Cable Takes Modem Fee Fight to FCC

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Washington— 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 a March ruling in which the FCC held that cable's high-speed data product is not a cable service, major operators stopped collecting franchise fees for 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 during a meeting that included the cable advisers of all five FCC members.

The MSOs said cities have initiated "several lawsuits" which claim that operators have withheld franchise fees on modem revenue based on an FCC ruling that was not "final." Some cites have claimed nonpayment of modem fees violated contracts to occupy their rights of way. 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 non-cable services triggered class-action suits by data subscribers 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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