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Local Government Groups Sue FCC Over Cable Modem Ruling

The FCC's ruling will have devastating financial impact on nation's communities.

WASHINGTON, D.C. -- Five national organizations have joined to oppose the recent cable-modem ruling issued by the FCC and held a press briefing at the National Press Club on Tuesday to outline how the decision will hurt communities.

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.

The alliance also released new data on expected revenue losses, and officials said the preemptive FCC ruling will cost local communities an estimated $300 million this year and remove their authority over public rights-of-way.

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. As a result, cable-modem service is no longer subject to local cable-franchise requirements.

Members of the alliance said:

- 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 Sept. 11 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, the alliance said.

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 alliance 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, electronic government, trash collection and street maintenance.

According to the alliance, some projected city and county revenue losses for 2002 are:

Lincoln, Neb. will lose $250,000 in revenue.
Las Vegas is projecting a loss of $1 million in lost revenue.
Mecklenburg County, N.C., projects, between two cable providers, losses at $52,500.
Springfield, Mo., projects a $100,000 loss in revenue.
Charlotte, N.C., reports losses in revenue at $600,000.
South Portland, Maine, stands to lose $90,000.
Chandler, Ariz., will lose a minimum of $300,000 in budgetary revenue.
Fort Worth, Texas, will lose $133,000 in revenue.
Houston, Texas, stands to lose $624,000.
Minneapolis reports losses will be $200,000.
Livonia, Mich., expects to lose $200,000 in revenues.
Albuquerque, N.M., will lose $400,000.

"Local governments are prepared to do everything necessary to make our case," members of the alliance said during the briefing. "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."

The U.S. Conference of Mayors