City fears cable access channel funding loss

Santiago Garces, Pittsburgh’s director of Innovation and Performance, points to the cable box connected to a small TV in his office in the City- County Building. A live look at a public hearing in City Council chambers is playing on the flat screen.

“There’s boxes like that throughout the city, in community center[ s] so people can watch TV and whatnot,” Mr. Garces said. “In our case, we have them in the office so that we can actually tune in to the city channel [ to] see if the council is talking about the department.”

The boxes and internet connectivity in 52, or roughly half, of the city’s buildings are provided free of charge by Comcast and Verizon. Mr. Garces estimated the value of free cable services from Comcast to be roughly $ 68,000 a year. The companies also give hundreds of thousands in grants each year for public, education and government cable services.

Now Mr. Garces and others fear that those in- kind services could be deducted from fees, or rent, that the big cable players pay to the city for access to run cable and maintain their systems in the public right of way — for example, to lay cable under city streets — space that is a “limited resource,” Mr. Garces said.

The Federal Communications Commission is set to vote Thursday on the proposed rule change.

“What the ruling would do is basically say, ‘ Hey, these things you’ve been getting on top of the rent, now Comcast and Verizon are going to be able to deduct that from the rent.’ And the reality is we’ve been using the rent to pay for the city channel and PCTV,” Mr. Garces said.

The city channel — channels 13 and 14 on Comcast and 44 and 45 on Verizon — airs City Council meetings, public hearings and mayoral news conferences, and Mr. Garces’ department streams and archives the content online. Pittsburgh Community Television, or PCTV, located on the city’s North Side, is open to any Allegheny County

resident to take classes or produce a television show.

Currently, Comcast and Verizon pay the city 5% of gross revenues earned from cable subscriptions in city households and businesses as a rent payment, or franchise fee, in exchange for access to public right of way. The amount is capped by Congress.

In 2018, the city received nearly $5.2 million in rent. In 2019, the city has received just under $2.6 million and expects $5.3 million by the end of the year. The city projects the amount to go down slightly over the next five years “due to fewer subscriptions,” according to the 2019 operating budget.

Mr. Garces estimated that companies could deduct at least $700,000 annually from those payments if the FCC approves the rule change. An exact total was not readily available as the city doesn’t publish cable grants as part of its operating budget, according to the Office of Management and Budget.

“It’s hard to say exactly how it will affect PCTV,” said John Patterson, executive director of the station.

Eighty-five percent of PCTV’s funding comes from cable company grants given to the city by Comcast and Verizon. In 2018, that amounted to $618,004 for PCTV.

Community television advocates say that multibillion-dollar cable giants are trying to take money back from public services in the interest of profit. According to Forbes, Comcast was expected to make $54 billion from its cable services in 2018.

“Suddenly the city has to cough up money or get bids to replace its networking infrastructure because the cable company wants to make more money,” said Mike Wassenaar, president and CEO of the Washington, D.C.-based Alliance for Community Media. “It’s not like consumers in Pittsburgh are going to see their fees drop. It just means the operating margin for the cable operator goes down so they can profit more.”

Comcast and Verizon did not respond to multiple requests for comment.

The D.C.-based Internet & Television Association, one of the industry’s large sttrade groups, maintains that local governments have taken advantage of “substantial ‘in-kind’ contributions, like free services, free advertising, free channels for their programming, and even for extra ‘voluntary’ cash contributions,” according to a November 2018 blog post that spokeswoman Joy Sims highlighted.

“Together, these requirements add up to an amount well beyond the fee cap that Congress established,” the post read. “The process that was intended to encourage the deployment of services to strengthen communities is instead placing an unnecessary burden on cable operators that threatens to hinder their ability to innovate and expand their services.”

Ms. Sims declined to comment further.

But Mr. Garces said a ruling in favor of the cable companies would be a “ruling against the city’s ability to control its destiny and maintain the thing the city was created for, which is controlling public right of way and public space and resources that benefit all residents.”

“Suddenly the city has to cough up money or get bids to replace its networking infrastructure because the cable company wants to make more money.” — Mike Wassenaar, president and CEO, Alliance for Community Media