MIDDLEBURY — Managers of Vermont’s cable access channels are warning that a new rule being pitched by the Federal Communications Commission (FCC) could significantly affect their revenues to a point where some stations might have to pare back services significantly, or even close down.
If that happens it would certainly restrict the public’s ability to keep tabs on their local government.
The 1984 Cable Act, among other things, established rules on how cable television operators must reimburse communities for the right to use public ways to extend their cable infrastructure to consumers. Cable operators must pay a franchise fee to substantially subsidize local cable access stations — also known as Public, Educational, and Governmental Access Channels, or PEGs.
Local PEGs include Middlebury Community Television (MCTV) and Northeast Addison Television (NEAT) in Bristol.
Cable subscribers pay the franchise fee as part of their regular television bills.
The 1984 law also called upon cable operators to extend other, in-kind services that have included complementary cable and Internet access to schools, libraries and municipal buildings; the backhaul of television signals to go live from remote locations; access to an interactive programming guide; and channel capacity.
But the FCC is now considering a rule change that would allow cable corporations — such as Comcast in Vermont — to redefine, and place a value on, those in-kind cable franchise obligations. The result, local access station operators fear, would be a new era in which cable companies would be able to establish their own estimates for these in-kind services and expense them back to local access organizations to count against their franchise fee. This would mean less revenue for local access staff and programming.
And since the foundation of local access programming is coverage of municipal and school functions, there would be less transparency in local government.
Kevin Christopher is executive director of Lake Champlain Cable Access TV in Colchester. He also serves as president of the Vermont Access Network, which represents the interests of the state’s 25 independent, non-profit PEG organizations.
“We don’t yet know what impact it would have on our funding,” Christopher said during a Tuesday phone interview,  “but we presume that in instances where the cable operator takes advantage of this new rule, it would have a significant impact.”
Since local access organizations’ annual budgets are typically very small, any loss of operating revenue could have a big impact, according to Christopher. And stations can’t accurately plan ahead for a potential loss in revenue, because they don’t yet know if Comcast would choose to charge for in-kind services, and if it does, how much.
Here in Addison County, MCTV’s annual budget is around $150,000; NEAT’s is approximately $78,000.
Both local stations depend on only a few, mostly part-time staffers to operate cameras at meetings and other public events. Residents within the stations’ service areas can also borrow equipment to produce their own programming, ranging from high school sports to religious services.
Kurt Broderson is executive director of MCTV. He and his board are concerned about a potential loss in funding following some already discouraging financial news: Vermont public access stations noticed, on average, a 4 percent drop in their Comcast franchise fee checks during the first quarter of last year. Broderson said the drop — amounting to around $5,000 for MCTV — was attributed to a change in Comcast accounting practices that had been authorized by the federal government.
“The Vermont Public Utilities Commission is not entirely satisfied with (Comcast’s) explanation, and has started conversations with Comcast,” Broderson said. “There may be an investigation of that.”
Broderson, Christopher and other PEG station managers are also concerned about recent consumer trends in the home entertainment industry. The advent of streaming services — such as Netflix and Hulu — has prompted some consumers to drop cable. Some viewers can also contract with streaming services to receive only the channels they want, versus tiered plans through cable companies that include unwanted channels.
Fewer cable subscribers means less franchise fee revenues for PEG stations.
FRUGAL OPERATIONS
While Broderson and NEAT Executive Director Mary Arbuckle are concerned about the FCC rule and its impact on their respective stations, they are optimistic they won’t have to cease operations. Both run frugal operations.
“There’s been a great deal going on in our community, and  I am pleased that NEAT has been able to follow issues that matter to people,” Arbuckle said. “We’ve increased coverage significantly this past year, and the feedback from our community has been terrific. People want to know what’s happening, and seeing it directly is powerful. NEAT’s mission is ‘to use locally produced media to strengthen public dialogue, understanding, and community involvement.’ We are doing this, and hope we can continue. Reduced revenue would result in reduced coverage.”
MCTV benefits from sharing a professional-grade media production facility at the neighboring Ilsley Library. The two organizations split the costs. MCTV also receives a modest ($5,000) annual contribution from the town of Middlebury, and has asked the town to bankroll $8,000 in new broadcast-related equipment in the town offices. MCTV uses that equipment to record public meetings.
“At the larger stations, it could result in elimination of positions,” Broderson said of the proposed FCC rule, “but I think we’ll be able to ride it out.”
But “riding it out” under the proposed FCC rule might force local access stations to adopt new business plans to make up for lost franchise fee revenue. There could come a day when stations assess charges for services, and/or ask businesses to consider underwriting programming.
Broderson is confident MCTV will have a stable budget for 2019.
But after that, it’s anyone’s guess.
“2020 might be the year things change radically,” he said.
The FCC published the proposed a new rule last October, according to Christopher. It accepted public comments through mid-December. The commission should now be reviewing those comments, but that’s not happening due to the federal government shutdown.
If the FCC decides to adopt the new rule, it will file it with the Federal Registry, at which point cable companies will be able to take advantage of it in their future financial dealings with PEG stations.
Comcast is one of several cable companies represented by the Internet & Television Association. The association in May gave the FCC a 66-page document expressing its views on the proposed FCC rule.
“In a competitive market, there is no such thing as ‘free,’” the association document reads in part. “In-kind demands for ‘free’ service, ‘free’ advertising, or other ‘voluntary’ contributions put cable operators at a clear competitive disadvantage: Any extra in-kind assessments on the cable operator raise the costs of the cable operator’s service, and in turn ultimately raise costs on consumers, who can move to an alternate provider not subject to such costs. The cost of providing ‘free’ items also reduces resources available for deployment of broadband services and facilities.”
Reporter John Flowers is at [email protected].