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Lawsuit planned over cable franchise fee bill

I sure hope Houston gets involved in this.

Fort Worth and cities across Texas stand to lose millions of dollars due to a new law that slashes fees telecom providers pay to them. But before the savings go into effect next year, it’s likely cities will challenge the legislation in the courts.

The bill, signed by Gov. Greg Abbott earlier this month, would slash right-of-way fees telecom providers pay cities to supply cable and phone service. For years, companies paid cities two separate fees to run phone and cable TV lines in right-of-ways — even when delivered over the same line. The bill changes that practice, and allows providers to only pay the higher of the two fees.

Supporters of the bill, like Walt Baum, the president of the Texas Cable Association, said it’s necessary to end an “outdated double tax” on companies. But Bennett Sandlin, executive director of the Texas Municipal League, said he thinks the legislation violates sections of the Texas Constitution.

“The use of public land is a privilege, not a right,” Sandlin said. “They could certainly decide to run those wires through people’s backyards, but they would pay a lot more. They have to pay for that rental of public space.“

Fort Worth estimates a little over $4 million will be lost in revenue due to the law, according to a presentation given to the Fort Worth City Council outlining the legislative session’s impact. And in some cities, those losses are more than six times that, with Houston pinning its potential losses at up to $27 million.

Sen. Kelly Hancock, R-North Richland Hills, authored Senate Bill 1152 and chairs the Senate Business and Commerce committee. Since 2006, telecom providers — some who stand to potentially cut costs due to Hancock’s bill — have contributed over $150,000 to Hancock’s campaign, according to the National Institute on Money in Politics.

“I don’t know who saves millions more than the constituents that I work for,” Hancock said about providers paying less.

This wouldn’t be the first time one of Hancock’s bills spurred a lawsuit.

In 2017, a group of over 30 cities filed a lawsuit against the state alleging that a bill authored by Hancock violated articles of the Texas Constitution that prohibit the legislature from directing local municipalities to make gifts or grants to a corporation. The lawsuit, filed in Travis County District Court, is ongoing, and Kevin Pagan, McAllen’s city attorney, said he believes the newly signed legislation violates the same tenets.

Pagan said the new bill wrongly requires cities to make a gift to private companies by allowing providers to use the right-of-way at a lesser charge.

The telecom providers are, “already in the right-of-way. You’re already using our facilities. You’ve already agreed to pay us a franchise fee. And now under this law, you’re just going to stop paying,” Pagan said. “It’s a gift from the state legislature back to those companies.”

See here for the background. I have no idea what the odds of success are for this lawsuit, but as I said up front I sure hope the city of Houston signs on as a co-plaintiff, because we’re definitely taking it in the shorts from this bill. As for the claims from the cable lobbyist that this bill will lead to lower costs for cable subscribers, well, if you think that will happen I’ve got a nice beach house in Abilene to sell you.

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