How Does Open Signal Get Its Funding?

March 29, 2018

Open Signal is a private, nonprofit corporation whose purpose is to elevate and amplify local community voices, with a focus on digital equity and building media capacity in marginalized communities. We achieve this goal through collaboration with the City of Portland and a few other funders who support special projects.

Have you ever wondered exactly how Open Signal's funding works?

I have worked in community media for my entire career, and I can confirm that the funding situation is not simple — and it's becoming increasingly complex. This post clarifies precisely where the money currently comes from, and how it’s used to support your access to equipment and cable channels. 

Brace yourselves, friends! This information is not for the faint of heart, but it's really important to know. As Open Signal begins to look at diversifying revenue, we need to explain the state of the field and share why it's important for all of us who work in community media to begin to seek new sources of support.

Funding From the City of Portland

The City’s largest revenue source comes from fees paid by utility providers for access to the public rights-of-way. The rights-of-way include: streets, sidewalks, the space underground where pipes and wires are buried, and utility poles (Oregon Public Rights of Way video).

The utilities, including water, gas, electric, telecommunications, etc, pay the City for access to the public rights-of-way in order to get their services to customers homes. These fees go into the City’s general fund and are then spent to manage the use of the rights-of-way, and on core services to the community including: fire, police, roads, schools, parks, and so on.

In some cases, where the City cannot solely fund a service, they will enter into agreements with other municipalities or private businesses to provide services like waste management, recycling, libraries and public transportation.

And, sometimes federal, state and local statutes, regulations and initiatives will provide for specific services that address social issues, or enrich the community, such as arts and culture, digital equity, community development and so on. Nonprofits and other businesses are often contracted to provide these services because they frequently are able to provide greater service at a lower cost.

The City of Portland is Open Signal’s largest funder. Open Signal manages and facilitates public and government access for the City of Portland which includes: training the community, providing access to technology, maintaining the facility, equipment and studios, supporting community producers with resource management and technical guidance, covering Portland City Council meetings, and managing and scheduling content on five cable channels available on the cable television providers’ systems.

In addition to these functions, and as part of the scope of services agreement with the City, Open Signal develops and maintains programs working with communities of color, immigrants, low income communities, youth and mature adults to build media capacity for communication, workforce development, social and digital equity, and civic participation.

Open Signal is one of three designated PEG (public, education and government) access providers in the City of Portland. Portland Public Schools and Portland Community College are the designated Education service providers, and Open Signal is the designated Public and Government service provider.

Open Signal has a grant agreement with the City of Portland through the authority of the Mt. Hood Cable Regulatory Commission (MHCRC), whom the City has designated as the regulatory body that oversees cable franchising.

We receive two types of funding from the City: Operating (unrestricted funds that are awarded by the City through the general fund budgeting process), and Capital (restricted funds that are designated for community media by federal statute and local franchise agreements).

Operating Funds

These funds can be spent on anything (equipment or staff) and are used to cover staff salaries; utilities like garbage and electric; insurance, annual audits, and other requirements necessary to sustain the organization; office supplies and printing; and direct program costs for workshop materials, promotion, and other items.

Capital Funds

These funds can only be spent on building, land and technology projects, and management of the technology. These funds are used to cover purchases of new production equipment, computers, studio upgrades, building construction, playback systems, data servers, and so on.

Capital funds come directly to us as a result of the franchise agreements with the cable television providers.

Budget Process

Open Signal participates in the City of Portland’s annual budget cycle. Each February, we receive an estimated budget amount from the MHCRC, and prepare our budget based on our plans for the upcoming year, our initiatives such as digital equity, and anticipated increases or decreases in general costs of doing business.

Once approved by our Board of Directors, our budget is submitted to the MHCRC for review. After review and any adjustments are made, our final draft budget is incorporated into the MHCRC budget (as a line item).

The MHCRC, which is staffed by the Office for Community Technology (OCT), is located in the Revenue Department, which is within the Office of Management and Finance.

The MHCRC budget goes through review by both the Revenue Department and the Office of Management and Finance prior to being submitted to the City Budget Office for inclusion in the overall budget that is reviewed and adopted by the City Council. During this review additional adjustments may be requested.

In June the final budget is presented to and adopted by the City Council. In July our fiscal year begins and we receive our first quarterly payment based on the newly approved budget.

Franchise Funds

Federal statute allows for local municipalities to collect 5-percent of each designated cable providers total gross revenue annually. Franchise fees are collected based on the total number of subscribers who subscribe to cable television. *Franchise fees are not collected for internet/cable modem subscribers. This has established an anticipated fiscal cliff (or decline) in revenue as subscribers transition away from traditional cable television toward OTT MVPDs (“over-the-top”= internet-based delivery of content; multichannel video programming distributors such as playstation vue, hulu, etc.).

City of Portland franchise agreements with designated cable television providers identify 3-percent of these funds for the support of the following public benefits: 1-percent goes to the designated access providers for capital costs, 1-percent is designated for capital grants utilizing PEG or I-NET services, and 1-percent is designated to support I-NET capital costs (the I-NET is an “institutional network” provided for through federal statute, which supports the communication needs of local municipal and education facilities).

The 1-percent that is designated for the access providers is divided among three organizations serving the City of Portland. The division is based on the MHCRC’s budget allocation process, and the funds are paid to the organizations quarterly by the City of Portland. These organizations are: Open Signal, Portland Public Schools, and Portland Community College.

The MHCRC is contracted by the cities of **East County to manage franchise negotiations and and collect fees that support MetroEast Community Media. 60-percent of the fees collected are provided to MetroEast for capital costs. The remaining fees are forwarded to the jurisdictions based on the ***MHCRC’s allocation process.

* In 1999 The City of Portland and Multnomah County sued AT&T @Home (first cable modem service provider to enter the Portland metro market) for the right to collect revenue from cable modem services under the auspices of the 1996 Telecommunications Act. They lost the argument, and set precedent.

**The East County intergovernmental agreement includes the cities of Fairview, Gresham, Troutdale, Wood Village, and Multnomah County.

***MHCRC commissioners represent all jurisdictions overseen by the MHCRC.

Fiscal Cliff

There is an inevitable decline anticipated to begin immediately, and that we may be seeing in the difference between the current fiscal year capital allocation and the projected allocation for next fiscal year (which has dropped by approximately $60,000).

This decline is a direct result of the transition of consumers from traditional cable television service to adoption of internet based delivery of content. While there may be no perceivable difference (or even an increase) in Comcast or CenturyLink business revenue, there will be a steady decline in capital funds for community media due to this transition.

It is imperative that Open Signal, and all community media centers, establish alternative and ideally unrestricted funding streams to sustain current levels of service.

Future of Funding

The evolution and convergence of technologies is positive for consumers and media creators, because it makes devices easier to use and cheaper to own. However, ownership of devices and media consumption is a small part of the media ecosystem. Media owners and producers continue to be overwhelmingly wealthy, male and white. This skews the nature of the content being created for the public, and drastically limits viewpoints which harms the whole community by keeping us ignorant, divided and pacified.

Open Signal, and community media centers across the nation, must work at the local, state and national level to educate our government leaders that technological changes can’t drive the funding structure. Whether people consume media on cable, or over the internet doesn’t matter. Community media and digital equity are necessary, protection of the digital space to practice first amendment rights in an uncensored and unmoderated way is necessary, and a funding structure must be established for the good of all citizens.

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