HomeHow-toHulu, Netflix, Other Streaming Providers Facing Lawsuits From Local Governments Over Cable Fees

Hulu, Netflix, Other Streaming Providers Facing Lawsuits From Local Governments Over Cable Fees

by Samantha Whidden
(Photo by Michael Kovac/Getty Images for Hulu)

Earlier this week, the Ohio Supreme Court held a hearing over local government smacking Hulu, Netflix, and other streaming services with a lawsuit over cable fees. 

According to ABC News, the Ohio Supreme Court observed the state’s 2007 Video Service Authorization Law. The law notably directs the state Commerce Department to determine what entities must obtain permission to physically install cables and wires in a public right-of-way. Local governments want companies considered video service providers to pay a fee. The Act is now part of the lawsuit that government officials in Maple Heights, which is a Cleveland suburb, brought on to steaming services Netflix and Hulu. This is due to the fact that streaming services are delivering content through the Internet over cables and wires. 

Maple Heights attorney Justin Hawal told News 5 Cleveland that as more residents are cutting ties with their cable providers, he believes it is only fair that streaming services like Hulu pay the fees. “The fees that go to the municipalities and townships to invest in this infrastructure are being pulled away from the cities. Because there’s not as many subscribers to the cable companies. They’re going towards Netflix and Hulu, who are using the exact same infrastructure.” 

The media outlet further reports that Maple Heights filed a class-action lawsuit in the U.S. District Court for the Northern District of Ohio on behalf of all Ohio local governments receiving franchise fees. The Cleveland suburb’s government claims in the lawsuit that Netflix and Hulu are to receive video service authorization.  

While responding to the streaming service lawsuit, Hulu and Netflix’s legal counsels say the city government is misinterpreting the statute in the court case. Netflix attorney Gregory Garre states, “They’re fundamentally unlike the cable operator operators. Which are the paradigm example of the video service provider. For which this act was intended [for]. Which actually own, operate, and install wires and cables in the public’s right of way.”

Garre further explains that in the case of Netflix, the streaming service doesn’t provide video programming under the Ohio Act. This is in reference to a program that is like a television program. “Netflix is programming which is available anywhere, any time, and any place. [It] is not scheduled or channelized.”

However, Hawal continues to disagree with the streaming service’s legal counsel. “There’s nothing in that definition of video service that requires Netflix and Hulu to operate facilities in the rights of way. Nothing that requires them to construct facilities in the rights of way. They only must provide their programing over wires and cables. And there’s no dispute.”

Along with Ohio, Tennessee’s Supreme Court will be hearing arguments brought by Knoxville against Netflix and Hulu. Netflix and Hulu won their arguments in Arkansas, California, Nevada, and Texas last year. They are not video providers in those states.