FEDERAL COURT UPHOLDS STATE CABLE FRANCHISE LAW

On October 29, 2010, the United States District Court for the Western District of Texas granted a favorable motion for summary judgment in Texas Cable and Telecommunications Association v. P.U.C. Commissioners. The case involved the longstanding dispute regarding the “grandfathering” provision in Senate Bill 5. That provision requires incumbent cable providers to fulfill obligations under existing franchise agreements until those agreements expire. (S.B. 5, which authorized a state-issued certificate of franchise authority for cable and video providers, became law in 2005. The bill is now codified in Chapter 66 of the Texas Utilities Code.)

The Texas Cable and Telecommunications Association (TCTA) lawsuit was filed the day after the bill became effective, and the Texas Coalition of Cities for Utility Issues (TCCFUI) intervened shortly thereafter on behalf of Texas cities. In 2006, the court dismissed the case on procedural grounds. In 2007, the TCTA appealed the dismissal to the Fifth Circuit Court of Appeals. In 2008, the Fifth Circuit issued its opinion and concluded that the TCTA’s claims deserved consideration by the trial court.

Last month, the federal district court granted a motion for summary judgment in favor of the Texas Public Utility Commission, TCCFUI, and others (i.e., upholding the grandfathering provision). The court brushed aside TCTA’s claim that being bound to an existing franchise violates a provider’s First Amendment rights by holding that Chapter 66 does not discriminate based on the content of a cable provider’s programming. It also rejected TCTA’s claim that Chapter 66 violates federal law relating to “redlining” by state franchise holders because each applicant for a franchise must comply with federal law. (Redlining is when a company discriminates against certain geographic, income, or ethnic areas.)

TCTA still has time to appeal the decision. TML will continue to monitor the case, but it appears almost moot because only a handful of grandfathered cable franchises remain in existence.

TML member cities may use the material herein for any purpose.
No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the
Texas Municipal League.

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