City of Chicago is seeking to force cable operators to pay franch...
City of Chicago is seeking to force cable operators to pay franchise fees on cable modem service by invoking state law that requires companies to honor contracts. In lawsuit filed in Circuit Court in Cook County, city said cable…
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operators voluntarily had signed agreements to pay franchise fees on all revenue “regardless of what the Federal Communications Commission says.” City Cable Administrator Joyce Gallagher told us cable operators had notified city March 15 they would stop paying cable modem franchise fees following FCC decision to classify it as interstate information service. Fees on cable modem weren’t included in their quarterly payment, she said, and companies “would be in default as far as we are concerned on June 30.” Under contract law companies are obliged to honor conditions agreed to in their 15-year franchise agreements. Despite FCC ruling, condition that companies pay percentage of gross revenue as franchise fees hadn’t changed, she said: “We believe strongly that we are entitled to that [cable modem fees] by contract.” Companies operating in city are AT&T Broadband, RCN Corp. and Wide Open West. Chicago has joined National Assn. of Telecom Officers & Advisors (NATOA) challenge to FCC cable modem ruling in 9th U.S. Appeals Court, San Francisco, Gallagher said. Declining to comment on lawsuit until he had read it, RCN spokesman said cable operators now faced difficult situation because FCC took long time to resolve issue of cable modem classification. “We completely understand the need to generate revenue on the cities’ side,” he said, but given FCC ruling operators would face complaints from consumer groups and subscribers if they continued to collect and pay franchise fees on cable modems. “It’s a policy matter that we have to abide by,” he said: “The cities will have to fight this one out.”