Why are taxpayers subsidizing a cable industry windfall in the state budget? | Wis.Community

Why are taxpayers subsidizing a cable industry windfall in the state budget?

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Published
July 1, 2019

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Cable and phone companies are getting a big windfall in the state budget and taxpayers are
going to pay the bill for the next ten years. Wisconsin Community Media can think of a lot
of better ways to spend tax dollars than subsidizing large telecommunications companies
like Charter Communications, Comcast and AT&T that are making a lot of money here in
Wisconsin through their cable TV, broadband and telephone services. We are asking
Governor Tony Evers to veto this budget provision.

The budget provision lowers the amount of fees video service providers pay to
municipalities for use of public rights-of-way through a stepped process and subsidizes the
loss with taxpayer revenue. It forces income down for most communities by 10% the first
year and 20% in succeeding years. But communities that assessed a lower fee on
companies to begin with are going to be hit harder; they will see a 16% loss the first year
and a 33% loss in succeeding years. After taking away income from municipalities, the
legislature is giving it back -- for the next ten years -- in the form of taxpayer subsidies.

In 2020, taxpayers are on the hook for $5 million, which may or may not make up the loss
from the reduction in fees. The initial estimate of loss was $6 million, but the amended
budget caps the outlay at $5 million. In succeeding years, the loss for municipalities is
estimated to be between $10 and $12 million per year, so taxpayers will be paying that
amount annually until 2029 when the subsidy ends. At that point, municipalities will just
have to deal with the lost income.

One has to ask, how is this provision in the public interest? No other state has gladly
reduced the fee video service providers pay to below the federally allowed fee level of 5%.
Why is Wisconsin?

This budget provision is not going to benefit cable subscribers; cable rates are unregulated
and companies will charge whatever the market will bear. It is not going to benefit the
general taxpayer; we are now going to be paying a charge that would otherwise be paid by
video service providers. It will not benefit municipalities; after ten years they will receive
20% to 33% less revenue from video service provider fees. These telecommunications
companies don’t need a bail-out from the public. Charter Communications/Spectrum,
which serves nearly the entire state, and Comcast/Xfinity are the two largest cable
companies in the country. Charter Communications revenue was up 5% to $44.183B year-
over-year for the twelve months ending March 31, 2019 according to Macrotrends.net.

On the other hand, municipalities are hurting and the fee video service providers pay is used for all kinds of
municipal services. Most notably, it is the primary source of funding for the production of local programming.
Long term, if video service providers pay less to our communities, there will be less money for Public, Education,
and Government (PEG) access centers, which produce much-needed local coverage of our communities. If PEG
channels go dark, cable systems would be entirely closed to the public.

So we should all be asking, why are we doing this? I have yet to hear how this cable industry windfall contributes
to the public good. Revenue once bound for much needed municipal projects and local program production will
simply be pocketed as increased profits by the cable and telephone industries.

We are encouraging everyone to contact the Governor and ask for a veto. Call 608-266-1212 and simply say you
are asking the Governor to veto the provision that reduces Video Service Provider Fees. Or you can send a
message to the Governor by using the comment field at https://appengine.egov.com/apps/wi/Governor/contact
and write “Please veto the provision to reduce Video Service Provider Fees (LRBb0155/P1).” If you would like
to see our comment template or learn more about this budget provision, go to our website at
https://wisconsincommunitymedia.com/state-legislation.

WCM members: Algoma, Beloit, Columbus, De Pere, Deerfield, Dodgeville, Eau Claire, Fitchburg, Green Bay, Hartland,
Howards Grove, Hudson/North Hudson, Janesville, Jefferson, Juneau, Kenosha, Lake Mills, Madison, Marshfield, Mauston,
McFarland, Merrill, Milwaukee, Monona, Mount Horeb, Oregon, Oshkosh, UW Oshkosh, Pleasant Prairie, Plymouth,
Portage, Prescott, Rice Lake, Ripon, Sevastopol, Sheboygan, Stevens Point, Stoughton, Sun Prairie, Superior, Trempealeau
County, Waterloo, Watertown, Waupaca, Wausau, West Allis, West Bend, Westby (Vernon Communications Cooperative),
Whitewater, UW Whitewater, Wisconsin Rapids.

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Author

Mary Cardona, Executive Director

608-215-5594

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