Va. Judge Tosses Out Modem-Fee Class Suit

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A federal judge in Virginia has dismissed a potential class-action suit against Cox Communications Inc. in which subscribers challenged the franchise fees levied on their cable-modem service.

Judge Samuel Wilson of U.S. District Court for the Western District of Virginia in Roanoke said his court had no jurisdiction in a dispute that boils down to the legal classification of high-speed-data delivery.

In their suit, the plaintiffs — Cox subscribers William and Kimberly Bova — noted that the Atlanta-based MSO does not charge franchise fees on cable-modem service to customers in the West.

The operator stopped passing through the charges following a 2000 ruling by the U.S. Court of Appeals for the 9th Circuit in the case of Portland (Ore.) vs. AT&T Broadband, in which the appeals panel held that high-speed-data delivery is not a cable service.

As a result, Cox does not pass franchise fees through to its cable-modem customers in the Western states within the 9th District's jurisdiction. However, the Portland vs. AT&T
ruling is only "the law of the land" within the 9th District.

MOOTED CLAIM

The Bovas' suit also claimed Cox violates the federal Cable Act by charging them franchise fees on what they called a "telecommunications service." Cox disagreed it had ever classified the product as a telecom product.

The judge said the Bovas' argument became moot on March 15, when the Federal Communications Commission issued a declaratory ruling which indicated that high-speed data delivery is an information service, not a cable nor telecommunications service.

The plaintiffs tried to salvage their suit by attempting to convince Wilson of his jurisdiction under a subchapter of one of the Cable Act clauses. Section 542 and its subsections allow local authorities to charge franchise fees. It also caps them at 5 percent of revenue.

The plaintiffs claimed Congress intended to create a cause of action for subscriber suits when it wrote the franchise-fee cap.

Cox disagreed. It argued that the regulations are for local authorities and not individual subscribers.

Though Wilson said Cox's argument makes sense, given the legislative history of the Cable Act, he did not want to "wade into this regulatory thicket."

"Whatever Bova's remedies might be, a cause of action in federal court under [the Cable Act] is not one of them," he wrote in his July 10 decision.

John Fishwick, attorney for the Bovas, did not respond to a call to comment on the dismissal.

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