Articles:LA Sues Time Warner For Unpaid Franchise Fees

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Time Warner Cable Inc. has stirred anger over its hike in subscription rates for customers, and its efforts to extract hefty fees from rivals to air the L.A. Dodgers channel. Now Meg James reports at the LA Times that the city of Los Angeles has sued the cable giant, alleging Time Warner Cable stiffed the city on franchise fees over four years through 2011[1].

The city seeks nearly $10 million in fees, money it said could have helped ease its budget problems during the financial crisis. 'Time Warner owes L.A.'s taxpayers millions of dollars for the privilege of having its franchise,' says City Attorney Michael Feuer. 'This is a day where we are standing up and saying enough is enough.' The 24-page lawsuit[2], filed in U.S. District Court in Los Angeles, contends that Time Warner Cable "blatantly refused to live up to its obligations to the city" to pay franchise fees to operate its cable network over city-owned rights of way while collecting more than $500 million a year from customers in the city. The city is seeking $9.7 million from Time Warner Cable which includes $2.5 million in franchise and PEG (public, educational and government channel) fees and support for 2008 and 2009, plus another $7.2 million owed for 2010 and 2011.

The lawsuit comes just a few weeks after Time Warner Cable alerted its Southern California customers that it planned to hike rates by an average of about 6% a month for homes that are not covered by a promotional package. Time Warner Cable, in a statement, denied the allegation that it had cheated the city. 'As a major job creator, tax contributor and service provider in the city of Los Angeles, Time Warner Cable is an active and responsible corporate citizen,' the company said in a statement. 'We are disappointed the city has chosen to bring this action, which we strongly believe is without merit.'

Jonathan Kramer, a Los Angeles-based telecom attorney and a member of the California chapter of the National Association of Telecommunications Officers and Advisors, said it was 'inevitable that [more] of these types of lawsuits will be filed' and that other cities are considering similar action[3], but that 'Los Angeles is first to pull the trigger.' 'It's the devil you know,' Kramer said. 'We know Time Warner. But Comcast is much more aggressive when it comes to pushing back (against) local jurisdictions.'

External links / Further reading

Cable television franchine fees

LA Times Story

Press Release and copy of the Official Complaint