Portland, Ore: FCC Policy Denying Cities $3.75 Billion a Year

Portland wants to apply their standard 5 percent right-of-way fee to cable broadband providers.

Portland, Ore: FCC Policy Denying Cities $3.75 Billion a Year
Photo of skyline of Portland, Ore., with Mt. Hood in the distance used with permission

WASHINGTON, June 7 – A federal communications policy is costing America’s cities about $3.75 billion a year – money that struggling communities could use to fund first responders, maintain parks, and prepare for disasters, according to the city of Portland, Ore.

Portland pointed this out in a June 6 filing with the Federal Communications Commission and called on the agency to void a rule that shields cable broadband internet providers from having to pay fees on revenue collected from subscribers.

Citing industry analyst S&P Global, Portland said cable companies that provide Internet access “made approximately $75 billion in 2022.” If cities could apply their standard 5 percent right-of-way fee, “that would have resulted in approximately $3.75 billion in municipal revenues nationwide for just 2022.”

Portland is Oregon’s largest city, with about 652,000 people. It is also the 26th largest city in the country. Portland’s FCC filing was signed by Seema Gadh Kumar, Chief of Community Technology in the Bureau of Planning and Sustainability.

Like many cities, Portland has experienced a decline in revenue as a result of subscribers dropping cable TV, also known as cord cutting.

“In 2023, cable providers lost approximately 4 million subscribers nationally. That represents a decrease in subscribers by about 10% across the country. The local franchising authority for the City of Portland has seen a similar trend in franchisee reports,” Portland said.

The FCC’s policy – called the mixed-used rule – prohibits cities from applying the 5 percent franchise fee on cable’s pay-TV revenue to cable’s Internet revenue because Internet is not classified as a cable service in federal communications law.

According to Portland, the mixed-use rule not only saved cable money but it also provided a competitive advantage.

“Incumbent cable providers only have to pay right-of-way fees on constantly decreasing cable revenues. Whereas broadband-only providers are subject to right-of-way fees based on much higher broadband revenue,” Portland said. “Competitors, such as Quantum Fiber, are at a competitive disadvantage due to this regulatory structure that favors incumbent cable providers.”

Portland did not say whether it would attempt to establish regulatory parity by eliminating fees applied to broadband-only ISPs like Quantum Fiber, owned by Lumen Technologies.

The mixed-use rule has been contentious and the subject of litigation in which the FCC prevailed in defense of the rule. In 2019, then-FCC Commissioner Jessica Rosenworcel opposed the decision to reaffirm the mixed-use rule.

In the past, NCTA – The Internet & Television Association has urged the FCC to disregard calls to abolish the mixed-use rule. NCTA represents the country’s two largest ISPs in Comcast Corp. and Charter Communications.

Procedurally, NCTA has also pointed out that the FCC could not suddenly nix the mixed-use rule as no longer good law.

“Even if the [FCC] were to conclude that it had the authority to repeal the mixed-use rule, it would first need to conduct a notice and comment rulemaking,” NCTA said last December in an FCC filing.

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