Missouri Streaming Franchise Fee Bill Faces Municipal Pushback
Local government interests urged Missouri lawmakers Tuesday that before adopting any legislation protecting streaming services from video service provider franchise fees, they should follow through on the promise to create a task force to look at the contentious issue of how rights of way are used and who should pay for their use. SB 152, which would amend state law so provision of streaming content is excluded from being considered a video service provider and thus liable for such fees, is premature before that task force can do its work, said Missouri Municipal League Executive Director Richard Sheets at a state Senate Commerce Consumer Protection Committee hearing.
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Republican Sen. Curtis Trent, the bill's sponsor, said franchise fees on streamers are "duplicative taxation," and such fees are for paying for the cost of use of public rights of way -- something streaming services themselves don't directly use.
The bill doesn't change state policy but clarifies what has been Missouri policy since 2007, when the state's Video Services Providers Act (VSPA) set up the current franchise fees regime, said Hamlin Wade, DirecTV associate vice president-state external affairs. Testifying in favor of the bill, Wade said it's necessary because of litigation in the U.S. against streaming services alleging they use rights of way and thus are on the hook for that usage. Applying franchise fees to streamers doesn't make sense because they don't own or operate infrastructure in the rights of way, Wade said. If there's a line problem, he said, "we are not the ones who can go fix it."
Localities' suits seeking what they claim are unpaid franchise fees -- including litigation being pursued by Creve Coeur, Missouri (see 2301270049) -- are an attempt at "trying to legislate through litigation," Wade said. He said if such suits are successful, a 5% fee will be levied atop what consumers already pay for each service.
It's "absolutely false" that the bill is just a clarification of VSPA, said Steven Berezney of Korein Tillery, who's representing Creve Couer in its DirecTV and Dish litigation and in separate litigation against Hulu and Netflix. Berezney said VSPA clearly says providing video service "counts" as much as constructing a video network for liability to pay franchise fees. "It's not just about ownership of those lines," he said. He said it's "really hard to listen to" warnings of consumers facing 5% fees when the state two years ago required passing through franchise fees to consumers. "Let the court process play out," Berezney said. "Let's see what happens." He said there could be a decision in one of the cases by late this year or early next that provides some clarity and guidance.
The Municipal League's Sheets said localities agreed in 2021 to lower municipal video franchise fees over a five-year span as long as that was packaged with the task force to study rights of way management. That task force was never established, he said. SB 152 should be back-burnered until after the task force is established and it can come back to lawmakers with recommendations about rights of way fee amounts and who should pay, Sheets said. "The wisdom that could come from that group could drive a fair methodology," echoed Chuck Caverly, Missouri Municipal League past president and Maryland Heights city councilman.
The state's House Utilities Committee has a hearing scheduled for Wednesday on three video service provider bills that would modify the definition of "video service" in provisions of law regarding video service providers to include streaming content.