Snippet: Cities Sue Netflix, Hulu, Disney+, Claim They Owe Cable “Franchise Fees” ☇

Jon Brodkin:

Four cities in Indiana are suing Netflix and other video companies, claiming that online video providers and satellite-TV operators should have to pay the same franchise fees that cable companies pay for using local rights of way.

The lawsuit was filed against Netflix, Disney, Hulu, DirecTV, and Dish Network on August 4 in Indiana Commercial Court in Marion County. The cities of Indianapolis, Evansville, Valparaiso, and Fishers want the companies to pay the cable-franchise fees established in Indiana’s Video Service Franchises (VSF) Act, which requires payments of 5 percent of gross revenue in each city.

The lawsuit is based on an unusual legal argument and doesn’t seem likely to succeed. Essentially, the cities are claiming that Netflix and similar providers use the public rights of way simply by offering video streaming services over the Internet:

Defendants transmit video programming to Indiana subscribers using Internet protocol and other technologies. When doing so, Defendants transmit their programming through facilities located at least in part in public rights of way within the geographic boundaries of Indiana Units, including public rights of way located within Plaintiffs’ geographic boundaries. Therefore, Defendants are required by the VSF Act to pay the Plaintiffs—and all other Indiana Units in which Defendants transmit video programming through facilities located at least in part in a public right-of-way—franchise fees.

This is happening in other places, too, so it’s not just an Indiana-being-dumb thing. However, I think this is yet another example of public policymakers not understanding technology. Would this mean that eventually, any internet video would be subject to these fees? What if I’m streaming video at home, but connected to a cellular tower outside of the city limits? That could potentially not be using anything in the “public right of way” that this is centered around. Furthermore, perhaps it was influenced by some of the cable providers:

Valparaiso city attorney Patrick Lyp told the Times [of Northwest Indiana], “Our case helps ensure a competitive marketplace where everyone subject to the fee pays it. The current situation is unfair to cable providers who have been following Indiana law.”

Ah yes, poor Comcast, Spectrum, and (if U-verse counts), AT&T.