Ohio Supreme Court Decision Could Drive Up Prices for Netflix, Hulu, Others
Maple Heights, Ohio is a suburb on the southeast side of Cleveland that is home to just over 22,000 residents. However, the city could end up being the cause of streaming prices going up for millions of subscribers across the country. On Wednesday, the city argued in front of the Ohio Supreme Court that a 2007 state law requires Netflix, Hulu, and other streaming services to pay a fee to municipalities in order to compensate the local governments for use of cables and internet wiring that run on public property.
The law was designed to require cable companies to obtain permission to install wiring on public rights-of-way but also folded in the video services requirement in the very early days of streaming. In a court filing in December, Maple Heights attorney Justin Hawal said that without the use of these wireline facilities in public rights-of-way, streamers “could not deliver their video programming to their subscribers,” meaning that they were subject to the fee under Ohio law.
The city maintains that the 5% service fee is repayment on the billions of dollars that the services have made while benefiting from local infrastructures across the country.
The services argue that the 2007 law does not apply to them, because they do not distribute their content in the same way that companies who fall under the law do. Netflix’s attorneys claim that the company doesn’t have any physical wires and cables and as an internet streaming business, they do not need them to bring their product to customers.
Maple Heights claims that without the wires and cables supplying internet to customers, Netflix and other streamers could not operate.
In 2020, Netflix and Hulu won similar cases in Arkansas, California, Nevada, and Texas by arguing that they are fundamentally different than video providers. However, similar lawsuits are currently being argued in Tennessee, Missouri, and Indiana. A decision by Ohio’s 4-3 conservative majority court is not expected to be handed down for months.
While taking judicial questioning as insight into justice’s positions can be fraught, Justice Pat Fisher questioned Hawal on why he even brought the case to the Supreme Court in the first place.
“Shouldn’t you be up at the Statehouse a block and a half away instead of at a courthouse trying to get the law changed?” he said.
The Maple Heights attorney responded that they are arguing in front of the Supreme court because they are not attempting to change the law, but rather to apply existing law to a new technology that was nearly unfathomable in its current form 15 years ago.
Despite the rulings in those five other states in 2021, an Ohio Supreme Court decision against Netflix, Hulu et. al could potentially be precedent-setting and require the streamers to doll out 5% of its revenue in Ohio and any other states that follow suit. Of course, it is highly unlikely that the companies would simply accept the potential losses leading to another potential rate hike for consumers.