News

NCTA: No High Court Hearing for Cities

11/04/2004 9:40 AM Eastern

America’s cities should not be granted a hearing before the U.S. Supreme Court in a case that might allow local governments to collect up to 5% of cable operators’ high-speed-data revenue, the National Cable & Telecommunications Association said Thursday.

Cities from the around the country want the high court to overturn a Federal Communications Commission ruling that denied them authority to collect franchise fees on cable-modem revenue.

The FCC determined in March 2002 that cable-modem service was not a cable service under federal law -- a classification that put modem revenue beyond the reach of cities’ franchise-fee-collection powers. The commission’s ruling was not disturbed by a federal appeals court.

“The cities’ petition presents no question that is worthy of this court’s attention,” the NCTA said in a Supreme Court brief.

A few years ago, cable operators and cities agreed that cable-modem service was a cable service under the law, and cable operators agreed to pay franchise fees.

But cable abandoned that position and stopped paying franchise fees after the FCC ruled that cable-modem service was strictly an interstate information service.

The U.S. Court of Appeals for the Ninth Circuit overruled the FCC on that point by asserting that cable-modem service was also a telecommunications service -- a classification that exposes cable to Internet open-access mandates.

The NCTA and the Justice Department have asked the Supreme Court to strike down the telecommunications-service holding. The high court is expected to announce within a few months whether it will take the case.

Cities have said that the FCC ruling on franchise fees is costing them $500 million per year in lost revenue.

However, in 2003, cable operators paid about $2.4 billion in franchise fees assessed on their video-programming and equipment revenue.

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