Missouri Makes it Illegal to Charge Streaming Services — and by Extension, Customers — Cable Franchise Fees
Missouri Makes it Illegal to Charge Streaming Services — and by Extension, Customers — Cable Franchise Fees
Many cable companies have to pay fees to use the physical infrastructure involved in delivering pay-TV to a person’s house, but streamers won’t have that problem in Missouri.
Streaming services operating in the state of Missouri got a reprieve this week. Missouri Governor Mike Parson has signed a new bill into law that prevents streaming services like Netflix and Disney+, as well as live TV streaming platforms like DIRECTV STREAM and Fubo, from being charged “franchise fees” that are traditionally charged to cable companies that have to install infrastructure that uses the public right-of-way.
Key Details:
- Missouri has become the 14th state to ban the imposition of franchise fees on streaming services.
- DIRECTV lauded the decision, calling such fees “anti-consumer.”
- Many states have targeted streaming as a source for new tax revenues.
Franchise fees are used as a way for states to ensure cable companies compensate local governments for providing the infrastructure they need to deliver their product to people’s homes. But proponents of Missouri’s new law pointed to the fact that streaming’s delivery infrastructure is already in place, as most homes get internet regardless of their streaming ownership.
Missouri becomes the 14th state to impose legislation that prevents streamers from being charged these types of fees, joining Arizona, Arkansas, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Nevada, Ohio, Oklahoma, South Carolina, and Tennessee. DIRECTV issued a statement calling these fees “anti-consumer,” which is somewhat specious considering most of the time these fees are charged directly to cablers, who then decide to pass on the costs to subscribers to protect their own profit margins.
“DIRECTV applauds the states who have recognized the undue burden these fees will place on millions of Americans who stream their video programming,” DIRECTV executive Hamlin Wade said. “This overwhelming and bipartisan vote by the Missouri legislature, and Governor Parson’s signing it into law, should put to rest any further notion that franchise fees apply to consumers who choose to stream their content.”
Recently, local governments have increasingly thought of streamers as a good source of new potential revenues. Streamers have been hauled into court before over their use of public internet infrastructure, but in many cases, they’ve successfully argued that using the internet to deliver their services isn’t the same as having to physically create the framework to bring cable into homes.
Cities and states have gotten quite creative in their efforts to get blood from the streaming stone. Chicago has a 9% “amusement tax” on streaming, and New York considered imposing its state sales tax on streaming subscriptions last year as a way to boost revenues for the Metropolitan Transportation Authority of New York City. Earlier this year, Vermont considered a direct tax on streamers themselves to help prop up sagging public TV stations.
Taxes on streamers are sensible solutions to revenue gaps in some municipalities, though consumer opinions on the subject predictably vary wildly. Proponents of streamers paying more to local governments in Missouri will have to head back to the drawing board, however, as their hopes of seeing services like DIRECTV STREAM or Netflix pay franchise fees have now gone glimmering.
DIRECTV
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