Big Easy Wants Piece of Modem Pie


The city of New Orleans wants the U.S. Supreme Court to restore the authority of local governments to tax cable-modem revenue -- a position opposed by cable operators and the Bush administration.

“Cable-modem service should be classified as a `cable service’ … and cable operators should pay franchise fees on revenues derived from cable-modem service,” New Orleans explained in a court brief filed Monday.

The Federal Communications Commission eliminated franchise fees in March 2002 by classifying cable-modem service as an interstate information service. Cities are allowed to impose fees on cable services, such as video programming, but not on information services.

The FCC’s ruling that cable-modem service was not a cable service was affirmed by the U.S. Court of Appeals for the Ninth Circuit, prompting major municipal groups to file an appeal with the Supreme Court, in which they disclosed that lost modem revenue was costing nearly $500 million annually.