In a decision by a state trial court, Georgia has joined California and Texas in holding that local governments cannot impose franchise fees on over-the-top (“OTT”) streaming TV services like Netflix, Hulu, or Amazon Prime. Gwinnett County, Georgia, et al. v. Netflix, Inc., et al., Civil Action File No. 20-A-07909-10, Gwinnett County Superior Court, Feb. 18, 2022. Like those other states, the Georgia court held that the state video franchising statute (here, the Georgia Consumer Choice for Television Act), did not give local governments an express or implied private cause of action against the steaming TV providers. While the local governments cited provisions allowing actions for disputes over franchise fee payments or for discrimination by franchise holders, the court noted that the provisions applied only to franchise holders, and that the streaming TV providers did not hold state-issued franchises.
In addition, the court explained that the Television Act does not apply to streaming TV providers because they do not construct and operate facilities in the public rights-of-way, and therefore cannot be required to obtain franchises or pay franchise fees to local governments. As the court put it, “[a]pplying the Television Act – which contemplates fees for providers that offer facilities-based service – to non-facilities-based streaming services would be akin to applying a tax on horses to cars simply because cars have horsepower.” In fact, the decision said, if the Television Act applied to non-facilities-based vide providers, local governments could seek franchise fees from an extremely broad range of entities that could not reasonably be covered by the Television Act, such as newspapers that provide online video or churches that stream their services online. And like other courts, the Georgia court held that streaming TV providers do not “use” the public right-of-way simply because they send video content over the wires of internet service providers in the public right-of-way. Finally, and again like other courts, the Georgia court held that streaming TV providers’ service falls within the exception in the Television Act for video provided via a service “offered over the public internet.”
This is the latest in a line of decisions in cases across the country where local governments seek to recover franchise fees from streaming video providers. For an overview of the issues, arguments, and other cases, see this blog post.