Judge Voids Windy City Modem Fees


The city of Chicago may not impose franchise fees on revenue local cable
companies derive from high-speed-data customers, a federal judge ruled last

In a short ruling, U.S. Judge David H. Coar agreed with eight operators sued
by the 'Windy City' that under federal law and Federal Communications Commission
rulings, cable companies do not need to contribute any cable-modem revenue in
the form of franchise fees.

Among the cable companies sued was the former AT&T Broadband, now
controlled by Comcast Corp.

Under federal law, cities may demand up to 5% of a cable company's gross
revenue from cable services -- an annual take totaling more than $2 billion,
according to the National Cable & Telecommunications Association

In March 2002, many operators stopped paying franchise fees on cable-modem
revenue after the FCC ruled that cable-modem service was not a 'cable service'
as defined in federal law.

Many cable companies said they feared being sued by data
subscribers if they continued to collect franchise fees on a noncable service
after the FCC ruling.