AT&T SEEKS WAIVER OF FRANCHISE FEES ON CABLE MODEM SERVICE
AT&T followed lead of Cox in seeking waiver of franchise fees on cable-delivered Internet services, in letters to franchise authorities within jurisdiction of 9th U.S. Appeals Court, San Francisco. Waiver would be in effect until regulatory uncertainty about classification of service was resolved, MSO said. However, responding to requests from several local franchise authorities (LFAs) and National Assn. of Telecom Officers & Advisers, AT&T has extended time for cities to respond to its request to Feb. 15 from Jan. 1, 2001.
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Unlike Cox, which notified local govts. it would stop paying franchise fees, citing 9th Circuit ruling classifying cable modem service as telecom service (CD Nov 21 p3), AT&T left cities that wanted to continue assessing fees with option of signing agreement acknowledging “the potential refund liability and agreeing to offset AT&T Broadband’s future franchise fees by the amount of any refund liability ordered, as well as… costs and reasonable attorneys’ fees.”
In light of 9th Circuit decision in Portland (Ore.) case, “there is some risk that a city/county would be exposed to potential refund liability in the future, should it continue to assess franchise fees on cable modem service revenue,” AT&T said in letter. At least one local govt. has decided to “eliminate this risk” by waiving fee, company said, and some other local govts. are depositing proceeds into escrow account. “Given the uncertain nature of the law regarding franchise fees on cable modem service, we believe that it is in the best interests of the city/county, as well as AT&T Broadband, to waive” fee and suspend passthrough to subscribers, company said.
AT&T also drew attention to consumer protection laws “which often give rise to class action or other litigation.” Such lawsuits might seek refund of any fees “not lawfully collected,” it said. In subsequent letter extending time for responding to its request, AT&T said it was doing so in “spirit of cooperation,” but emphasized that federal law doesn’t allow voluntary payment of franchise fees in excess of statutory limits and “there is a critical need to address this issue promptly.” NATOA spokeswoman wouldn’t comment on AT&T decision beyond saying that association was in talks with AT&T and was evaluating issues and options available to local govts.