News

Court: Modem Fees Are Federal Matter

4/20/2003 8:00 PM Eastern

A federal judge in Illinois has ruled that state courts are the incorrect forum for resolving cable-modem franchise-fee disputes between operators and local governments.

The April 14 ruling, handed down by U.S. Judge David H. Coar, was a victory for Comcast Corp. and other cable companies over the city of Chicago.

When Comcast stopped paying cable-modem franchise fees pursuant to a Federal Communications Commission ruling in March 2002, the city took the matter to state court as a beach of contract dispute outside federal control.

Comcast (which inherited the issue with the purchase of AT&T Broadband) moved the case to federal court, claiming franchise-fee matters fell solely within the scope of federal law. Chicago responded by filing a motion with Coar that sought to send the case back to state court.

In a six-page ruling against Chicago, Coar said the city failed to demonstrate the fee dispute with Comcast was "anything other than the application and interpretation of federal law."

In a client memo, lawyers with Cole, Raywid & Braverman noted that although many cities have chosen to go to state court to collect modem fees, Coar's ruling would help to ensure that such battles going forward would be waged in the federal court system.

March