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The FCC Begins a Rulemaking on Local Franchising
In November 2005, at the request of the telephone industry, the FCC released a Notice of Proposed Rulemaking (NPRM) on local cable franchising, MB Docket No. 05-311. For links related to the rulemaking, click here.

The FCC Adopts the first Report and Order
At its December 20, 2006, meeting, the Federal Communications Commission voted 3-2 (Commissioners Adelstein and Copps dissenting) to adopt an order purporting to establish new regulations governing local cable franchise negotiations.
The Commission announced that local communities had "unreasonably refus[ed] to award competitive franchises" in ways including "drawn-out local negotiations with no time limits; unreasonable build-out requirements; unreasonable requests for 'in-kind' payments that attempt to subvert the five percent cap on franchise fees; and unreasonable demands with respect to public, educational and government access (or 'PEG')." (Quotations are from the FCC's Dec. 2006 press release.)
The FCC stated that it would consider five types of practices to constitute unreasonable refusals to grant a franchise: (1) negotiations that exceed certain time limits; (2) "unreasonable build-out requirements"; (3) demands for "costs, fees, and other compensation" exceeding the five percent franchise fee cap; (4) demands for "certain unreasonable obligations relating to public, educational, and
governmental ('PEG') and institutional networks ('I-Nets');" and (5) certain local attempts to exercise jurisdiction over "mixed-use networks."
The Commission did not seek to preempt state laws or state-level franchising decisions.
With the Report and Order the FCC also proposed a Further Notice of Proposed Rulemaking to consider whether its new rules should be extended to incumbent cable operators as well as new applicants.
The FCC did not release the text of the order at the time of its adoption.

Links related to the FCC's December 2006 action:
FCC's press release (12/20/06)
Statement of Commissioner Adelstein, dissenting
Statement of Commissioner Copps, dissenting
Statement of Chairman Martin
Statement of Commissioner Tate
Statement of Commissioner McDowell
Chairman Martin's reply to Congressman Dingell's 12/19/06 letter re FCC's authority on local franchising (12/21/06)
NATOA's press release on the FCC order (12/20/06)
Congressman Markey's response to FCC adoption of franchising order (12/20/06)
Jonathan Kramer's audio capture and time log of 12/20/06 FCC meeting
Congressman Dingell's letter to FCC re Commission's authority on local franchising (12/19/06)
Notice of Proposed Rulemaking on Local Cable Franchising (11/18/05)

The FCC Releases the Text of the Report and Order
Over two months after adopting its order on local cable franchising, the FCC released the 109-page text on March 5, 2007. Click here for MVE's brief initial (3/7/07) summary of the Report and Order and Further Notice of Proposed Rulemaking.
Links related to the release of the text:
Report and Order and Further Notice of Proposed Rulemaking (FCC 06-180) (3/5/07)
Statement of Chairman Kevin J. Martin
Dissenting Statement of Commissioner Michael J. Copps
Dissenting Statement of Commissioner Jonathan S. Adelstein
Statement of Commissioner Deborah Taylor Tate
Statement of Commissioner Robert M. McDowell

Effects of the FCC's Order
Initially, some communities asked whether the FCC order dissolved local franchises or otherwise made an immediate change in the terms of existing contracts. It did not purport to do so, since the order by its terms was limited to new franchise applicants. However, the Commission's follow-up order adopted on October 31, 2007, based on its Further Notice of Proposed Rulemaking, extended some of the new rulings to existing cable operators, as discussed elsewhere on this page.
The Report and Order formally took effect as to new franchise applications on April 20, 2007, after publication in the Federal Register. However, as noted above, the FCC's "shot clock" time limits on grant or denial of a franchise did not take effect until they were approved by the Office of Management and Budget (OMB) (see below).

Sixth Circuit Appeal
On April 3, 2007, Miller & Van Eaton filed appeals of the FCC's franchising order in the U.S. Court of Appeals for the 11th Circuit on behalf of the City of Tampa, and in the 2d Circuit on behalf of the Villages of Larchmont and Mamaroneck and the Town of Mamaroneck, New York. Additional appeals were filed by local governments and the Alliance for Community Media in the 3d, 4th, 6th, and 10th circuits. The cases have been consolidated in the Sixth Circuit under the title Alliance for Community Media v. FCC, No. 07-3391. For the press release of NATOA, NLC, NACo, the U.S. Conference of Mayors, the Alliance for Community Media, and the Alliance for Communications Democracy on the appeal (4/3/07), see the NATOA Web site.
Larchmont-Mamaroneck's Petition for Review (2d Circuit)
Tampa's Petition for Review (11th Circuit)

June 18 Stay Motion
On June 18, 2007, the national organizations filed a motion to stay the FCC's order while the litigation is in progress. The text of the motion and the associated exhibits can be found in the Policy/Advocacy section of NATOA's Web site. The following links will redirect you to NATOA's site: Joint Motion for Stay Pending Judicial Review
Exhibit A -
Exhibit B -
Exhibit C -
Exhibit D -
Exhibit E -
Exhibit F

NATOA's press release
The FCC and the Bells opposed the stay motion, and NATOA replied.
FCC's Opposition to Motion for Stay (6/29/07)
Opposition of USTA et al. to Motion for Stay (6/29/07)
NATOA's Reply re Motion for Stay (7/12/07)

On July 24, the court denied the request for stay. The court's July 24 order concluded that the stay request should have been filed with the FCC first. The stay request was thus denied without prejudice to the rights of petitioners to ask the court for a stay if the FCC refuses to grant one.

Initial Appeal Briefs Filed 7/18/07 On July 18, 2007, petitioners also filed the opening briefs in the Sixth Circuit appeal of the FCC's March 2007 franchising order.
Initial brief of the City of Tampa et al.
Initial brief of the Alliance for Community Media et al.
Initial brief of Fairfax County, VA
Initial brief of the City of New York, NY
Initial brief of New Jersey Public Advocate, Division of Rate Counsel
Initial brief of San Francisco, CA
Initial brief of NCTA

On July 27, 2007, amicus curiae briefs were filed by amici on the side of petitioners.
Brief Amici Curiae of the National Association of Towns and Townships et al.
Brief Amici Curiae of Access Sacramento et al.

OMB Approves FCC's "Shot Clock" Rules
The FCC's 90/180-day"shot clock" time limits on grant or denial of a franchise could not take effect until they were approved by the Office of Management and Budget (OMB). On July 26, 2007, the OMB approved the rules' information collection requirements. The FCC deadlines went into effect on August 6, 2007.
Because the FCC rules establish very strict deadlines and drastic consequences for missing them, it is important to ensure that if anyone files a cable franchise application (which may be no more than a letter with a one-page attachment), it is promptly date-stamped and sent to the proper office in the local government for review, and that immediate steps are taken to review the application for completeness and compliance with local requirements.
Postscript: The FCC's Paperwork Reduction Act filing with OMB included the remarkable estimate of four hours' work for a local government to grant or deny a franchise. Public comments on the FCC's filing were filed at OMB on June 22, 2007. NATOA's May 21 and June 19 comments on the FCC's OMB filing can be found on NATOA's Web site. Links to some of the comments may be found below.
OMB Comments of Anne Arundel County et al.
OMB Comments of TeleCommUnity
OMB Comments of GMTC

Opposition Briefs in Appeal Filed 9/17/07 Briefs were filed Sept. 17, 2007, by the FCC and industry parties in opposition to local governments' appeal of the FCC's March 5, 2007, order.
Brief of the FCC
Brief of Intervenors United States Telecom
Association, Verizon, AT&T, and Qwest
Brief of the Ad Hoc Telecom Manufacturer Coalition
On Sept. 24, 2007, an amicus brief was filed on the side of the FCC and the industry:
Brief Amicus Curiae of the Fiber-to-the-Home Council

Reply Briefs of Petitioners Filed 10/4/07 Reply briefs were filed on Oct. 4, 2007, by local governments and other parties in the appeal of the FCC's March 5, 2007, order. Reply brief of Fairfax County, VA
Reply brief of City of Tampa et al.
Reply brief of the Alliance for Community Media et al.
Reply brief of San Francisco, CA
Reply brief of the City of New York, NY
Reply brief of New Jersey Public Advocate, Division of Rate Counsel
Reply brief of NCTA

Next Steps in the Appeal of the First Report and Order
Briefing was completed with the filing of the reply briefs on October 4, 2007. Oral argument has been set for February 6, 2008, at 9:00 a.m.

The FCC Issues the Second Report and Order
On November 6, 2007, the FCC released the text of its Second Report and Order, which was adopted on October 31 by a 3-2 vote (Commissioners Copps and Adelstein dissenting). Links to the order, the FCC's news release, and the Commissioners' statements may be found below.
The Second Report and Order applied most of the FCC's rulings (other than those on timing and build-out) to incumbent cable operators immediately, rather than only at renewal. However, a cable operator must take affirmative steps to apply the order to alter an existing franchise agreement. "Most favored nation" (MFN) clauses in favor of incumbents remain in force.
The Order was published in the Federal Register on Nov. 23, 2007, and is effective as of Dec. 24, 2007.
Our initial summary of the second order may be found at the link below.
Miller & Van Eaton's initial summary of the Second Report and Order (11/8/07)
Text of Second Report and Order (including Commissioners' separate statements) (11/6/07)
FCC's Oct. 31 News Release (10/31/07)
Statement of Chairman Kevin J. Martin (10/31/07)
Statement of Commissioner Michael J. Copps, dissenting (10/31/07)
Statement of Commissioner Jonathan S. Adelstein, dissenting (10/31/07)
Statement of Commissioner Deborah Taylor Tate (10/31/07)
Statement of Commissioner Robert M. McDowell (10/31/07)
NATOA's press release on the FCC's Oct. 31 action (10/31/07)

Second Appeal Filed During the week of December 7, 2007, local governments filed appeals in federal court challenging the FCC's Second Report and Order on local cable franchising. These appeals have been consolidated, like those of the first order, in the Sixth Circuit. Petition for Review of Dayton Access Television, Inc. (6th Cir. filed 12/5/07)
Petition for Review of Montgomery County, Maryland (4th Cir. filed 12/6/07)

Related Links
Federal and State Legislative Action on Franchising