Cox Sued Over Modem Fees

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Lawyers in Virginia, acting on behalf of Cox Communications Inc. cable-modem
customers, filed a federal lawsuit challenging the practice of passing along
cable-franchise fees to consumers that subscribe to a telecommunications
service.

The suit, filed in U.S. District Court in Roanoke, noted that Cox defines
high-speed-data delivery as a cable service in most of the country and collects
franchise fees on the product. But the operator has notified regulators in
California, Arizona, Nevada and Idaho that in those states, high-speed-data
delivery is a telecommunications service that is not subject to franchise
fees.

Those Western states are under the jurisdiction of the U.S. Court of Appeals
for the Ninth Circuit, which opined last year that modem service was a
telecommunications offering. Cox cited that opinion as justification for
dropping the franchise fee.

Cox dropped franchise-fee payments in the West because it was afraid of being
sued if it continued the charge. Instead, the operator has been sued in the East
over the practice.

The Virginia lawsuit asks the court to decide whether Cox is violating
federal law by failing to file tariffs on a telecommunications service, or
whether Cox should be compelled to drop fees on modem service in states outside
of the jurisdiction of the Ninth Circuit court.

Cox officials said they have not seen the lawsuit, which was filed
Tuesday.

Should the suit go forward, plaintiff's lawyers want to represent all Cox
modem customers except those in Ninth Circuit states.

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