Cable Takes LFA-Fee Fight to FCC

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In a recent meeting with senior Federal Communications Commission officials,
a group from the cable industry complained about aggressive legal moves by
cities over the payment of cable-modem fees.

Following an FCC ruling in March that cable's high-speed-data product is not
a cable service, major cable companies stopped collecting franchise fees on
cable-modem revenue. Some cities, having lost a source of revenue, filed
lawsuits against cable operators and have threatened to take other legal steps
to recover the funding.

On Dec. 19, representatives of Comcast Corp., Charter Communications Inc. and
Time Warner Cable spelled out their concerns at a meeting that included the
cable advisers of all five FCC members.

The MSOs said cities have initiated 'several lawsuits' claiming that cable
operators have withheld modem franchise fees based on an FCC ruling that was not
'final.' Some cities have claimed that nonpayment of modem fees violated
contracts to occupy their rights-of-way. The cable operators said both of those
claims were wrong as a matter of federal law.

The cable operators said they would continue to pay franchise fees on
video-programming revenue, noting that 2001 franchise-fee payments totaled $2.2
billion.

Stopping the collection of franchise fees on data services, the MSO group
added, was an act of legal self-defense. Collecting franchise fees on noncable
services triggered data-subscriber class-action suits even before the FCC ruled
that cable-modem service is an information service within the meaning of federal
telecommunications law, the MSOs said.

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