Attorney to pursue PEG fees for OCTV

Send in the lawyer.
That’s what the Oxford Area Cable Communications Commission (OACCC) decided to do last week in the hopes of obtaining some fees that officials believe they’re entitled to from cable provider Charter Communications.
Cable commissioners voted 4-0 to engage the services of Detroit attorney Michael Watza, for an amount not to exceed $25,000, to go after Charter for fees  specifically pertaining to the funding of Public, Educational and Governmental (PEG) access channels.
“He said it might be a fight,” said Teri Stiles, production manager for Oxford Community Television (OCTV), who brought the PEG fee issue to the cable commission’s attention.
It was recently discovered that Charter has not been paying any PEG fees to Oxford Township and Village, Addison Township and the Village of Leonard – the four communities that makeup the cable commission – because the cable provider was never required to do that as part of the local franchise agreement.
PEG fees are optional fees that local municipalities can choose to levy via the franchise agreements they enter into with cable providers.
Cable providers collect these fees from subscribers, at no profit to themselves, then pay them to municipalities to fund PEG channels like OCTV. Cable providers only collect and pay PEG fees if municipalities require them to do so.
PEG fees are separate from franchise fees, which cable providers pay municipalities for use of the public right-of-way. In Charter’s case, it currently pays OACCC communities franchise fees amounting to 5 percent of its gross revenues.
Franchise fees can be used by municipalities at their discretion for any number of purposes, while PEG fees are restricted in that they can only be used for PEG channel purposes and nothing else.
PEG fees can be up to 2 percent of a cable provider’s gross revenues as defined in the franchise agreement.
It’s the subscribers who pay both PEG and franchise fees as cable providers pass these costs along to them on their monthly bills.
For some undetermined reason, there is no mention of PEG fees in the franchise agreement approved in 2004 between Charter and the four municipalities.
As a result, Charter hasn’t been collecting PEG fees and the municipalities haven’t been receiving them, resulting in a significant annual loss of potential revenue for OCTV based on estimates provided to the cable commission by station management.
According to these estimates, in 2017, had a 2 percent PEG fee been paid by Charter, the four municipalities would have received a combined $102,709. A 1 percent PEG fee would have yielded $51,355 for the two townships and two villages.
This is money that could have been used to help fund OCTV as the local PEG channel.
Various sources indicate that PEG fees can only be used for capital expenditures, which is “no problem” for OCTV, said Stiles, “because we’re building a building.”
A total of $350,000 has been earmarked by the cable commission to construct and furnish a new 3,010-square-foot television station in Seymour Lake Township Park.
Just because “there’s nothing in the (franchise agreement) about” PEG fees now, Stiles told commissioners “that doesn’t stop us from asking (for them) at any time.”
That’s where hiring the attorney comes into play.
“I have a lot of confidence in Mike Watza,” said Stiles, who noted he’s “really willing to go to bat” for the cable commission.
“He does very good work,” added Commissioner Charlene Sutherby, who represents Leonard.
Commissioner Maureen Helmuth, who represents Oxford Village, asked “what’s the chance” of obtaining PEG fees from Charter dating back to 2004.
“None,” Stiles replied. It’s not something that can be collected retroactively, she explained.
There was some discussion and speculation as to how the PEG fees got left out of the franchise agreement 14 years ago and whose fault it was, but in the end, Commissioner Bill Dunn, representing Oxford Township, said it doesn’t really matter because “we are where we are.”
“Whatever happened, happened,” he said, so the only thing to do is “move forward.”
Dunn noted he “cannot fault” those people who served on the cable commission back then because he wouldn’t have known to ask for PEG fees.
Stiles noted Watza believes “one of the biggest arguments” the cable commission has in favor of obtaining PEG fees from Charter is the fact that OCTV is “doing so well with (its) programming.”
She said Watza “couldn’t believe” the station’s viewer numbers on YouTube are “so high.”
“He’s really impressed,” Stiles said.
“He thinks we have a good argument (for requesting PEG fees),” Stiles continued. “We’re doing everything right as a studio.”
Stiles told commissioners OCTV’s “going in the right direction,” despite being handicapped in terms of funding.
“We’ve really been functioning on bubblegum and Scotch tape, when you think about it,” she said. “We’re getting half of our franchise fees and no PEG fees and we’ve done all this. We’re pretty good with our money.”
Of the four municipalities that make up the OACCC, only Oxford Township gives 100 percent of the franchise fees it receives to OCTV.
Addison Township along with the villages of Oxford and Leonard all contribute half of their franchise fees to OCTV and keep the other half.
Given the franchise agreement with Charter expires in August 2019, Helmuth believes that’s a big incentive for the cable company to start collecting and paying 2 percent PEG fees “if they want to keep us.”
“I think there’s a real sword hanging over them,” she said.
This reporter reached out to Charter for comment on the PEG fee issue.
“I can’t speak to what happened in 2004,” said Bill Morand, Charter Communications senior director of communications for the Great Lakes Region.
“All I can say is we’re abiding by the terms of the franchise agreement and we’re up-to-date in terms of our franchise fee payments.”
Morand said “the short answer” as to why no PEG fees are being paid is “it wasn’t asked for. It wasn’t requested in the agreement.”
If something “wasn’t requested when (a contract) was agreed to (by) both parties,” Morand said it’s difficult to look back 14 years later and answer the question, ‘Well, why wasn’t there this (in the agreement)?’
“I don’t know because it wasn’t negotiated,” he said.
Because PEG fees are not part of the current franchise agreement, they can’t be collected at the present time or retroactively, according to Morand.
Trying to collect them retroactively also wouldn’t work from a practical standpoint, he noted.
“These fees are passed through to the consumer. It’s a fee that appears on their bill,” Morand explained. “How in the world would you go back 15 years or 14 years and track customers who’ve come and gone and say ‘you owe us money in arrears for fees that didn’t appear on your bill in 2005.’”
Given the franchise agreement expires next year, Morand said that’s when the municipalities could attempt to get “something added or amended.”
“That would be the time to negotiate anything  . . . when you’re establishing a new contract,” he said.

Leave a Reply

Your email address will not be published.