The California court made their decision in line with Nevada’s similar case which ruled that streaming video providers are not subject to local franchise fees. The City of Lancaster had filed a class action complaint against Netflix and Hulu claiming they failed to pay the local video service provider fees imposed under the California Digital Infrastructure and Video Competition Act. The Los Angeles County Superior Court concluded that local video service provider fees do not apply to streaming video providers. The court reached this conclusion based on two reasons:
(1) “ 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” and
(2) “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.”
(City of Lancaster v. Netflix et al., Case No. 21STCV01881, September 20, 2021)