Netflix and Hulu are Being Sued by a Texas Town Saying it Should be Getting 5%

A small town in Texas is going up against streaming giants Netflix and Hulu with a class-action lawsuit over utility fees. New Boston, Texas says the streamers use broadband infrastructure to reach their residents, and should in turn pay the town 5% of the revenue generated from those residents as a fee.

“When a Netflix subscriber wants to view Netflix programming, the subscriber’s Internet service provider will connect the subscriber to the closest Netflix Open Connect server offering the fastest speeds and best video quality,” writes attorney Austin Tighe in the complaint. “According to Netflix, that means that most of its subscribers receive Netflix’s video programming from servers either inside of, or directly connected to, the subscriber’s Internet service provider’s network within their local region.”

New Boston’s argument is based on the state law that video service providers are required to get certified with an application to the Public Utility Commission of Texas, and that neither Hulu nor Netflix has filed the application. Failing to file doesn’t mean they are exempt from paying the quarterly franchise fee to the cities in which they operate.

Neither of the streaming services has commented on the lawsuit yet.

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