Jan 8, 2001 12:00 PM,

AT&T, Cox seek end to certain cable fees

Toby Weber

(Telephony) AT&T and Cox Communications are seeking a discontinuation or possible future refunds of cable Internet franchise fees paid to municipalities in the areas covered by the U.S. 9th Circuit Court of appeals.

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Among the areas under the court are Arizona, California, Nevada, Oregon and Washington. AT&T offers cable Internet service in these states under the AT&T@Home and AT&T RoadRunner brands. Cox offers the service under the Cox@Home brand. Both are major shareholders in Excite@Home.

In a June decision regarding open access, the 9th circuit appeals court ruled that cable Internet service is not a cable service, but rather a telecommunications service. Telecommunication services, unlike cable services, are not subject to municipal franchise fees. These fees generally are 3% to 5% of gross revenue, a charge that cable companies pass on to consumers.

According to a company spokesman, if AT&T had its way, cable Internet service would be classified as a cable service throughout the country. “We have said all along that cable Internet service falls under the category of cable service,” he said.

In citing the non-cable status of cable Internet in the 9th circuit as a cause to discontinue franchise fees, the company is not being inconsistent, the spokesman said. Rather, it is simply operating under the law as it exists in the 9th circuit’s jurisdiction and any savings AT&T realized would be passed on directly to consumer.

“In the decision, the 9th circuit said that cable Internet service is not a cable service…If it’s not a cable service in the 9th circuit than it’s probably not a service that municipalities can collect franchise fees on,” said the spokesman.

In a December letter to municipalities charging these fees, AT&T requested that the fees be discontinued or that, should Excite@Home have to refund past franchise fees to consumers, the company not have to turn over franchise fees in the amount it refunds. AT&T has requested a response from these municipalities by February 15.