KNOXVILLE, Tenn. (WATE) — The Tennessee Supreme Court has ruled that streaming companies, like Netflix and Hulu, do not have to pay fees to the cities in the way a cable company might have to pay for access to the community.
In late 2020, Knoxville sued Netflix and Hulu in federal court claiming the companies should have to pay Knoxville and all the rest of the municipalities in the state under a law that lets video service providers negotiate fees to pay for using public rights of way. The city contended Netflix and Hulu are “video service providers” as defined in the Competitive Cable Video Services Act, meaning the companies needed to apply for a franchise and pay franchise fees to Knoxville and violated the Act by failing to do so. Netflix and Hulu wanted to dismiss, arguing they do not provide “video service” under the Act.
Tennessee Supreme Court justices released an opinion on Tuesday declaring streaming companies are not video service providers under the law, because they do not own or operate the wires that carry their programming into homes. The opinion lays out that the law defines a “video service provider” as an entity that offers the “provision of video programming through wireline facilities located, at least in part, in the public rights-of-way.” The court said this language must be interpreted in the context of the act as a whole.
“The Act as a whole, then, is focused on granting video service providers permission to physically occupy the public rights-of-way and ensuring that those providers adequately compensate localities for that privilege. Given the Act’s focus, it would make little sense to interpret it to apply to entities like Netflix and Hulu that do not construct or operate the wireline facilities that are used to transmit their content,” read the court’s opinion.
This opinion now goes to the federal court which had asked for the state court’s view of the law.