Montgomery County. v. Federal Communications Commission, No. 08-3023 (6th Cir. 2017)Annotate this Case
Over the last 10 years, the Federal Communications Commission has established rules governing how local governments may regulate cable companies. In 2007, the FCC barred franchising authorities from imposing unreasonable demands on franchise applicants or requiring new cable operators to provide non-cable services. The FCC also read narrowly the phrase “requirements or charges incidental to the awarding . . . of [a] franchise” (47 U.S.C. 542(g)(2)(D)), with the effect of limiting the monetary fees that local franchising authorities can collect. A petition for review was denied. Meanwhile, the FCC sought comment on expanding the application of the First Order’s rules—which applied only to new applicants for a cable franchise—to incumbent providers. In its Second Order, the FCC expanded the First Order’s application as proposed. Local franchising authorities again objected. The FCC finally rejected objections after seven years; the FCC clarified that the Second Order applied to only local (rather than state) franchising processes and published a “Supplemental Final Regulatory Flexibility Act Analysis.” Local governments sought review, arguing that the FCC misinterpreted the Communications Act, and failed to explain the bases for its decisions. The Sixth Circuit granted the petition in part; while “franchise fee” (section 542(g)(1)) can include noncash exactions, the orders were arbitrary to the extent they treat “in-kind” cable-related exactions as “franchise fees” under section 541(g)(1). The FCC’s orders offer no valid basis for its application of the mixed-use rule to bar local franchising authorities from regulating the provision of non-telecommunications services by incumbent cable providers.