U.S. Court Rules FCC Within Authority On 90-Day Franchise Requests


Local governments and incumbent cable operators have been shot down in their federal court challenge of the Federal Communications Commission's so-called 90-day shot clock for the awarding of competitive franchises.

The FCC was within its statutory authority when it ordered local governments to approve competitive franchise requests in 90 days, according to a ruling issued by the U.S. Court of Appeals for the Sixth Circuit.

The panel said the FCC had acted “well within its statutory delineated authority in enacting” the order, issued March 5, 2007. 

In that rulemaking, the FCC decided that Section 621 of the Cable Communications Policy Act not only prevented local governments from refusing a franchise request, but also prevented procedures and requests that interfered with a provider's ability to earn a franchise. 

The agency ordered that local governments award a franchise to newcomers within 90 days; barred local build-out requirements; and prohibited local requirements such as insurance and bonds in excess of the 5% in franchise fees cities already collect. Moreover, newcomers can't face public, educational and government channel support requirements that exceed those applied to incumbent providers.

The order was immediately challenged by groups including the Alliance for Community Media, the National Association of Counties, the National Association of Telecommunications Officers and Advisors, the National League of Cities, the U.S. Conference of Mayors and the Alliance for Communications Democracy.

They argued the FCC acted in an “arbitrary and capricious” manner, beyond the scope of agency authority. The petitioners asked that the court reverse the FCC ruling and declare it void in its entirety. The National Cable & Telecommunications Association, as well as a handful of cities and counties, also filed to intervene in the suit.

But the appeals panel found each of the four requirements in the FCC ruling was acceptable: the 90-day time frame is similar to other timelines, such as the 120-day period allowed to negotiate franchise adjustments, in federal law. Local rules mandating a quick build-out hinder competitive deployments desired by Congress in the Act, the court opined. The agency was reasonable in determining that local bonds or insurance fit within the 5% franchise fee cap, and that PEG requirements be equal to the current ones for incumbents, the court said.

Libby Beaty, NATOA executive director, called the ruling a “very disappointing analysis,” adding that NATOA and the other organizations will talk next week about their options.

The groups could ask for a rehearing, request an en banc hearing (arguing the case before all the appeals judges, not just a panel) or appeal the decision to the U.S. Supreme Court. If the municipal groups decide to pursue the case to the Sixth Circuit, they will have to decide quickly, Beaty said. 

The NCTA said the “potential harm” in the FCC's original order has been mitigated, as the FCC later applied many of the policies in the rule to other providers.

“Today's video marketplace is intensely competitive and consumers are enjoying more choice, more services and better value than ever before,” the NCTA said in a statement. Cable operators will continue to work hard to provide to consumers the best range of video, broadband and voice services to be the preferred choice of consumers.”