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  • Writer's pictureCarrie LeZotte

The Future of PEG Cable Stations in a Broadband World

Updated: Feb 12


Public, Education, and Governmental (PEG) cable channels are community-based television channels across the United States. They are funded by cable companies who pay a percentage of their revenues to local communities in the form of Franchise Fees and PEG Fees. These fees are charged to the cable providers for allowing them to operate in the rights-of-way of these communities. The Franchise Fee is capped at 5% of the gross income derived from the provision of paid television services. The PEG Fee is between 1% - 3% of the gross revenue from paid television service and must only be used for PEG related activities (Stewart & Shaker, 2018). The fees are tied to the Cable Communications Policy Act (CCPA) of 1984 and have resulted in millions of dollars to support community programming and Franchise Fees servicing other local needs, like public safety and road repair.


While the programming varies from state to state, it usually includes videotaping of governmental meetings as well as local shows produced by, or in collaboration with, community members.


As consumers cancel cable subscriptions and switch to broadband services to view content on a variety of streaming media platforms like Netflix, YouTube and Hulu, the funding of PEG stations is decreasing.



At the same time, the Federal Communications Commission is working to secure broadband services to rural communities and low-income urban areas. This collision of communication requirements is disrupting the cable industry. Penn State Professor Christopher Ali explains in Telecommunications Localism: the Fight for Control Over Local Communication Networks in the United States

“In regulatory actions over the past decade the FCC has simultaneously acknowledged local municipalities’ role in telecommunications deployment and actively worked to curtail this power through deregulation. These deregulatory actions strip municipalities of their autonomy over license negotiations and local rights of way and stymies the development and deployment of local communication systems."

Because these fees are tied to cable subscriptions and not to streaming, dish, or satellite delivery of video content, PEG stations are in jeopardy of losing funding that has been counted on since the CCPA Act of 1984.


Meanwhile, the Moving Forward Act, H.R.2, passed a $1.2 trillion bipartisan infrastructure bill in 2021 with $65 billon allocated “to expand broadband in communities across the U.S., create more low-cost broadband service options, subsidize the cost of service for low-income households, and provide funding to address the digital equity and inclusion needs in our communities”(U.S. Department of Commerce) As Hernán Galperin writes in The Conversation, "broadband access is like access to running water or electricity. It is essential infrastructure, the lack of which is a barrier to economic competitiveness and the “equitable distribution of essential public services, including health care and education.”


“In the context of cable television," note Stewart and Shaker (2018), "the Franchise and PEG Fees are key expressions of the federal government’s commitment to media localism and diversity," (p. 447). How might historic precedents inform the evolution of Community Cable stations? How are they taking shape with the introduction of the reliance on broadband and streaming media and how is current legislation making an impact? Most significant, how will they continue to be funded in the future and what will the impact be on local communications as they diminish?

 

THE IMPORTANCE OF PEG TELEVISION

At a time when successful content is measured in number of views and how much advertising revenue can be generated, it is critical to understand the foundational tenets of community television. As Baoill and Scifo (2022) make clear, “The algorithmic mechanisms that shape what is available to users of digital platforms are driven exclusively by an advertising logic that undermines diversity and reproduces the social capital of those with power.”


Large telecommunications companies make the argument that web-based streaming platforms can replace public access as a way to distribute more user-generated content than free cable channels. But the collaborations between producers and YouTube is focused on monetization and the focus of community television has always been on non-commercial programming. (Dewey, 2021).


PEG stations have historically been important resources for underserved communities providing:

  • Technology support and equipment to "demystify the media production process and foster digital literacy skills" (Ali, 2014, p. 70).

  • "Local, alternative, non-commercial information and programming" (Dewey, 2021 p. 782).

  • A safe, supportive space for a diversity of opinions, where under-represented populations have a voice, "to be heard and be seen" (The Power of Community, 2015).

  • Transparency and oversight of government by the recording and broadcasting of public meetings.

  • A way for community members "to see and join in democratic deliberation, political critique, and local knowledge production" (Haywood et. al., 2021. p. 258).

What PEG doesn't do:

  • Provide oversight of content production by a cable company.

  • Produce content driven by profit, i.e. advertising revenue.

"These fees are an example of rare public resources earmarked for local information environments," write Stewart and Shaker in Exploring the Policy Value of Cable Franchise and PEG Fees. They continue, "The information needs of communities and their citizens are critical in democratic societies and should not be subordinated to corporate interests or forsaken for regulatory expedience," (p. 462).


When the Covid-19 epidemic struck, it was an "environmental jolt" to PEG capabilities, as communities turned to the stations to deliver local information and governmental health and safety updates. PEG employees served their communities as video technology experts. "While PEGs struggle to keep pace with technological and regulatory shifts, the pandemic gave them a chance to demonstrate their contemporary relevance" (Haywood et. al., 2021. p. 259).

 

RECENT LEGISLATION


Good news for PEG stations out of Washington D.C. is the introduction of H.R. 907: Protecting Community Television Act in February of 2023. This bill would help undo a ruling in August of 2019 by the FCC that usurped local franchising authority and allowed cable companies to deduct the fair market value of any services (like providing PEG channels) as in-kind contributions, which resulted in a loss of 30% - 40% of Franchise Fee revenue. Representative Anna G. Eshoo (CA-18), senior member of the House Energy and Commerce Committee is one of the sponsors of the of bill and says, “Community television is a critical part of our society, giving a voice to nonprofits, artists, local governments, and other community members who otherwise struggle to be heard.”


However, H.R. 3557, the American Broadband Deployment Act, introduced in May 2023 which is said “To streamline Federal, State, and local permitting and regulatory reviews to expedite the deployment of communications facilities, and for other purposes.” The act will again erode the power of local government, if passed. Journalist Roger Cheng explains in Cord Cutters News,

“The bill could instead diminish the power of local and state oversight, devastating their ability to ensure coverage is built out to serve everyone equally. ISPs (internet service providers) prioritizing more profitable or densely populated areas is a core reason why there’s such wild disparity in service and network quality.”


Angelina Panettieri, Legislative Director for Information Technology and Communications for the National League of Cities explains further, “In a purely market-driven system of telecom infrastructure equipment, you’ll never achieve your equity goal” Panettieri adds. “It’s always more profitable to build in the densest and wealthiest areas. Cities are the only ones looking out for their residents.”


Speaking during a webinar held by the National Association of Telecommunications Officers and Advisors (NATOA) on November 6, 2023, Panettieri argued that versions of this bill’s language has appeared in prior bills over the last several years. But, this spring those bills were rolled together, moving faster through the process, and “it’s all the things that we don’t like, rolled up into one quickly moving package.” These items include:

  • Eroding the preservation of authority and making it more difficult to enforce wireless zoning requirements

  • Further preempting state and local authority to manage the rights-of-way, including unreasonable new Shot Clocks and fee caps

  • Applying must-approve language to wireline facilities

  • Eliminating renewals and allowing cable operators the right to terminate the franchise

In an April 2023 hearing about the bill by the House Energy & Commerce Subcommittee on Communications and Technology, none of the witnesses included representatives from local government. No local officials were brought into the process. In September 2023, a joint letter of opposition was sent by the National League of Cities, United States Conference of Mayors, National Association of Counties, and the National Association of Telecommunications Officers and Advisors to House Leaders. It read, “H.R. 3557 deprives citizens and their local governments of the ability to preserve property rights and maintain public safety,” and continued, “As the level of government closest to the people, we oppose heavy-handed federal overreach into local land use, permitting, and franchise negotiation decisions.”


Eyes are on state level legislation as well, with broadband providers looking to define terminology that would prevent streaming services from being included as providers of video and thus not being subject to pay franchise fees similar to what is paid to utilize the rights-of-way by cable providers.

In Michigan, HB 4965 is a bill before the legislature that would amend the Uniform Video Service Act to define video service by making it clear that it “does not include direct-to-home satellite services or streaming content and to specify that it only includes services provided by a video service provider.” At risk is $100 million in Franchise Fees currently being collected in the State of Michigan that go into the general funds of communities, and the ability (in the future) to collect fees from streaming companies who utilize the rights-of-way, according to talking points compiled by the Michigan Community Media Association and distributed in October 2023.


In Bloomfield Township alone, the Franchise Fees generate nearly $1 million for the community's general fund.

 

FUTURE FUNDING POSSIBILITIES


As consumers continue to “cut-the-cord" and replace cable television service with streaming content and other delivery platforms, the funding of PEG operations needs to evolve with the new media. The services PEG stations offer should include content production and engagement opportunities for communities as originally intended by telling local stories and providing transparency in government.

A few cities are taking the lead in creative funding, including Travis County in Texas, Chicago, Illinois, and Somerville, Massachusetts.


In March 2023, Travis County approved a license agreement with Google Fiber for installation and maintenance with the right-of-way. This license meets both the needs of expanding broadband access and filling the funding gap of decreased Cable Fees. “The services include broadband internet access and Voice over Internet Protocol. The infrastructure is being placed in the right-of-way to include aerial or underground fiber-optic cables. Conduits, access manholes, electric equipment, power generators, batteries, etc.,” explains Anna Bowlin, a division director for the county.

Chicago implemented a 9% Amusement Tax in 2019. The tax includes non-traditional amusements like television shows, movies, videos, music and games. Significantly, television is defined as “programming that can be viewed on a television or other screen, and is transmitted by cable, fiber optics, laser, microwave, radio, satellite or similar means to members of the public for consideration” (Breslow, 2019). This means that the city has the authority to impose tax on streaming services like Netflix and Hulu.


Perhaps a first step in supporting PEG programming is to dedicate Franchise Fees, that are often funneled to general funds, to PEG operations, which is what Somerville, a city of 81,000 located outside Boston, is doing. The city committed to funding community programming through its general fund and is allotting the full 5% franchise fees to Public Access. “This solution will help keep these offerings sustainable amid a changing media landscape,” said Mayor Katjana Ballantyne.


As funding begins to shift from traditional cable franchise fees to other options driven by new media, PEG television itself needs to find ways to be relevant. These changes are already underway as television stations rebrand themselves as community media centers. Offering workshops in digital literacy and other collaborative productions bring the community together to create locally inspired, non-commercial content. The transparency in government provided by recording and broadcasting governmental meetings is critical to the preservation of democracy. As local newspapers have shuttered across the country, the reduction in PEG funding deals another blow to community voices and local stories.


In addition to continuing to broadcast on cable, PEG facilities are using streaming services to meet citizens where they are on multiple platforms, like YouTube and Facebook. How those streaming services will pay to use the rights-of-way and keeping control within local government will create contentious negotiations to watch in the years ahead.

 

References


Ali, C. (2023). Telecommunications localism: the fight for control over local communication networks in the United States. Media International Australia, 0(0). https://doi.org/10.1177/1329878X231198318


Baoill, A., & Scifo, S. (2022). Fragility and empowerment: community television in the digital era. International Journal of Communication, 16(2022), 566-584


Dowdall, S. (2023, May 16). Support the Protecting Community Television Act. National Association of Counties. https://www.naco.org/resources/support-protecting-community-television-act


Fischer, S. (2022, August 18). Streaming surpasses cable as top way to consume TV, AXIOS. https://www.axios.com/2022/08/18/streaming-surpasses-cable-tv-market-share


Galperin, H. (2021). Infrastructure law: high-speed internet is as essential as water and electricity. The Conversation. https://theconversation.com/infrastructure-law-high-speed-internet-is-as-essential-as-water-and-electricity-171782


Haywood, A., Aufderheide, P. & Sánchez Santos, M. (2021). Community media in a pandemic: facilitating local communication, collective resilience and transitions to virtual public life in the U.S., Javnost - The Public, 28:3, 256-272, DOI:10.1080/13183222.2021.1969617


HB 4965 Local Community Talking Points in Opposition (2023, October). Michigan Community Media Association email https://files.constantcontact.com/bd9bf5dd001/d34b662e-637c-45b8-b1e3-6ce4aca7b5b4.pdf?rdr=true


Lynch, M., Panettieri, A., Lavery Lederer, G., Werner, N., (2023, November 6). H.R. 3557, (mis)cited as the ‘‘American Broadband Deployment Act of 2023. [Webinar] NATOA. https://register.gotowebinar.com/recording/8180537369975853664 presentation slides


Legislative Analysis (2023, September 26). Legislature MI. Retrieved November 20, 2023 from http://www.legislature.mi.gov/documents/2023-2024/billanalysis/House/pdf/2023-HLA-4965-0D497ED3.pdf


Richards, H (2023, October 10). Engagement Needed: Video Franchise Fee Exemption for Streaming Services Heads to House Floor for Action, Michigan Municipal League. https://mml.org/inside208/2023/10/10/engagement-needed-video-franchise-fee-exemption-for-streaming-services-heads-to-house-floor-for-action/


Sens. Markey and Baldwin, Rep. Eshoo Introduce Legislation to Uphold Access to Community Television, Undo Trump-Era FCC Rules. Ed Markey United States Senator for Massachusetts. Retrieved November 20, 2023, from https://www.markey.senate.gov/news/press-releases/sens-markey-and-baldwin-rep-eshoo-introduce-legislation-to-uphold-access-to-community-television-undo-trump-era-fcc-rules



Smally, S. (2023, March 10). Google fiber to expand presence in Travis County. Austin Monitor. https://www.austinmonitor.com/stories/2023/03/google-fiber-to-expand-presence-in-travis-county/


Stewart, D., & Shaker, L. (2018). Exploring the policy value of cable franchise and PEG fees. Journal of Information Policy 8(1), 442-471. https://doi.org/10.5325/jinfopoli.8.1.0442


Fact Sheet: Department of Commerce’s Use of Bipartisan Infrastructure Deal Funding to Help Close the Digital Divide (2021, November 21). U.S. Department of Commerce. https://www.commerce.gov/news/fact-sheets/2021/11/fact-sheet-department-commerces-use-bipartisan-infrastructure-deal-fundinghttps://www.commerce.gov/news/fact-sheets/2021/11/fact-sheet-department-commerces-use-bipartisan-infrastructure-deal-funding

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