MAPLE HEIGHTS, Ohio — The city of Maple Heights is taking on some of the world's largest streaming companies in federal court, arguing Netflix and Hulu should be forced to pay video service provider fees similar to traditional cable companies who operate in the city.
For years, new streaming options and lower prices have threatened traditional cable operators, stealing away viewers and revenue. Less money coming in for those companies also means cities and townships are losing funds, too.
"It's really the city of Maple Heights who is trying to stand up for all the cities and townships in the state of Ohio," said Justin Hawal, associate attorney with the law firm DiCello Levitt Gutzler representing the city of Maple Heights.
Under Ohio law, traditional video service providers and cable companies pay fees to cities to provide video services using infrastructure in public rights of way, like telephone poles or underground cabling. The argument is that streaming companies use the same infrastructure, and should therefore pay the same fees.
But the internet streaming giants say otherwise. One argument is that they have no actual infrastructure in Ohio, and that the fees don't apply to internet companies. Still, Maple Heights and its attorneys believe they have a solid case.
"The law states that the franchise fees are to be paid regardless of the type of technology used including internet protocol technology." Hawal claimed.
This is a class action suit, meaning cities and townships across Ohio could benefit if Maple Heights is successful. If that happens, Netflix, Hulu, and potentially every other streaming company would have to pay up to 5% of its gross revenue as a tax to municipalities.
Over the years, Maple Heights has lost revenue for various reasons, and Mayor Annette Blackwell is known for seeking innovative ways to recoup losses — not afraid to go after internet giants.
"These companies are enormously profitable," Hawal told 3News, "and they're benefitting from the use of these facilities in public rights of way."
Next month, the Ohio Supreme Court is scheduled to hear both sides to decide whether Netflix and Hulu count as "video service providers" under the Ohio Revised Code as well as whether or not Maple Heights can bring the suit in the first place. 3News reached out to both Netflix and Hulu for comment on the case, but didn’t receive a response from either company.