Texas Cities Team Up to Sue State over Telecommunications Fee Cuts

Telecom providers expect to save millions of dollars thanks to a new Texas state law that cuts fees. But a coalition of nearly 50 TX cities, who will be on the losing end of that revenue, worry those discounts won’t be passed on to their residents. So they’re suing. For years, telecom providers paid two separate fees to run cable and phone lines through city-owned strips of land, know as rights-of-way. Companies were required to pay both fees, even if it took only one line to deliver the two services. But a bill changed that practice, allowing companies to pay only the higher of the two fees if cable and phone services are delivered over the same line. Walt Baum, the president of the Texas Cable Association, said the legislation was simply meant to bring the law up to date with current technology.

But TX cities have joined forces and are suing the state in an attempt to stop the law from being enforced. The lawsuit alleges the law — along with a 2017 law by the same state legislator — is unconstitutional, forcing cities to provide a gift to private companies. “I consider it corporate welfare,” said Jimmy Stathatos, the town manager of Flower Mound, which joined the lawsuit. Fort Worth estimates $4 million to $5 million will be lost annually due to the law — a hefty portion of at least $10 million in revenue the city anticipates losing due to new state laws, including laws that banned red light cameras and imposed a revenue cap on property taxes.