Four Indiana cities sue Netflix, Hulu for unpaid franchise fees

Four Indiana cities are suing video streaming services, including Netflix and Hulu, seeking to require them to pay the same franchise fees to local governments that cable companies must pay.

The lawsuit, filed this month filed by the cities of Indianapolis, Fishers, Valparaiso and Evansville, argues that major video streaming services must pay a 5% franchise fee of gross revenue to the localities where their customers reside because of the use of internet equipment in the public right of way to transmit programming.

The lawsuit demands the companies—Netflix, Disney, Hulu, DirectTV and Dish Network—be required to pay unpaid fees for past services and all future fees required by law, The Northwest Indiana Times reported. The lawsuit seeks class-action status.

An estimate of how much money is owed statewide was not provided.

According to the lawsuit, cable companies have abided by the Video Service Franchises Act’s requirements and handed over the fees. The money is typically paid by cable subscribers as an additional charge on their monthly bills.

Records maintained by the Valparaiso clerk-treasurer show the city received $446,000 in video franchise fees last year, compared with $476,000 in 2017—a decline likely to an increasing number of residents “cutting the cord” by replacing their cable television service with subscriptions to streaming services.

Valparaiso city attorney Patrick Lyp said the lawsuit will level the playing field so all companies delivering video programming across the state pay the fees.

Court records show the streaming service companies have not yet filed a response to the lawsuit.

A similar lawsuit seeking to require streaming services pay local franchise fees still is pending in Missouri after being filed last year by the city of Creve Coeur.

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6 thoughts on “Four Indiana cities sue Netflix, Hulu for unpaid franchise fees

  1. The franchise fee by cable companies is for exclusivity in the community. Streaming services have not negotiated for exclusivity within the community so why would they pay a franchise fee?

    1. How is it exclusivity when I can get more than two cable companies to provide service to my house. Doesn’t sound exclusive when I can have uverse Comcast and dish all going to my house at the same time. Even in downtown indy it’s no longer exclusive with spectrum when you can get the other services. It has more to do with how they are getting the service to the house. Nothing around exclusivity.

  2. Another money grab, that will be passed along to the consumer. I pay taxes to receive high-speed internet to my home. Why would I need to pay another tax to use that internet as I see fit? Will they charge Amazon for allowing me to shop?

    I understand charges to Comcast, AT&T and anyone else that buried lines to get to my house to provide that service, but they didn’t. I pay the tax for internet for that usage and how I see fit. Enough with these lawsuits that just waste money that is passed down to the consumer.

    1. Hear Hear!

      I cut the cord for a reason, All I need is an internet line, which I pay for, and streaming services which I pay for. It’s not like I’m getting some old school public access channel. Also I live in Indianapolis where I have plenty of options in terms of who my service provider is. There is no exclusively here.

  3. Franchise fees are for cable company providers not internet streaming! Does YouTube have to pay a damn franchise fee? No. Internet video streaming are anywhere services meaning I can use it on my 4G phone out of state, or my laptop on WiFi at the airport. This is a desperate attempt to charge locally for anywhere services.

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