TCI Cablevision of Oregon Inc. has joined othertelecommunications firms to challenge a 'business privilege' tax enacted by thecity of Eugene, Ore.
The operator wants to reverse an eight-month-old taxdesigned to raise $500,000 a year to fund projects such as one that would enable trafficscofflaws to arrange to pay tickets from home. But the tax, 2 percent on the gross ofcable television, cellular phones and other telecommunications companies, also funds a'franchising management fund.'
Since the city approved the tax in April, TCI has refusedto pay the levy and the operator recently filed suit alleging the tax violates a federaltelecom law guaranteeing a 5 percent cap on franchising fees.
'This is a very important case. If Eugene prevails,then others can disguise franchise fees with different names,' said Howard Symons,TCI's Washington, D.C.-based attorney.
City officials said last spring the tax is needed toenforce new laws governing cellular phone tower placement and to pay for public telecomprojects.
Local cities -- including Eugene and Springfield --and thesurrounding county, as well as two utilities and the University of Oregon, are part of agroup promoting ways to fund and construct fiber optic deployment. The TCI system in thearea is channel-locked at 42 channels at 320 megahertz. There is no rebuild currentlyscheduled for the local cable system.
Eugene officials cite federal law for their authority forthe tax: Section 253e of the Telecommunications Act allows communities to seek 'fairand reasonable compensation' for rights-of-way.
A legal challenge of a franchise fee by a competitivelocal-exchange carrier in Tucson, Ariz., last year reinforced the tax authority ofmunicipalities. It said the Act creates a 'safe harbor' and that means the CLEChad no right to sue.
TCI is the third company to sue to block the Eugene tax.AT&T Corp. claimed in a U.S. District Court suit last year that the tax violates bothfederal and state law.
Sprint Spectrum L.P., whose partners include Sprint Corp.,TCI, Comcast Corp. and Cox Communications Inc., also sued in a state suit.