On September 20th, the Los Angeles County Superior Court held that local video service provider fees do not apply to streaming video providers. This decision is consistent with a prior decision by the United States District Court for the District of Nevada, which held that streaming video providers were not subject to Nevada localities’ franchise fees, along with recent decisions by the United States District Courts for the Western District of Arkansas and the Eastern District of Texas. See City of Ashdown, Arkansas v. Netflix, Inc. & Hulu, LLC, Case No. 4:20-cv-4113 (W.D. Ark. 2021); City of New Boston, Texas v. Netflix, Inc. & Hulu, LLC, No. 5:20-CV-00135-RWS (E.D. Tex. 2021).
The city of Lancaster filed a class action complaint against two streaming video providers, claiming that they provide video services in California using broadband wireline facilities located at least in part in public rights-of-way, and thus must pay local video service provider fees imposed under California’s Digital Infrastructure and Video Competition Act (the Act). After holding that California localities such as Lancaster lacked the right to bring a case under the Act against streaming video providers, the court further concluded that the local video service provider fees imposed by the Act do not apply to the streaming video providers.
The court reached this decision for two primary reasons. First, the streaming video providers’ use of Internet service providers’ networks to distribute their content does not constitute the type of “use” of the public right-of-way rendering them liable for the local video service provider fees. Second, the court concluded that the streaming video providers do not meet the definition of a “video service provider” that provides “video programming” under the Act because the streaming video providers’ services were not comparable to the live, linear, channelized, scheduled, or programmed programming provided by a television broadcast station.