Missouri, where the entire movement to charge streaming companies cable industry-like “franchise fees” started, has shut the door on the gambit with new legislation.
Republican Gov. Mike Parson on Tuesday signed into a law a bill that would restrict Missouri municipalities from charging companies ranging from Netflix to DirecTV — anyone who streams video — the kind of right-of-way charges cable companies are typically dinged for by digging trenches and attaching wires to power lines.
Missouri became the 14th state to make that restriction, following Arizona, Arkansas, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Nevada, Ohio, Oklahoma, South Carolina and Tennessee.
In order to establish their physical infrastructure, cable companies have to pay franchise fees to municipalities. And, in 2018, Creve Coeur, Missouri sued Netflix and Hulu, demanding the companies pay similar tribute.
Also read: Netflix, Hulu, Disney Sued Again Over Cable Franchise Fees
However, as noted by Americans for Tax Reform (ATR), a conservative group founded by Grover Norquist: “Streamers use the internet to reach homes. This means they either use wireless, satellites, or existing cable connections to deliver content to homes and do not alter municipal infrastructure to reach customers.”
Last we checked, many of these same streamers use internet delivered via cable infrastructure. But DirecTV, which operators DirecTV Stream, lauded Missouri's decision.
“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," said Hamlin Wade, associate VP of external affairs at DirecTV, who worked on the legislation across each state, in a statement.
As ATR noted, there are still plenty of local governments that are taxing video services via means other than franchise fees.
Chicago, for example, imposed a 9% ding on streaming services, calling it an “amusement tax.” And of the 45 states with a general sales tax, 33 include video streaming services in their sales tax base, ATR said.
These charges are passed on to consumers. In February, Netflix began charging users an additional 5.07% over their usual tier rate to offset state “communications taxes.”
