Ruling: Modem Fees A Federal Matter


Washington -- A federal judge in Illinois has ruled that state courts are the
incorrect forum to battle cable modem franchise disputes between cable operators
and local governments.

The April 14 ruling, handed down by U.S. Judge David H. Coar, was a victory
for Comcast Corp. and other cable companies over the city of Chicago.

When Comcast stopped paying cable modem franchise fees pursuant to a Federal
Communications Commission ruling in March 2002, the city took the matter to
state court as a breach of a contract dispute outside federal control.

Comcast (which inherited the issue with the purchase of AT&T Broadband)
moved the case to federal court, claiming franchise fees matters fell solely
within the scope of federal law. Chicago responded by filing a motion with Coar
that sought to send the case back to state court.

In a six-page opinion ruling against Chicago, Coar said the city failed to
demonstrate the fee dispute with Comcast was 'anything other than the
application and interpretation of federal law .'

In a client memo, lawyers with Cole, Raywid & Braverman noted that
although many cities have chosen to go to state court to collect modem fees,
Coar's ruling would help to ensure that such battles going forward would be
waged in the federal court system.