City of Eugene v. Comcast of Oregon II, Inc.

Registration fees on revenue for internet service providers are barred under the Internet Tax Freedom Act (ITFA); but licensing fees are not a tax under the ITFA.

Under the City of Eugene’s telecommunication’s ordinance, the city is entitled to collect a registration fee and licensing fee from gross revenues on telecommunication services in the city. The City of Eugene asserted that they are entitled to these fees from Comcast for their broadband internet revenues in the city. Comcast argued that broadband internet service is neither a “telecommunications service” as defined by the City’s ordinance, nor by the Telecommunications Act (The Act), 47 USC § 153. Comcast based this definition both on the legislative history, which excludes internet service providers from The Act, and by arguing that internet service is a “transmission for hire” rather than a “telecommunication”. Comcast further argued that enforcement of the ordinance is barred by the Internet Tax Freedom Act (IFTC), 47 USC §151, which bars state and local governments from imposing any tax on internet access. The Court held that the registration fee is barred under the ITFA, and affirmed that the licensing fee is not a tax under ITFA. Reversed and remanded.