p200508PEGIssues

PEG Issues In the New Digital World : 

Joseph Van Eaton Miller & Van Eaton, P.L.L.C. Dallas, Texas August, 2005 PEG Issues In the New Digital World

Overview: 

Overview Why PEG? What Makes PEG Work The Effect of New Entrants/Legislation The Evolution of PEG - Issues to Think About in the New Digital Environment Controversial Programming

Why PEG?: 

Why PEG? Provide opportunity for roughly equivalent access to “marketplace of ideas” Ensure that there is a low or no-cost “on-ramp” for local communities to the information highway Provide media tools for building community Prevent facilities owner from controlling or restricting all content Promoting local content Goals protect rights of speakers & viewers

What Makes PEG Work?: 

What Makes PEG Work? Channels available to users at no cost, to viewers as part of basic services Provided through franchise; quality protected Often with provision for more channels as use grows Facilities for production Provided by: specific franchise requirement for a facility; grants from operator; grants by community; through use of existing facilities (schools); combination of the above.

What Makes PEG Work?: 

What Makes PEG Work? Equipment for production (cameras, editing equipment) Provided by: specific franchise requirement for a facility; grants from operator; grants by community; through use of existing facilities (schools); combination of the above. Equipment to place signals on system Provided under franchise, or paid for by community

What Makes PEG Work?: 

What Makes PEG Work? Connections to local network insertion point Typically provided by operator directly, or through an INET May be multiple connections (schools, govt, public facility, local origination points). Interconnections to region Operational support Provided by operator in-kind By community or by operator through grants (beware franchise fee issue)

What Makes PEG Work?: 

What Makes PEG Work? Other support Access to menus Stable channel location Promotional support KEY: requirements can be changed over time to meet needs of community; requirements included in franchise can be enforced at local level

Effect of New Entrants – Key Issues: 

Effect of New Entrants – Key Issues Will entry rules preserve and protect elements necessary to PEG success? From standpoint of viewers? Speakers? Do all users of ROW providing equivalent services have PEG responsibilities? Will entry rules provide fair and balanced division of responsibility for costs? Is embedded capital accounted for and protected? Will entry rules shift costs to local governments/local users? (impact of fed. law)

Effect of new entrants: Tx legislation: 

Effect of new entrants: Tx legislation Texas legislation pending as of August 2005 chosen because it appears as if some effort was made to try to protect PEG Question: does it really do it? Basic model: state becomes franchising authority State franchisee pays 5% franchise fee; matches number of activated PEG channels as of date of state franchise.

Effect of new entrants: Tx legislation: 

Effect of new entrants: Tx legislation Until incumbent cable op’s franchise expires, state-franchised co. pays, on per sub basis “the same cash payments” required to be paid by the incumbent operator. After the incumbent’s cable op’s franchise expires, state franchisees pays 1% of gross in addition to franchise fee OR (at local option) the same per sub amount that incumbent cable op. paid under old franchise. Incumbent cable op not eligible for state franchise until franchise expires

Effect of new entrants: Tx legislation: 

Effect of new entrants: Tx legislation Incumbent must also continue to provide INET capacity until at least 2008 even if franchise has expired, but can charge for capacity at incremental cost after franchise expires Less clear: what happen with PEG connections after franchise expires? What happens to PEG or INET connections after 2008?

Evaluating Texas Legislation v. Key Entry Issues: 

Evaluating Texas Legislation v. Key Entry Issues Does it ensure adequate channel capacity is available? Locks in existing number of activated channels, generally; No quality standard for state-franchised providers Does it allow use of advanced capabilities? HDTV? Not clearly. Particular problem for: communities that have just started PEG; the educational community & public health and safety community, which may now have increasing demands for communications capacity.

Evaluating Texas legislation: 

Evaluating Texas legislation Does it provide for/protect PEG facilities and equipment? Answer: partly Incumbent required to comply with franchise for term; but FED law allows modification of “commercially impracticable” facilities and equipment requirements Per sub payment made by state franchisee till incumbent’s franchise ends may not take into account past PEG/INET lump sum payments or in-kind support (equipment, services or facilities) While state franchisees must pay 1% of gross or per sub fee after existing franchises expire, not clear this will be enough given other costs to community Unanswered: What happens to existing PEG facilities and equipment provided by incumbent after franchise expires?

Evaluating Texas legislation: 

Evaluating Texas legislation Does it provide for adequate connections from local PEG facilities to a location where programming can be placed on the video provider’s system. Legislation does not appear to protect all existing connections after expiration of current franchise. INET could be used for carrying signals to incumbent operator until at least 2008, but there may be a charge for even that capacity, and connections may disappear in 2008 Not clear that state franchisee must provide any connections from PEG facilities – legislation either provides for only 200 feet of connectivity, or provides for everything but last 200 feet Responsibility for insertion equipment costs at “headend” unclear No clear right to capacity for channel management

Evaluating Texas legislation: 

Evaluating Texas legislation Does it provide for equipment necessary to place signal on systems? No – that becomes cost for locality Locality must deliver signal in format demanded by video service provider, so locality may need equipment to deliver duplicate signals in multiple formats This may dramatically increase costs Interconnections? Not beyond franchise area boundaries (e.g., to allow schools to provide programming to serve entire district) Not clear how fits in with connection requirement

Evaluating Texas legislation: 

Evaluating Texas legislation Does it provide means for obtaining operational support in addition to franchise fee? Probably not Does it provide for channel stability, easy access to viewers at basic service level, and equivalent menu access? No. Broadcasters get mandatory access to menus, but there is no similar requirements for PEG Protection against operator control of content? Maybe not Designed for the future? Easily enforced? - NO

Evaluating Texas legislation: 

Evaluating Texas legislation Summary: while there have been real efforts to address PEG, Texas and other approaches aimed at moving franchising to state or federal level do not fully appreciate how PEG operates now, and what may be required for the future. This creates a real risk for PEG and key PEG users: religious groups, non-profit organizations, schools, etc.

PEG Evolution - Issues: 

PEG Evolution - Issues What happens when channels go digital? What rights to capacity? What rights to quality? Taking PEG to the Internet Who owns the programming? What additional releases/copyright clearances are needed? Making PEG available on demand/interactively Does new/existing legislation allow PEG to take advantage of advances in technology? Should “green space” concept apply to new technologies? Can we/do we want to create a market for PEG?

Controversial Programming: 

Controversial Programming The ability to manage the content of programming on PEG channels is matter of significant debate Ability to manage content may depend on whether effort is result of action of: Government Cable operator Non-profit PEG Manager May depend on whether channel is P,E or G Management practices may affect liability

Controversies: Basic Issues : 

Controversies: Basic Issues The controversial programming debate turns fundamentally on the degree to which PEG channel use is subject to first amendment protections If facilities ARE subject to first amendment rules, use would still be subject to reasonable “time, place and manner” regulations If not subject to first amendment, potentially greater control of content would be permitted BUT such control may raise other issues: Are PEG requirements constitutional? Liability issues

Status of access manager: 

Status of access manager First amendment applies to “state action,” or action that can be ascribed to the government Government managed channel would clearly involve state action Cable operator managed channel might involve state action; cable op also subject to Cable Act “no censorship” rule NPO managed channel might involve state action Key may be degree to which govt controls conduct, or operation of access manager

Examples of cases: 

Examples of cases Denver Area: 518 US 727 (striking certain Cable Act rules regarding indecency on PEG channels) Horton: 179 F.3d 188 (finding Houston Access had failed to show fee for non-local programming was adequately tailored to serve legitimate interests) Wilcher: 2005 WL 1140676 (challenging TW rules requiring substantially all content be local; $25 admin fee for programming; and limiting access to residents of specified communities – held: no first amendment claim available)

Examples of cases/other issues: 

Examples of cases/other issues Morrone: 363 F.Supp.2d 552 (challenge to rules departing from first come first served PEG) Huffman: 2005 WL 1106504 (applying indecent exposure rules to PEG) Other issues Who can sue a cable operator for censoring cable programming? (see discussion in Wilcher) Do equal time/political advertising rules apply to PEG? Answer: not if open access is provided to forum

Controversial Programming: 

Controversial Programming Very good reasons to: Treat “P” channel as type of open forum, or to limit local government control of programming; Treat “G” channels as government speech, and program accordingly; Treat “E” channels as educational speech, and program accordingly Recognize that in first amendment area, courts may look beyond ostensible label to programming practices

Contact information: 

Contact information Joseph Van Eaton jvaneaton@millervaneaton.com Miller & Van Eaton, P.L.L.C. Suite 1000 1155 Connecticut Avenue. N.W. Washington, D.C. 20036-4320 phone (202)785-0600 fax (202)785-1234