News & Events

By Dave Garb, Legislative Committee Chair

Last month we talked about the legal action which has begun here in New Jersey against over-the-top service providers and their franchise fee obligations.

The Borough of Longport and Township of Irvington had filed a class action complaint against v. Netflix, Inc. and Hulu, LLC, alleging they had violated New Jersey’s Cable Television Act by not paying franchise fees to municipalities in exchange for their use of the public rights-of-way.

Coming straight from the “Ask the Lawyers” session at our Eastern Video Expo, Nancy Werner, General Counselor for NATOA gave us an update on where this situation stands.  “On May 19th, the federal district court where this case was pending, issued a decision dismissing the case.  So they agreed with the defendants, the streaming companies, that the city’s municipalities couldn’t bring these cases.  And in a way, maybe it doesn’t resonate with everybody, but the court didn’t decide on the merits.  They didn’t say these companies don’t fall under the New Jersey statute.  The court said that the borough and the township who sued did not have the authority to sue.  There’s no private right of action under the statute.  So basically the implication is the BPU could decide that they think that these over the top providers are subject to your law.  But the local governments can’t be the ones to try to enforce that through the courts.”

Nancy further went on to say  “There’s actually at least 12 other state litigations similar to New Jersey’s, although most of those states have similar statutes, they are different from New Jersey.  So you guys are still you’re still special.  So I make that distinction because in these other states where this is happening and a decision has been reached by the courts, they have said, no, that these streaming services are not video service providers.  I think maybe all of them have defined a term called video service provider in the same way.  That’s defined in a different way than New Jersey law is.  So they’re not directly applicable.  But I think the arguments are going to be exactly the same in New Jersey if it ever got to that.  But I do think it’s good for the local government side that the court didn’t go into that substantive decision, because in other courts, as I said, the court said you don’t have standing to sue and these aren’t video service providers and they don’t provide video service.  And you’re wrong in every single conceivable way we can think of.  You didn’t get that decision in New Jersey.  They just said, no, no, no.  We think the BPU has to bring this case.”

JAG now has a possible avenue to help our municipalities in this interesting situation.  It will be discussed and debated in our future board meetings.

On a different subject that was also brought up at the “Ask the Lawyers” session, there is a whole bunch of grant funding going to states from the federal government for broadband deployment, over $40 billion.  President Biden announced a couple of weeks ago a voluntary initiative of around 20 broadband providers who have agreed to provide 100 megabit service for $30.  And the $30 number comes from a plan called the Affordable Connectivity Program, or ACP which Congress adopted to provide this $30 subsidy for low income households to afford broadband.  And so what the President did was to get some Internet providers together and make sure you have an ACP.  But it’s really just to make sure that the people who qualify for this low income broadband subsidy will have a high, a truly high speed plan that they can tap into through this subsidy.

Lastly also coming from the “Ask the Lawyers” Session, Brandon Dittman from the law firm of Kissinger & Fellman, P.C. added his thoughts to a question on Drone usage.  “The federal government and specifically the FAA is the only one that can really regulate the technical requirements of how a drone works and how you can use it.  You know, the flight aspects of a drone, all the local government or state can do is really regulate where it can be used more or less.  And this is where it gets a lot more complicated

Before the FAA stepped in and promulgated what is now very extensive regulations on the commercial and recreational use of drones, states tried to step in and do some of this work.  Several boroughs and townships and New Jersey tried to implement local rules and at this point in time, you know what the case law on this is, most of those have been overruled or preempted by federal law to the extent that they reach into really the flight aspects of drones or aircraft pursuant to case law.

And therefore, the FAA really has exclusive jurisdiction over their operation.  And so from a practical perspective, there’s not really any state laws because really the FAA is occupied the field in its entirety with regard to at least the operational aspects of drones.  Now, if you, pass a state law or more likely a local law that you can only take off or land it in a particular area, that may be worth looking at.  But otherwise, with regards in terms of how you can operate your aircraft, you really got to look at the FAA rules. That’s the only thing that matters at this point.”

Legislator of the Year Award Recipient

At the 2022 JAG Awards, held on May 25th, the Jersey Access Group proudly honored Congresswoman Bonnie Watson Coleman of the 12th Legislative District with the “2022 Legislator of the Year Award”.

This award was given in recognition of her efforts in preserving the mission of local media here in New Jersey and throughout our nation. 

Through her support to protect the local PEG channels and her willingness to be a co-sponsor of the Protecting Community Television Act, and by sending a letter to the FCC Chair along with Congressman Donald Payne, to rescind the FCC’s August 1, 2019 Third Report and Order (621) she has demonstrated to our members her understanding of issues facing municipalities in NJ and around the country.

She has truly shown her understanding of the importance of local access television and the role these stations play in getting information to the communities they serve

Though she could not attend in person, Congresswomen Watson Coleman did send us this message of gratitude:

May 25, 2022

Dear Friends:

I want to thank the Jersey Access Group for honoring me with the 2022 Legislator of the Year Award. I’m sorry I am unable to attend this evening, but I want to take this opportunity to express how I view the importance of your work.

In a time when the volume of commercial media to which we are constantly exposed can seem overwhelming, your work in protecting and in expanding access to PEG channels is so important. We’re seeing more and more that most people are getting their news from national sources that often don’t have an interest in covering the local news that most directly impacts people.

These are crucial access points for community members and are valuable resources that require our commitment and protection. Local media is struggling right now but the work of The Jersey Access Group and other organizations like it will ensure that everyday people get the information they need to fully participate in their communities.  

My sincere appreciation once again for this recognition.

Thank you,

by Dave Garb, Legislative Committee Chair

Last month we talked about legal action that has begun here in New Jersey against over-the-top service providers and their franchise fee obligations.

The following is from the law firm Kessler, Topaz, Meltzer & Check, LLP, who are leading this action.  It is a brief summary of the factual allegations and procedural history of Borough of Longport and Township of Irvington v. Netflix, Inc. and Hulu, LLC, No. 2:21-cv-15303-SRC-MAH (D.N.J.) (the “Netflix/Hulu Litigation”).

*On August 13, 2021, Plaintiffs Borough of Longport and Township of Irvington (“Plaintiffs”) filed a class action complaint in the District of New Jersey, individually and on behalf of all other similarly situated municipalities against Defendants Netflix, Inc. and Hulu, LLC (“Defendants”) alleging violations of New Jersey’s Cable Television Act, N.J. Rev. Stat. § 48:5A-1, et seq. (the “CTA”).  As set forth in the Complaint, Defendants have been providing online streaming services, using wireline facilities (i.e. broadband wireline facilities) located at least in part in the public rights-of-way, without paying Plaintiffs and other New Jersey municipalities franchise fees required under the CTA. The CTA requires entities, like Defendants, that provide “video programming” and “cable television service” to pay franchise fees to municipalities in exchange for their use of the public rights-of-way. Because Netflix and Hulu qualify as providers of “video programming” and “cable television service,” they are obligated under the CTA to pay Plaintiffs, and other New Jersey municipalities, franchise fees equivalent to a percentage of their gross revenue. Plaintiffs have sued Defendants to recover these fees on behalf of themselves and the putative Class.

By way of background, to fall under CTA’s franchise fee requirement, an entity must provide a “cable service over a cable system” and, either directly or through an affiliate, own a significant interest in that “cable system.” N.J.S.A § 48:5A-3(g).  An entity can also be covered by the CTA if, “through any arrangement,” it controls or has responsibility for the management and operation of a “cable system.”  Id.  Plaintiffs have alleged that Netflix falls under the CTA because, inter alia, it (1) provides video programming comparable to traditional programming and thus provides cable services and (2) owns a significant interest in its billion-dollar infrastructure program which it controls and operates through contractual arrangements with local Internet Service Providers (“ISPs”).  As for Hulu, it falls under the CTA because, inter alia, it (1) provides cable services through live broadcasts similar to traditional cable services and (2) owns a significant interest in a cable system through its affiliation with ISPs and, in addition, its ownership by Comcast. Plaintiffs allege that despite being covered by the CTA, Netflix and Hulu have failed to pay the required franchise fees.

On October 29, 2021, nearly two months after Plaintiffs filed their complaint, Netflix and Hulu filed Motions to Dismiss. In their Motions to Dismiss, Defendants asserted that Netflix and Hulu do not fall under the CTA, Plaintiffs do not have a right to enforce the franchise fee requirements of the CTA, and that the statute’s provisions do not apply to streaming services. Thereafter, on December 23, 2021, Plaintiffs opposed Defendants’ Motions to Dismiss, disputing Netflix and Hulu’s assertions. For example, Plaintiffs pointed to provisions in the N.J. Constitution as well as the CTA’s legislative history, which showed that Plaintiffs have a right to enforce the statute’s franchise fee requirements. Moreover, Plaintiffs highlighted the numerous ways in which the CTA applies to Netflix and Hulu’s streaming services.

Following Plaintiffs’ Opposition, Defendants filed reply briefs on January 26, 2022. The Motions to Dismiss are fully briefed and pending. While the Motions to Dismiss are pending, the parties continue to negotiate the protective order and ESI protocol and Plaintiffs plan to serve an initial round of discovery.   (ESI-Electronically Stored Information) Should this action win in court, it could potentially mean more income via franchise fees and therefore more support for our PEG channels.  While this is going on in New Jersey, other states like Connecticut are actually attempting to pass a bill that would require OTT providers to pay a yearly fee per subscriber.  The bill is SB278 and it has come out of their Energy and Technology Committee.  We are currently waiting on the next steps as to where this bill is heading.