Proposal Would Allow Cities to Tax Streaming Services

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.”

Tom Butts

Tom has covered the broadcast technology market for the past 25 years, including three years handling member communications for the National Association of Broadcasters followed by a year as editor of Video Technology News and DTV Business executive newsletters for Phillips Publishing. In 1999 he launched for internet B2B portal Verticalnet. He is also a charter member of the CTA's Academy of Digital TV Pioneers. Since 2001, he has been editor-in-chief of TV Tech (, the leading source of news and information on broadcast and related media technology and is a frequent contributor and moderator to the brand’s Tech Leadership events.