Cable operators in Texas, through their trade association, can proceed with a federal lawsuit against a statewide franchising law that excludes incumbent cable companies.
The Texas Cable & Telecommunications Association sued over the new law – known as “SB5” – the day after it was signed into law in September 2005.
A federal judge in Austin, Texas, tossed out the lawsuit in September 2006, determining the cable group hadn’t demonstrated injury against the cable companies and that “the case was not yet ripe for litigation.”
A four-judge panel from the U.S. Court of Appeals for the Fifth Circuit overturned that judge's decision, in an order filed on Thursday.
The appeals court judges determined that the exclusion of incumbent cable operators was a direct injury, as the incumbent companies missout on an economic benefit by being unable to obtain a statewide franchise. New entrants, the appeals court said, benefited by avoiding the licensing costs of obtaining franchises with individual municipalities.
Christine DeLoma, a Texas Cable & Telecommunications Association representative, said in a statement: “We firmly believe in the merits of the case. The bottom line is SB 5 unfairly gives new providers entering the market an advantage over existing cable operators because the new entrants are not held to the same regulations. SB 5 clearly violates not only federal law, but the U.S. and Texas Constitutions as well. Consumers should have equal access to communications services provided in a truly competitive market, where every business can offer the same services on a level playing field.
“In light of today’s ruling, we have confidence that we can present the facts to a fair and impartial Court that will ultimately rule in the best interests of Texans and of fair competition,” DeLoma’s statement said.
The trade group also has a lawsuit pending in state court in Texas.