Counties Quake at Cable Revenue Shortfall

In March the Federal Communication Commission reclassified cable Internet connections as an information service instead of a cable service, and fallout from that ruling already is hitting Maryland counties.

Comcast Cable told several counties they would no longer receive cable-modem franchise fees from the company because the FCC decision means the company is no longer obligated to collect the money. Counties say that could cost them a sizable chunk of change. For example, Baltimore County, Md., officials said they could lose $830,000 next year if Comcast stops collecting cable-modem franchise fees.

"The definition we created [in the franchise agreement] was that the county would receive a percentage of the gross revenue derived, in essence, from the wire," said Kevin Kamenetz, an eight-year member of the Baltimore County Council and the lead negotiator on cable issues for the county. "Any sources of income that our local Comcast entity receives as gross revenue derived from the transmission over the county rights of way would be subject to our franchise fee."

Officials said the county told Comcast that its decision to cease collecting the fee is premature, given that the FCC's ruling isn't final and that if the FCC does reverse its decision, the county is due a refund of fees that haven't been paid.

Several counties, through the state's association of counties, will lobby the FCC to change its decision about the classification of cable Internet services.

"Congress has been pretty clear that they want to take any negotiating leverage from the local jurisdictions in the guise of free market competition," Kamenetz said. "Obviously, this may be a position that will be resolved in the courts or by Congress."