Texas Court Dismisses Local Franchise Fee Suit Against Streaming Companies

The City of New Boston, TX filed a suit against Hulu and other streaming services claiming that they owed local franchise fees. A Texas court argued that the allegations against streaming companies, specifically Hulu, have no merit. Additionally if this case was not dismissed, it would have caused many more streaming services to have been sued. 

The Statement of Issues against Hulu were the following:

“I. Whether Hulu can be required to pay the “franchise fees” a holder of a SICFA must

pay, even though Hulu does not hold a SICFA.

II. Whether Hulu is subject to the PURA franchising rules when it does not construct or

operate its own cable or video services network in the public rights-of-way.

III. Whether taxing internet streaming but not over-the-air broadcasting or mobile cellular

streaming violates ITFA’s prohibition of discriminatory taxation.”

Texas court concluded the following:

“I. Hulu is not required to pay a SICDA fee when it does not hold a state-issued certificate of franchise authority.

II. Hulu does not need a franchise authority because it does not construct or operate in the public rights-of-way.

III. Plaintiff’s attempt to tax the streaming of video programming via the internet results in discriminatory taxation and violates the internet tax freedom act.” 

(U.S. District Court Texarkana Division, Case 5:20-cv-00135-RWS, September 30, 2021)

Posted on October 13, 2021