Make the cable companies pay their fair share to CT

Should a cable company’s state taxes and local fees for use of public rights of way be eliminated even though it uses the same street, same pole, and same wire to deliver product to the same customer, simply because it now chooses to use a different distribution technology?

For the past eight years, Connecticut’s cable TV providers have had sharply increasing profits while paying sharply decreasing taxes and funding for local public, education, and government (PEG) programming.

Proposed legislation, HB 5446 , would restore lost taxes to the state and PEG funding to former levels — necessary to ensure continued local community access programming. Those huge, and hugely profitable, companies are using public rights of way without honoring their obligations. Gov. Ned Lamont, a former cable operator, should provide real leadership at this critical moment.

Local access media has been an important part of the fabric of Connecticut. PEG has provided coverage of activities at a time when local newspapers have often cancelled that coverage or gone out of business. PEG is often the only coverage of local government — critical for our democracy.

The PEG stations also cover local events not otherwise available, including community, cultural and sports events for schools and the community. And they have provided important training for community members, including students, some of whom have gone on to play major roles in television in Connecticut and even nationally. The amount and quality of local PEG programming has skyrocketed when provided by independent nonprofits instead of directly by the cable companies.

The numbers raise serious questions. Cable providers’ aggregate 5% gross earnings tax paid to the state has dropped from approximately $74 million for 2015 (implying annual aggregate Connecticut gross profits of $1.48 billion) to only $49 million in 2023 (implying annual aggregate gross profits of $980 million). Over that same time, cable companies have reported dramatically increased actual gross profits nationally; for example, Comcast has reported gross profits increasing from $30.6 billion to $45.6 billion, Charter Communications from $3.3 billion to $21.2 billion, Altice from $6 billion (in 2016, after acquiring Cablevision) to $9 billion, and Breezeline from $2.04 billion to $3.08 billion (comparable numbers are not publicly available for Cox Communications). And over that same period, the cable companies’ required aggregate annual payments to the 24 nonprofit-operated PEG stations in Connecticut, serving communities throughout the state, have dropped precipitously, saving the cable companies millions of dollars, at the expense of local access programming.

The claimed reason for smaller reported “gross earnings” (and PEG payments) in Connecticut despite huge increases nationally is simple but makes no policy sense. The “gross earnings” tax to the state, and the funding provided to PEG, has been interpreted by most cable companies to apply only to “cable” service rather than to the same video service delivered over the internet (which did not exist when the tax and PEG funding began).

Yet the “cable” providers are not losing a customer who simply switches to a different broadband delivery along the same wire and infrastructure (often based on the cable companies’ own encouragement). Without HR 5446, companies will continue to claim the tax and PEG contribution applies only to the increasingly smaller number of “cable” customers, even though all customers benefit from the same product and public rights of way, and all can access PEG.

If this explanation — and the scale of real cable company gross earnings in Connecticut — is true (and only the state and cable companies know, because the cable companies need not, and the state chooses not to, share Connecticut payment and subscriber information with the public), the state is losing tens of millions of dollars a year. Even assuming the actual aggregate gross earnings simply stayed the same as in 2015, the aggregate loss to the state over the eight years since would have been over $150 million. And we know the real gross earnings have likely been rising due to the steadily increasing charges to consumers .

Public, education, and government programming is also being sharply underfunded. Although, again, full data is only known to the cable companies and the state, the per subscriber payments from the cable companies to PEGs in 2022 (the last year available) was about $3.4 million, over $2 million less than $5.7 million that would have been required and provided based on the inflation-adjusted payments made in 2015.

And the decreases in tax payments and underfunding of PEG will likely rise annually, as cable companies encourage more of their customers to migrate from cable to broadband.

Full funding could be provided from a tiny portion of those immense company profits. The per subscriber fee for PEG averages approximately 85 cents per month, a tiny portion of the monthly bill to any video service customer. HB 5446 would enable continued essential local PEG coverage by simply extending that tiny average 85-cent fee to the cable companies for all their customers ( i.e. , including those customers for whom the cable company paid that fee before migrating them to broadband).

Any claim by cable companies that they would be burdened by a “new tax” or would have to pass along to customers this additional 85 cents a month fee should be forcefully rejected. HB 5446 would essentially require these companies merely to pay (in taxes and/or PEG fees) what they were paying years ago.

Given the sharp increases in fees charged to all their customers, including this year , the 85 cents a month would be de minimis . These companies, with their near monopolies and huge profits, would not leave the state simply because they are required to honor their commitments once again. Especially the minimal additional amount to fund fully community access, which was originally a quid pro quo for legislative relief from regulation and substantive oversight.

Indeed, unwillingness to absorb any such small costs within such huge profits would also strongly suggest a non-competitive market sharply at odds with the promise of deregulation.

Finally, and importantly, PEG helps create community. The internet empowers individuals, and we’ve seen the advantages that brings — but also the disadvantages in increased individual dissatisfaction and even depression. So even if some of the content now generated by PEG stations might otherwise be recorded on cellphones and posted by individuals on YouTube, much would not be, and we would lose one important opportunity to celebrate community.

This is a time for leadership. Lamont is in a perfect position to provide it given his background in the cable industry. Instead of giving in to a phony pre-election cry of “no new taxes,” the governor and legislature should confirm the real numbers and call on the cable companies to honor their long-standing commitments to the state and PEG programming.

Andy Schatz formerly served as president of West Hartford Community Television (now West Hartford Community Interactive). He has also served as President of the American Civil Liberties Union of Connecticut and on the national ACLU board and executive committee. The views expressed here are personal and not those of any organization.