Millions of people in the U.S. have experienced bill shock – a reaction to taxes and fees tacked on to their cable bills that they did not expect or understand. Next week, the Federal Communications Commission (FCC) has an opportunity to alleviate this shock and burden on consumers when FCC leaders vote on the future of how cable carriers can tax bundled cable-internet bills – a major decision that will potentially impact millions of consumers and how expensive their access to broadband will be.
The Issue
During its August open meeting, the FCC will consider the implementation of Section 621 of 1992 Cable Act, specifically voting on an Order that will decide how state and local governments’ Local Franchising Authorities (LFAs) may regulate cable providers.
Currently, states and localities are only allowed to charge cable companies franchise fees of up to 5% of their cable service revenue in exchange for companies’ use of the network infrastructure to provide those services. However, in some localities, LFAs are charging an additional fee on broadband services provided by those same operators – services that are provided over the networks already being used to provide cable.
Under the leadership of the Multicultural Media, Telecom and Internet Council (MMTC), 17 national civil rights and business advocacy organizations urged the Commission in April to reaffirm its current Section 621 rules that prevent states and localities from charging these duplicative fees and taxes.
It is essential for the FCC to end this practice of imposing duplicative taxes and fees because these fees are passed on to consumers – and these fees disproportionately harm low-income consumers who are, in large, people of color.
What’s At Stake
Everyone recognizes and understands local governments’ need to raise money for important causes and services for their communities. However, charging a franchise fee for both cable and broadband services – which are deployed to each customer by the same provider over the same infrastructure – distorts the intention of current rules.
These duplicative fees are a form of double taxation and are regressive – that is, they are most burdensome to lower-income households that spend a far larger share of their income on broadband than wealthier families. Also, affordable access is essential to the development of small, minority businesses, which play a vital role in bridging the wealth gap and the digital divide. Duplicative fees make broadband access even less accessible and less affordable for those who can least afford it, and these fees serve to widen the digital divide.
All individuals deserve internet access. In fact, a connection is vital to success in today’s society, affording access to education, jobs, skills training, government services, civic engagement, and even healthcare. Unfortunately, additional fees and taxes on internet access create yet another obstacle to full access and adoption for lower-income Americans. Affordable access is increasingly and urgently vital to bridging the homework gap, the wealth gap, and ensuring economic civil rights, especially in low-income and disadvantaged communities. Increased broadband access costs can be especially problematic for the unemployed or underemployed who become shut out from the very tools they need to pursue new skills and opportunities.
What the Third Report and Order Would Do
According to the FCC’s Fact Sheet, the proposed Third Report and Order on Section 621 would preempt any localities from imposing any fees greater than 5% of gross revenue on a franchised cable operator, whether they’re presented as “franchise” fees, “right-of-access” fees, or fees on non-cable (e.g., telecommunications or broadband) services, as well as any requirement that a cable operator secure an additional franchise or other authorization to provide non-cable services through its cable system.
The Order would also prevent LFAs from charging additional fees through other, non-monetary contributions: LFAs would be required to treat cable-related, in-kind contributions from cable operators that are part of franchise agreements as “franchise fees” subject to the statutory 5% franchise fee cap set forth in Section 622 of the Act unless expressly exempt under the Act.
What We Can Do:
MMTC and our 16 partner organizations have urged the Commission to adopt this Order and end the practice of duplicative fees. We have also spread the word on Twitter, Facebook, and other places online so our communities know what’s at stake.
Anyone can do the same: tweet with the username and hashtags @FCC, #FCC, #Broadband, #DigitalDivide, and #HomeworkGap. Share this information on social media accounts so friends and family can continue to spread the message.
In order for equal opportunity to exist in the digital economy, the FCC must ensure everyone has access to affordable internet access. Regressive, duplicative franchise fees will only serve to hold back our most vulnerable communities.