By Ron Thaniel
March 8, 2010

According to political and credible reports, the Federal Communications Commission (FCC) staff will be recommending to the Commission to include in its National Broadband Plan to Congress on March 17 – as directed by the American Recovery and Reinvestment Act – recommendations that would limit local government rights-of-way authority and would impose a less than fair market value as the standard for fair and reasonable rights-of-way compensation.

This would occur if the FCC were to establish a rule or an interpretation that prevents state and local governments from obtaining fair market value for use of rights-of-way or that makes current gross revenue-based or market-based rights-of-way fees unlawful and requires rights-of-way fees be subject to a FCC-imposed cost model. However, if this rule or interpretation were to occur, this would be at odds with Section 253 of the Telecommunications Act of 1996. Congress has made it as clear as possible in Section 253 of the Telecommunications Act of 1996 – by an overwhelming and bipartisan vote – that the FCC was not to set rates for use of rights-of-way, and was to leave the determination of rates and management of public property to the states and localities.

The impact of such a ruling or interpretation would be devastating to local budgets and would increase layoffs, furloughs, service reductions, and fee increases. In a January 27 letter to the FCC, Conference of Mayors President Burnsville (MN) Mayor Elizabeth B. Kautz wrote, “The nation’s mayors do not believe Congress or the Obama Administration intended for the National Broadband Plan to be used as a vehicle to take revenue from city budgets in order to subsidize private entities.” Here are some specific examples of the impact on local budgets collected by the National Association of Telecommunications Officers and Advisors (NATOA).

• Arlington (TX) receives approximately $2.1 million per year in cable franchise fees and approximately $6.7 million from telecommunications companies, based on access line fees. These fees accounted for approximately 4.6 percent of the city's FY 2009 Budget, and if lost would translate to dozens of lost jobs and a ripple effect on the local economy.

• Dallas (TX) receives approximately $6 million per year in cable franchise fees and approximately $31 million from telecommunications companies, based on access line fees. This is about 3.6 percent of the budget for this fiscal year, and – applying the test for job creation used in assessing the impact of the federal stimulus package – if lost would translate to a loss of more than 300 jobs in Dallas alone (ignoring the ripple effect through the economy).

• Portland (OR) generated right-of-way revenues (fees and utility taxes) from cable and telecommunications providers totaling approximately $12.2 million (Cable: $5.5 million; Telecom: $6.7 million) in Fiscal Year 2008-2009. If those revenues are placed at risk, or are withheld, that would translate directly into significant service and employment cuts (approximately 139 police and firefighters, for example) on top of already significant cost cutting measures being taken due to the recession. That impact would multiply through the Portland economy.

• San Antonio (TX) received $16.4 million in access lines fees from Certified Telecommunications Providers and $15.6 million from cable/video providers for the use of the city’s ROW in Fiscal Year 2009. This is approximately 3.6 percent of city’s General Fund Operating Revenues for FY 2009. The impact of these fees could translate to a large number of employees and/or other municipal services.

• Seattle (WA) received $32 million in telephone revenues alone – equivalent to about 300 public sector jobs.