Saturday, January 22, 2022

Richardson to Netflix: Pay Up

This agenda item for the Richardson City Council caught my eye.

A lawsuit against Netflix, Hulu, and Disney+? What's that all about, I wondered. That sent me in search of lawsuits by other cities against Netflix, Hulu, Disney+, and other video service providers. That turned up a story from The Dallas Morning News from November, 2021.

Grand Prairie is suing three major streaming services — Netflix, Hulu and Disney+ — seeking the payment of franchise fees, which the city says are owed because the companies are using wires located in the public right of way.

The city council voted to approve a contract Tuesday with the same three law firms hired by Dallas, Plano and Frisco, which have announced similar lawsuits.

Why are cities doing this? It's a money grab. As people "cut the cord", shifting from cable to Internet streaming, the so-called franchise fee paid by cable companies is declining. That's the fee cable companies pay for use of public right-of-way to reach your house. To make up for the lost revenue from cable providers, cities are turning to what's replacing cable — Internet streaming services.

Note that the agenda item says "potential" lawsuit. Meaning it's not a done deal. But don't bet against the City of Richardson joining Grand Prairie, Plano, and Frisco in this shakedown of the streaming services. The franchise fees will largely be passed on to the consumer in the form of higher monthly fees. Expect to pay more in the future to watch "The Witcher."


Unknown said...

Seems like double taxation since I would assume you pay a tax for the base internet service that you stream on. What's next? A tax on Facebook, blogs, webpages, email...

Mark Steger said...

How much is the City anticipating to raise from Netflix, Hulu, and Disney+?
How much in legal fees does the City anticipate to spend to win this case?
If the answers aren't big enough in the City's favor, will they come after other businesses who might be benefiting from Internet access to the home through cable in City's right-of-way? (I'm thinking YouTube, TikTok, Facebook, Twitter, GrubHub, Dallas Morning News, etc.) When will I receive a letter from the City asking me to pay franchise fees for "The Wheel"?