Senate Bill 5 Update: Cable Industry Wins Procedural Victory
Senate Bill 5, which authorizes a state-issued certificate of franchise authority for cable and video providers, became law in 2005. Some cable companies were opposed to certain provisions of the bill, and they filed a case in federal court a day after the bill’s effective date. In Texas Cable and Telecommunications Association v. P.U.C. Commissioners, the Texas Cable and Telecommunications Association (TCTA) challenged the “grandfathering” provision in S.B. 5. That provision requires incumbent cable providers to fulfill obligations under existing franchise agreements until those agreements expire.
The TCTA claims, among other things, that its members (incumbent cable providers) are being discriminated against because they can’t unilaterally opt out of existing franchises. The counter-argument to TCTA’s position is that nothing in the U.S. Constitution or federal law requires providers to be treated exactly the same. In fact, the federal Telecommunications Act grandfathered existing agreements when it was adopted in 1996.
The lawsuit was filed on September 8, 2005, and a hearing on motions for summary judgment was held in Austin in May 2006. In September 2006, the court dismissed the case on procedural grounds. Essentially, the court concluded that the case was not “ripe” for litigation because the TCTA failed to show an example of how being bound to existing franchise agreements would cause specific economic harm to its members. In 2007, the TCTA appealed the dismissal to the Fifth Circuit Court of Appeals. On February 7, 2008, the Fifth Circuit issued its opinion and concluded that the TCTA’s claims are, in fact, ripe for further proceedings. The case will now be remanded to the trial court for proceedings on the merits.
TML will continue to work with interested parties to protect the interests of Texas cities. Please contact the TML Legal Service Department with questions at (512) 231-7400.