Federal Court Must Decide If Netflix Is a Video Service

A 2007 Missouri law allows municipalities and counties to collect franchise fees from video service providers, and they’ve been collecting from cable operators ever since. But Missourians, like other U.S. residents, are increasingly dropping cable service in favor of streaming services like Netflix and Hulu. Now the City of Creve Coeur, Missouri, is suing those services in federal court because they haven’t been paying the fees. According to a memorandum for the defense submitted last week, “Netflix is not a video service provider because it does not provide video service.” But Creve Coeur has asked for a declaratory judgment that Netflix and Hulu are engaged in the business of providing video service within the meaning of the 2007 law, and they must either start paying or be restrained from engaging in business in Missouri. Video service is defined in the statute as “the provision of video programming provided through wireline facilities located at least in part in the public right-of-way without regard to delivery technology.” Netflix argues that it does not provide video programming, but even if it did such programming would be specifically excluded from the definition of video service when provided through the public Internet. A similar case was decided in favor of municipalities by the Supreme Court, with Judge Anthony Kennedy providing the swing vote in a 5-4 decision.