Articles Posted in Communications and Broadband Law

On March 24, 2023, the 5th Circuit Court of Appeals held that § 254 of the Telecommunications Act of 1996 (the “Act”) did not violate the nondelegation doctrine or the private nondelegation doctrine, denying the Petitioners challenge to Congress’s delegation of administering the Universal Service Fund (“USF”) to the Federal Communications Commission (“FCC”) and the FCC’s reliance on a private entity to support its administration of the USF on constitutional grounds. Consumers’ Research v. Federal Communications Commission, No. 22-60008 at 2 (5th Cir. 2023). The Act established the USF and tasked the FCC with its administration for the purpose of ensuring “the facilitation of broad access to telecommunications services across the county,” which is accomplished by the USF raising funds that are then distributed across the country to further advancement of telecommunications services. Id. To assist in its administration of the USF, the FCC tasked a private entity, the Universal Service Administrative Company (“USAC”), with “certain ministerial responsibilities” which include collecting self-reported income information from telecommunication carriers, gathering data to put together a potential contribution rate for the USF, and proposing a quarterly budget to the FCC for the USF’s continued operation. Id.

The court found that “[c]ongress passed § 254 for the express purpose of preserving and advancing universal telecommunications services,” to be effectuated by policies which ensure that telecommunications services are:

(1) of decent quality and reasonably priced; (2) equally available in rural and urban areas; (3) supported by state and federal mechanisms; (4) funded in an equitable and nondiscriminatory manner; (5) established in important public spaces (schools, healthcare providers, and libraries; and (6) available broadly across all regions in the nation.

The District Court for the Southern District of Indiana published an order on November 18, 2020 remanding the Class Action lawsuit against Netflix, Disney, Hulu, DirectTV and Dish to Marion County Superior Court.

The city of Fishers, Indianapolis, Evansville and Valparaiso filed a class action lawsuit on behalf of all units entitled to receive franchise fees to compel the streaming services pay franchise fees governed by Indiana’s Video Service Franchises Act in Ind. Code §8-1-34-4 “VSF Act.” The VSF Act requires companies that provide video service in Indiana to apply and receive certificates of franchise authority. The companies must pay a quarterly franchise fee to certain governmental units. The units include counties, municipalities and townships under Ind. Code §8-1-34-12. The streaming services (“Defendants”) sent the case to federal court under Class Action Fairness Act under 28 USC §1332(d) and diversity jurisdiction under 28 USC §1322(a). The Cities filed a motion to send the case back to state court, arguing under comity principles, the matter is more appropriate for Indiana courts to decide.

The Cities argued the case should move back to Marion County because the enforcement and franchise fee collection is “a commercial matter over which the Indiana legislature and Indiana Unit have traditional enjoyed wide regulatory latitude, that does not implicate any fundamental right of Defendants.” ·

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