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Franchising Industry Updates

4 Cities Want Streaming Services, Satellite TV Operators to Pay 5% ‘Franchise Fee’

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The cities of Indianapolis, Evansville, Valparaiso and Fishers filed a lawsuit against Netflix, Disney, Hulu, DirecTV and Dish Network to pay the cable franchise fees established in Indiana’s Video Service Franchises Act. (iStock/David Peperkamp)

The beauty of streaming services like Netflix, Hulu and Disney+ is that the monthly fee is what you pay. It’s not like cable where they quote you the price for cable and internet but when the bill comes there’s an extra $30 in fees and taxes. It’s one of the many reasons for “cord cutting.”

But there are 4 cities in Indiana that want online video providers and satellite TV operators to pay the same franchise fees that cable companies pay for using local rights of way, according to ARS Technica.

The cities of Indianapolis, Evansville, Valparaiso and Fishers filed a lawsuit on Aug. 4 against Netflix, Disney, Hulu, DirecTV and Dish Network to pay the cable franchise fees established in Indiana’s Video Service Franchises Act. The act requires payments of 5 percent of gross revenue in each city.

A major problem with the lawsuit is that “streaming companies don’t have to build physical infrastructure in each city to offer online video, so they aren’t deploying their own wires on public rights of way.”

“I find it extremely unlikely this lawsuit will prevail,” said Harold Feld, a longtime telecom attorney and senior vice president of consumer advocacy group Public Knowledge. “The [federal] Communications Act defines terms such as ‘cable system’ and ‘cable operator’ in physical terms.”

Because the streaming services are internet-only and Dish and DirecTV are primarily satellite operators that offer online access, they don’t use public rights of way.

Valparaiso city attorney Patrick Lyp said “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.”

According to a 2019 article in The Colorado Sun, “For years, cable companies have called franchise fees unfair because competitors who don’t need the right of way … don’t have to pay cities a dime.”

Dish has fought efforts to impose a franchise fee on satellite providers and on its “Fair TV Tax” website said “Requiring satellite providers to pay a franchise fee, or an equivalent tax, is like asking cable and telecom companies to pay for launching satellites into orbit.”

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