US cities ask Netflix, Hulu, streaming services to pay cable fees

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Should Netflix and different streaming services have to pay native governments the identical fees levied on US cable operators?

That was the query earlier than the Ohio Supreme Court throughout a Wednesday listening to, because the court docket debates whether or not streaming services resembling Netflix and Hulu are lined by a state regulation that will require them to pay to play.

The argument is analogous to one in a number of different US states, the place cities try to pressure streaming service firms to pay cable operator fees.

At challenge in Ohio is the state’s 2007 Video Service Authorization regulation, which directed the state Commerce Department to decide what entities should get hold of permission to bodily set up cables and wires in a public right-of-way. Companies deemed video service suppliers should pay a payment to native governments below that regulation.

Officials with Maple Heights in suburban Cleveland contend that streaming services are topic to the payment as a result of their content material is delivered by way of the Internet over cables and wires.

In Tennessee, the state Supreme Court is scheduled to hear arguments subsequent month introduced by Knoxville towards Netflix and Hulu. The same case introduced by town of Creve Coeur is pending in Missouri. In 2020, 4 Indiana cities sued Netflix, Disney, Hulu, DirectTV and Dish Network to require them to pay the identical franchise fees to native governments that cable firms should pay.

In associated lawsuits introduced in Arkansas, California, Nevada and Texas, Netflix and Hulu gained their arguments final 12 months that they can not be handled the identical as video suppliers.

Streaming firms argue their distribution technique is completely different from conventional video suppliers. They additionally say within the Ohio case, it is up to the Commerce Department to label them a video service supplier, a course of they are saying cannot be finished by a lawsuit.

The state is siding with the streaming firms, contending that Ohio’s regulation solely covers firms constructing infrastructure to carry cables.

“This is about those that dig, they have to pay,” Mathura Sridharan, the Ohio deputy solicitor common, informed justices on the state Supreme Court throughout oral arguments Wednesday. “If they don’t dig, then they don’t pay.”

A court docket choice is not anticipated for months.

Attorneys for Maple Heights argue that nothing within the 2007 regulation requires a video service supplier to personal or bodily entry wireline services in public rights-of-way to be topic to video service supplier fees.

Without that gear, streaming services “couldn’t ship their video programming to their subscribers,” Justin Hawal, an legal professional representing Maple Heights, mentioned in a December court docket submitting.

The “modest 5% video service payment” just isn’t burdensome however as a substitute represents a small return on billions of {dollars} in advantages that the streaming services obtain nationwide from community infrastructure, Hawal mentioned.

Justices appeared sceptical of Maple Heights’ arguments, specifically questioning whether or not the argument was even one for the court docket to determine.

“Shouldn’t you be up on the Statehouse a block and a half away as a substitute of at a courthouse making an attempt to get the regulation modified?” Justice Pat Fisher requested Hawal Wednesday.

Hawal mentioned Maple Heights is making an attempt to apply current regulation to a brand new expertise.

Attorneys for Netflix say the corporate would not have bodily wires and cables and would not want them below its Internet streaming enterprise mannequin.

Unlike broadcast TV stations, “customers can watch content material wherever, anytime, and in any quantity, as long as they’ve an Internet connection,” Amanda Martinsek, an legal professional representing Netflix, mentioned in a November submitting.

Netflix argues a rising variety of courts nationally have reached the conclusion that firms like Netflix and Hulu do not owe supplier fees as a result of they are not video service suppliers. – AP



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