Comcast charging customers for city fee.
Comcast high-speed Internet customers in Eugene are now paying higher monthly bills after the cable provider began passing along a city-imposed fee that was at the center of an eight-year legal fight.
The fee, averaging about $3.15 per household per month, will go to the city's general fund to be used at the discretion of the City Council, according to the city.
Comcast began billing the new Internet license fee to its customers beginning Sept. 1, about four months after the Oregon Supreme Court affirmed an earlier appellate court ruling that federal laws don't prohibit the city from imposing the fee.
Comcast is levying the new fee on customers to recover the 7 percent fee on gross Internet revenue it will have to pay the city annually for the privilege of operating Internet service in Eugene via the city's rights of way.
A short notice on Comcast's Internet customers' bills in September notes: "Following a recent decision concerning a 7% City of Eugene license fee, your billing statement now reflects recovery of that fee."
The fee does not apply to broadband Internet customers outside of Eugene.
The average Comcast Internet customer in Eugene will pay about $3.15 more per month, according to Amy Keiter, Comcast's spokeswoman in Oregon.
In the wake of the Oregon Supreme Court decision, Comcast "in the next few weeks" will pay the city $18.75 million to cover the Internet license fee Comcast owes going back to the start of the dispute, said city spokeswoman Jan Bohman.
The city has not yet calculated how much the license fee will yield annually, Bohman said.
Eugene City Manager Jon Ruiz issued a statement saying: "The fee reimburses the taxpayers of Eugene for the use of publicly funded rights of way, as with other utilities.
"We are pleased that Comcast has decided to discontinue litigation after several court rulings supported our position. Other telecom providers in Eugene have been voluntarily complying with the ordinance, and this levels the playing field for all providers."
Comcast's Keiter said her company "completely disagrees" with having to pay the license fee.
She said it's likely Eugene is the only city in the nation to impose a license fee on high-speed Internet.
"We regret we have to pass through" the license fee to Internet customers in Eugene, she said.
It's unknown how much revenue the license fee will generate for the city annually.
The fee is on top of a franchise fee Comcast has long assessed its customers to recover the 5 percent of the gross cable revenue it must pay the city annually to operate its cable services in Eugene.
The Comcast franchise fee provided $2.1 million to the city in the budget year that ended June 30.
The franchise fee
Since 1991, Comcast and its predecessors have agreed to pay the franchise fee in exchange for permission from the city to bury and operate its service lines under city-owned streets, sidewalks and other rights of way.
The Philadephia-based conglomerate calculated the franchise fee from revenue it earns from cable services - generally defined as the one-way transmission of a package of channels - but not noncable services, generally defined as a telecommunications on information service.
This distinction proved crucial to the legal battle between the city of Eugene and Comcast.
The conglomerate began offering broadband Internet service, which uses the same lines that transmit its cable service, in 1999.
For three years, Comcast treated its broadband Internet service as a cable service and included its gross revenue when calculating the franchise fee.
It stopped doing that in 2002 when the Federal Communications Commission declared that under a 1996 federal law, broadband Internet service was not a cable service. Comcast continued to pay a franchise fee calculated from gross revenue on just its cable services in Eugene.
The U.S. Supreme Court affirmed the FCC order in a decision in 2005.
The license fee
Shortly after it renewed imposing its franchise fee on Comcast in 2007, the city of Eugene attempted to impose a fee on Comcast's broadband Internet service, under the principle that Comcast was providing that service in part by using the city's rights of way.
It required Comcast to pay an annual fee to secure a license to operate its Internet service as a telecommunications service in the city rights of way. The city spelled out that requirement in an ordinance the City Council approved 10 years earlier but had never enforced on broadband Internet service.
The council approved the ordinance in the wake of the 1996 federal law, the first major overhaul of U.S. telecommunications law in six decades. State courts later upheld the ordinance after challenges from three telecommunications companies.
After the city passed its ordinance, Congress passed laws and the FCC approved regulations barring federal, state and local governments from taxing Internet access.
"Eugene has had this great benefit and they acted with great vision and foresight to get the ordinance done in 1997," David Olson, the city of Portland's cable director, said when Eugene initiated its legal fight against Comcast in 2008 in order to charge the Internet service fee.
Courts side with city
The city sued Comcast in Lane County Circuit Court after Comcast refused the city's request to pay the license fee from 1999, totaling several millions of dollars.
Both the trial court and the Oregon Court of Appeals sided with the city.
Comcast appealed to the state's highest court, arguing the license fee is an illegal tax prohibited under a 1998 federal law or an unlawful franchise fee barred by an earlier federal law.
The justices spent about 20 pages of its opinion analyzing the complex arguments and determining that the license fee is neither a tax nor a franchise fee barred by the federal laws.
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|Title Annotation:||Eugene; The provider passes along a mandated Internet license feeto Eugene households|
|Publication:||The Register-Guard (Eugene, OR)|
|Date:||Sep 10, 2016|
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