BOSTON—Local communities that collect franchise fees from pay-TV providers are worried that the increase in cord cutting could threaten the future of community access TV. In Massachusetts, one legislator has responded by proposing a bill that would allow municipalities to levy a fee on streaming services like YouTube TV, Sling TV and DirecTV Now (also known as virtual Multichannel Video Program Distributors or “vMVPD”).

In “An Act Relative to Digital Entertainment on Public Rights of Way,” Democratic state legislator Matt McMurtry is proposing a 5% fee on digital streaming providers who are “using the public rights of way in order to sell their services to Massachusetts residents.” The fees would be collected twice a year and distributed to the state general fund, municipalities and community media centers.

Although vMVPDs offer many of the same channel lineups as traditional cable TV, they have been exempt from paying franchise fees. Since these OTT (over-the top) services ride on the back of high-speed broadband provided by traditional cable TV, legislators like McMurtry see little difference between the two.

“This legislation is a much-needed update to the way consumers receive digital entertainment streaming services. Multimillion-dollar media companies are using our public rights of way to deliver their product, yet are not paying their fair share for that use,” McMurtry said. “Fees charged to traditional cable providers support our local community media centers, which are an important resource to local public, educational and government news and information. As consumers are offered alternative streaming methods, we need to modernize our law to assure that community media centers are supported.”

Approximately 85 legislators have signed on to the bill, which was proposed the same week that the FCC voted to deregulate local cable franchise fees, a move that opposing FCC Commissioner Jessica Rosenworcel said “cuts at public, educational and governmental channels across the country.”

“It goes beyond placing reasonable limits on contributions subject to the statutory franchise fee and jeopardizes the day-to-day costs, like staff and overhead, required to run such stations,” she added.

A dozen states have already imposed similar fees on streaming services (or in the case of California, Colorado and Illinois, have individual municipalities that have adopted such fees), according to public interest group Mass Access, which voiced its support for the bill.

“For decades, the funding provided by cable companies has helped provide funding to support vital programs at the municipal level—including community media centers and PEG channels,” said Melinda Garfield, president of Mass Access. “Community Media centers and PEG channels serve the community, they are an important and vital resource that we need to protect. These new streaming services should be held to the same standards, accept the same responsibilities, and make the same contributions as cable companies.”

DALLAS—The Colorado Department of Revenue is clearing up some confusion among Colorado broadcasters about taxes on energy services being used to broadcast television programs. One Colorado station had been paying taxes on both electrical and natural gas services to operate the station from running broadcast transmitters and the control room to heating and powering the generator.

Ryan

By Colorado rule, a sales tax applies to electrical and natural gas services that are used for commercial consumption. However, there is an exemption for radio communication and all industrial uses. Looking specifically at the TV station, the Department of Revenue determined that the exemption should only apply to energy use used in communication, and that broadcast was a service and not industrial. This allowed the station to take an exemption on the energy services used to power the television transmitter, but energy used for lighting, computers, heating and other non-communication purposes are subject to tax.

“This is an excellent example of identifying a rather obscure exemption that was available, which would likely not have been readily thought of for this service industry,” according to Ryan, a global tax service firm headquartered in Dallas.