May 14, 2002

Local Government Groups Take FCC to Court Over Cable Modem Ruling
Ruling Will Have Devastating Financial Impact on Nation's Communities

Washington, DC -- Five national organizations have joined to oppose the recent cable modem ruling of the Federal Communications Commission and held a press briefing at the National Press Club. The briefing outlined how the decision will hurt communities and released new data on expected revenue losses. The preemptive FCC ruling will cost local communities an estimated $300 million this year and remove their authority over public rights-of-way.

J. Thomas Cochran, Executive Director of the U.S. Conference of Mayors addressed reporters during a press briefing at the National Press Club to announce that an alliance of national organizations representing local governments is taking the FCC to court to fight against a recent ruling that will cost cities and counties 300 million dollars. Cochran is joined by (left) Libby Beaty, Executive Director of the National Association of Telecommunications Officers and Advisors (NATOA) and (right) Larry Naake, Executive Director of the National Association of Counties (NACo).

Also See...
Mayors Join City/County Coalition to Fight Cable Modem Ruling

The ruling states that cable modem service offered over a cable system is an interstate information service, not a telecommunications service or a cable service, and thus no longer subject to local cable franchise requirements.

The National League of Cities, the U.S. Conference of Mayors, the National Association of Counties, the International Municipal Lawyers Association, and the National Association of Telecommunications Officers and Advisors, formed the Alliance of Local Organizations Against Preemption to pursue legal and regulatory actions and to prevent a devastating blow to communities' budgets.

Some of the concerns expressed by the Alliance are:

  • Communities will lose $300 million dollars in revenue in 2002 alone. This comes at a time when local governments face tremendous additional costs in areas such as security following the September 11th attacks;
  • Communities rely on this revenue to fund budgeted local projects such as street maintenance;
  • The FCC ruling robs local government of their constitutional rights to charge cable monopolies that should not be exempt from paying fair rent for the use of public property;
  • The ruling by the FCC leaves consumers unprotected against poor customer service practices of cable monopolies.

The adverse effect on the budgets of local governments, already stressed by the advent of higher homeland security costs, amounts to hundreds of thousands of dollars for some municipalities. Six of the largest cable companies have already sent letters notifying local franchise authorities that they will no longer pay cable franchise fees on cable modem revenues. Preliminary results of a survey being conducted by the coalition shows that communities across the nation will lose millions of dollars in revenue as a result of the FCC ruling. The losses will directly impact the budgets for services such as schools, public safety, e-government, trash collection, and street maintenance. Some projected city and county revenue losses for 2002 are:

  • Lincoln, NE will lose $250,000 in revenue
  • Las Vegas is projecting a loss of $1 million in lost revenue
  • Mecklenburg County, NC projects, between two cable providers, losses at $52,500
  • Springfield, MO projects a $100,000 loss in revenue
  • Charlotte, NC reports losses in revenue at $600,000
  • South Portland, ME stands to lose $90,000
  • Chandler, AZ will lose a minimum of $300,000 in budgetary revenue
  • Fort Worth, TX will lose $133,000 in revenue
  • Houston, TX stands to lose $624,000
  • Minneapolis reports losses will be $200,000
  • Livonia, MI expects to lose $200,000 in revenues
  • Albuquerque, NM will lose $400,000

Members of the Alliance stated during the briefing that, "Local governments are prepared to do everything necessary to make our case. Our level of concern is profound and significant. Our organizations and local municipalities that provide services are going to fight this preemption through the courts and with the FCC for as long as it takes."

National League of Cities - John Pionke 202-626-3051
National Association of Counties - Tiffany Ricci 202-942-4220
U.S. Conference of Mayors - Lina Garcia 202-861-6719
International Municipal Lawyers Association - Michael Moss 202-466-5424 ext. 110
National Association of Telecommunications Officers and Advisors - Libby Beaty 703-506-3275


©2004 U.S. Conference of Mayors