and mandate that the PEG channel operators receive a fixed percentage of the franchise fees at a share of at least 50% or more. In addition, the PEG channel charter should be amended to permit the operator to increase market share by broadcast pod casts, video streaming via the Internet, as well as becoming a broadcast entity, free from Cable operators reluctance to offer a quality distribution through their systems.

    Only in that method will the public be served as to the reason that PEG channels exist in the first place. All the public, not just a small sliver who subscribe to profit making cable operators like Comcast and Charter Communications.

    Comment by Rob - a senior citizen — January 4, 2010 @ 6:56 pm

  2. […] are much deeper than what kind of TV any given subscriber may own.  It is the idea that a PEG channel addition, allows many more of the city residents to view and passively participate in […]

    Pingback by The Expansion of Plainfield Public Access Television- the Verizon FiOS and Comcast Dichotomy « Plainfield Cable TV Advisory Board — April 4, 2010 @ 3:01 am


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This blog is made possible by the International Municipal Lawyers Association (IMLA), but may include guest bloggers (who are attorneys with experience in local government matters) who might or might not work for IMLA. Their views (and those expressed on this site) do not necessarily express the views of IMLA.

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