Dish declined comment today. We also contacted Netflix, Disney, and Hulu, and will update this story with any responses.
City franchise revenue in decline
Even if Indiana’s state court system agrees with the cities, the companies could appeal in federal court and argue that US law preempts local franchise fees on streaming companies. The Federal Communications Commission could also get involved in the legal battle, as it has done in cases involving federal preemption of local rules. We contacted the FCC today and will update this article if we get a response.
The lawsuit may have been spurred in part by cities getting less franchise revenue as TV customers switch to online video. “Records maintained by the Valparaiso clerk-treasurer show the Porter County city received $446,000 in video franchise fees last year, $457,000 in 2018, and $476,000 in 2017,” The Times of Northwest Indiana wrote last week.
Valparaiso city attorney Patrick Lyp told the Times, “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.”
The cities’ lawsuit points to the broad definition of “video service” contained in Indiana’s Video Service Franchises Act, which defines video service as “(1) the transmission to subscribers of video programming and other programming service: (A) through facilities located at least in part in a public right of way; and (B) without regard to the technology used to deliver the video programming or other programming service.” Netflix and the other defendants should be forced to “acquire the necessary franchises, pay the required fees in the future, and compensate Plaintiffs and all other units of government for unpaid fees for past service,” the lawsuit said.
A similar lawsuit was filed by the city of Creve Coeur, Missouri, in 2018. Netflix sought dismissal of Creve Coeur’s case in federal court, saying that it distributes video programming “exclusively over the public Internet.” The case was remanded to the Twenty-First Judicial Circuit of the State of Missouri, where it is still pending.