The City of New Boston, Texas has filed a proposed class action in which it claims Netflix and Hulu “should be and are required by law” to pay municipalities statewide a franchise fee of five percent of their gross revenue given they use broadband wireline facilities located partly in public rights-of-way.
The Bowie County municipality claims in the 12-page suit that because the content-streaming giants deliver their services over broadband internet connections that rely upon wireline facilities located in whole or in part in public rights-of-way, the companies were required to file an application with the Public Utility Commission of Texas for a state-issued certificate of franchise authority (SICFA) prior to providing video streaming services.
The lawsuit argues that because Netflix and Hulu failed to apply for and obtain a SICFA, the companies provide video services throughout Texas without authorization and in contravention of the Texas Utility Code.
According to the complaint, a SICFA would have authorized Netflix and Hulu to use public rights-of-way as long as the companies made quarterly franchise payments to each city in which they provided services. Per the suit, the required franchise payment must be equal to five percent of the companies’ respective gross revenues.
“Plaintiff New Boston, individually and on behalf of other Texas municipalities, seeks to require Defendants to abide by the Texas Utilities Code, and pay what they owe to these municipalities,” the complaint reads.
The lawsuit looks to represent all Texas municipalities in which Netflix and/or Hulu has provided video streaming services.
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