NASHVILLE, Tenn. — The Tennessee Supreme Court will hear arguments Tuesday after the City of Knoxville filed a federal lawsuit against Netflix and Hulu.
The lawsuit claims that Netflix, Hulu and similar services provide video services across the state without paying franchise fees. It cites the Competitive Cable and Video Services Act.
That law effectively established a statewide franchise for cable and video companies, instead of them having to work out agreements with individual cities.
However, while cable and video companies can operate with a statewide agreement, they are required to pay franchise fees directly to cities. Companies cannot route that money through a state department. The franchise fee is set at 5% and is payable every quarter.
According to experts, cities should receive franchise fee payments from cable and video companies within 45 days after each quarter.
The streaming services that were sued filed separate motions to dismiss the lawsuit, saying they do not provide "video services" and are not subject to the CCVSA.
Ultimately, the state's Supreme Court is expected to answer whether Netflix and Hulu are legally considered video service providers, as defined in the CCVSA.
The case will be streamed online, along with cases addressing other legal questions.
