Title: DIRECTV, LLC v. Dep’t of Revenue

State: massachusetts

Issuer: Massachusetts Supreme Court

Document:

NOTICE:  All slip opinions and orders are subject to formal 
revision and are superseded by the advance sheets and bound 
volumes of the Official Reports.  If you find a typographical 
error or other formal error, please notify the Reporter of 
Decisions, Supreme Judicial Court, John Adams Courthouse, 1 
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
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SJC-11658 
 
DIRECTV, LLC, & another1  vs.  DEPARTMENT OF REVENUE. 
 
 
 
Suffolk.     November 4, 2014. - February 18, 2015. 
 
Present:  Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & 
Hines, JJ. 
 
 
Taxation, Excise, Broadcasting company.  Interstate Commerce.  
Constitutional Law, Interstate commerce. 
 
 
 
 
Civil action commenced in the Superior Court Department on 
January 26, 2010. 
 
 
The case was heard by Thomas P. Billings, J., on motions 
for summary judgment. 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
 
E. Joshua Rosenkranz, of New York (Jeremy N. Kudon & 
Nicholas G. Green, of New York, Eric A. Shumsky, of the District 
of Columbia, & Kelley A. Jordan-Price with him) for the 
plaintiffs. 
 
Pierce O. Cray, Assistant Attorney General (Kirk G. Hanson, 
Assistant Attorney General, with him) for the defendant. 
 
The following submitted briefs for amici curiae: 
                     
 
1 Dish Network L.L.C. 
2 
 
 
Eric S. Tresh, Amelia Toy Rudolph, & Zachary T. Atkins, of 
Georgia, & Nicholas M. O'Donnell & David Nagle for New England 
Cable & Telecommunications Association. 
 
John Bergmayer, of the District of Columbia, & Karen A. 
Pickett for Public Knowledge. 
 
Kristen S. Scammon for Satellite Broadcasting & 
Communications Association. 
 
John A. Hinman, of California, & Allison M. O'Neil & Jamie 
C. Notman for National Association of Wine Retailers. 
 
Sheldon H. Laskin & Lila D. Disque, of the District of 
Columbia, for Multistate Tax Commission. 
 
David Parkhurst, of the District of Columbia, & David Hadas 
for National Governors Association. 
 
 
 
LENK, J.  General Laws c. 64M, § 2, imposes a five per cent 
excise tax on video programming delivered by direct broadcast 
satellite (tax).  The plaintiffs are two companies that provide 
services subject to the tax (satellite companies).  They brought 
a complaint for declaratory and injunctive relief in the 
Superior Court, alleging that the tax violates the commerce 
clause of the United States Constitution.2  The satellite 
companies contend that the tax discriminates against interstate 
commerce, both in its effect and in its purpose, by disfavoring 
them as compared with those companies that provide video 
programming via cable (cable companies).  The satellite and 
cable companies that operate in Massachusetts are all 
incorporated and headquartered in other States; the satellite 
                     
 
2 The companies that provide video programming delivered by 
direct broadcast satellite (satellite companies) also argued 
below that the excise tax violates their right to equal 
protection.  They do not pursue this claim on appeal. 
3 
 
companies argue, however, that the cable companies represent in-
State interests inasmuch as their in-State commercial operations 
are substantially greater than those of the satellite companies. 
 
A Superior Court judge granted summary judgment in favor of 
the defendant, the Department of Revenue (department).  The 
satellite companies appealed, and we allowed their application 
for direct appellate review. 
 
We conclude that summary judgment was warranted.  The cable 
companies and the satellite companies are subject to similar tax 
obligations, which differ primarily in the ways in which they 
are collected and calculated.  These differences are grounded in 
important characteristics of the cable and satellite companies' 
respective methods of operation, and in the different regulatory 
regimes to which they are subject.  The satellite companies thus 
have raised no genuine issue as to the facts material to their 
claim of discrimination against interstate commerce, and the 
department is entitled to judgment as a matter of law.3 
 
1.  Facts.  We summarize the undisputed facts important to 
our analysis, focusing on the nature of the video programming 
                     
 
3 We acknowledge the amicus briefs submitted by Public 
Knowledge, the Satellite Broadcasting and Communications 
Association, and the National Association of Wine Retailers on 
behalf of the satellite companies; and the briefs by the 
National Governors Association, the Multistate Tax Commission, 
and the New England Cable and Telecommunications Association on 
behalf of the Department of Revenue. 
4 
 
industry; the similarities and differences between the methods 
of operation used by the participants in this industry, namely 
cable companies and satellite companies; these companies' 
respective economic impacts on Massachusetts; their respective 
tax obligations; and the changes to those obligations introduced 
by the Legislature in 2010. 
 
a.  The video programming industry.  The service that 
permits customers to view a variety of video channels on their 
television sets is known as multi-channel video programming.  
The satellite companies compete in the market for video 
programming services primarily with cable companies, including 
Comcast Corporation (Comcast) and Charter Communications Inc.  
Verizon Communications, Inc. (Verizon), a telephone company, 
participates in this market as well.  All of the major 
participants in the market for video programming services, 
including Verizon, are incorporated and headquartered outside of 
Massachusetts. 
 
The cable companies and the satellite companies both offer 
several programming packages.  These packages generally include 
local broadcasts, basic cable channels, premium cable channels, 
pay-per-view movies and events, and on-demand programming.  
Customers typically choose between cable and satellite on the 
basis of considerations such as price, customer service, 
reception quality, and program offerings. 
5 
 
 
b.  Methods of operation.  The methods of operation used by 
the cable and satellite companies overlap substantially.  Both 
types of company purchase the rights to distribute programming 
from content providers.  Both designate certain percentages of 
their channel capacity to public, educational, and government 
programming.4  Both advertise their services using television, 
billboards, mail, newspapers, and the Internet.  Both lease some 
equipment, such as set-top boxes (which convert signals for 
viewing on television sets) and recording devices, to their 
subscribers. 
 
The cable companies and the satellite companies differ, 
however, in the methods by which they assemble and deliver 
programming to their customers.  The cable companies assemble 
their programming in local facilities known as "headends."  
There are approximately sixty headends in Massachusetts.  At the 
headends, programming signals are gathered by satellite dishes 
and fiber optics equipment.  These signals are then processed, 
packaged, and delivered to customers' homes through networks of 
cables laid on the ground or hung from buildings and poles.5 
                     
 
4 See note 16, infra. 
 
5 Telephone companies like Verizon Communications, Inc., use 
similar technology. 
6 
 
 
The satellite companies, by contrast, collect, process, and 
package their programming at "uplink centers."  Each of the 
satellite companies has two primary uplink centers nationally.  
These uplink centers are located outside Massachusetts.  
Programming signals are transmitted from the uplink centers to 
satellites orbiting the earth, and then relayed to small 
receiver dishes mounted on or near customers' homes.  The 
satellite companies maintain small, intermittently-staffed 
"collection facilities," which gather content from local 
broadcast stations and transmit it to the uplink centers. 
 
c.  Economic impact.  The methods of assembly and delivery 
used by cable and satellite result in different impacts on the 
Commonwealth's economy.  From 2006 to 2010, the cable companies 
spent more than $1.6 billion in Massachusetts, including 
investments in headend facilities, cable networks, and vehicles.  
As of 2010, the cable companies employed approximately 5,500 
people in Massachusetts. 
 
The satellite companies, on the other hand, hire relatively 
few employees in Massachusetts.  Their expenditures on 
facilities and equipment are concentrated primarily on their 
out-of-State uplink centers.  The satellite companies also pay 
fees to the Federal government for the right to locate their 
satellites in outer space and to use certain transmission 
frequencies. 
7 
 
 
d.  Tax obligations.  Both the cable companies and the 
satellite companies are subject to real property taxes in 
Massachusetts, and both pay personal property taxes on 
possessions located in the Commonwealth.  They both pay State 
income taxes, and they collect and remit sales tax on certain 
transactions. 
 
The cable companies, in addition, pay "franchise fees" to 
local governments.  The rates of these fees are determined in 
negotiated agreements.  Under Federal law, franchise fees may be 
no higher than five per cent of a cable company's gross revenue 
from the provision of cable services.  See 47 U.S.C. § 542(b) 
(2012).  Typically, the fees charged in Massachusetts are three 
to five per cent of gross revenue.  Local governments also 
usually impose an additional fee on cable companies, at an 
average rate of 1.09% of gross revenue, dedicated to supporting 
public, educational, and government programming.  In addition to 
these fees, cable companies ordinarily are required by local 
governments to (a) provide services, facilities, and equipment 
for the use of public, educational, and governmental channels; 
(b) deliver free video programming services to municipal 
buildings, schools, and libraries; and (c) meet certain service 
8 
 
quality and customer service requirements.6  A Federal statute 
prohibits the imposition of any such fees or taxes on the 
satellite companies at the local level, but it permits the 
taxation of the satellite companies by the States.  See 
Telecommunications Act of 1996 § 602, P.L. 104-104, 110 Stat. 
144 (reprinted in notes following 47 U.S.C. § 152 [2012]) 
(Telecommunications Act). 
 
e.  Changes introduced in 2010.  The Act making 
appropriations for the fiscal year 2010,7 St. 2009, c. 27 (2010 
appropriations act), introduced two significant changes to the 
scheme of taxation that governs the video programming industry.  
First, the 2010 appropriations act established the excise tax.  
See St. 2009, c. 27, § 61, enacting G. L. c. 64M.  The excise 
tax is imposed upon the satellite companies at a rate of five 
per cent of their gross revenues derived from the provision of 
                     
 
6 The agreements between the local governments and the 
companies that provide video programming via cable (cable 
companies) also typically require that the companies set aside 
channels for public, educational, and governmental programming.  
These obligations apparently augment the requirement of Federal 
law that the cable companies designate a percentage of their 
channel capacity to public-oriented programming.  See note 16, 
infra. 
 
7 The full title of the act is "An Act making appropriations 
for the fiscal year 2010 for the maintenance of the departments, 
boards, commissions, institutions and certain activities of the 
Commonwealth, for interest, sinking fund and serial bond 
requirements and for certain permanent improvements." 
9 
 
video programming in Massachusetts.  See G. L. c. 64M, §§ 1, 2.  
The satellite companies pass on the cost of the excise tax to 
their customers.  See G. L. c. 64M, § 3.8 
 
The 2010 appropriations act also imposed a personal 
property tax on "[p]oles, underground conduits, wires and pipes 
of telecommunications companies."  St. 2009, c. 27, § 25, 
amending G. L. c. 59, § 18.  "[T]elecommunications companies" 
are defined to include "cable television, [I]nternet service, 
telephone service, data service and any other telecommunications 
service providers."  Id.  In essence, this provision increased 
the personal property tax liability of the cable and telephone 
companies, but not of the satellite companies (which do not use 
poles, wires, and the like). 
 
2.  Legal framework.  a.  Summary judgment.  We review a 
grant of summary judgment de novo.  See Federal Nat'l Mtge. 
Ass'n v. Hendricks, 463 Mass. 635, 637 (2012); 81 Spooner Rd., 
LLC v. Zoning Bd. of Appeals of Brookline, 461 Mass. 692, 699 
(2012).  Summary judgment is appropriate "if the pleadings, 
depositions, answers to interrogatories, and responses to 
requests for admission . . . , together with the affidavits, if 
any, show that there is no genuine issue as to any material fact 
                     
 
8 The cable companies also pass on the cost of the franchise 
fees to their customers. 
10 
 
and that the moving party is entitled to a judgment as a matter 
of law."  Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404 
(2002).  The evidence in the record must be viewed "in the light 
most favorable to the nonmoving party."  Surabian Realty Co. v. 
NGM Ins. Co., 462 Mass. 715, 718 (2012), quoting Fuller v. First 
Fin. Ins. Co., 448 Mass. 1, 5 (2006).  We "need not rely on the 
rationale cited and 'may consider any ground supporting the 
judgment.'"  District Attorney for N. Dist. v. School Comm. of 
Wayland, 455 Mass. 561, 566 (2009), quoting Augat, Inc. v. 
Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991). 
 
b.  The dormant commerce clause.  The commerce clause 
provides that "Congress shall have Power . . . to regulate 
commerce with foreign nations, and among the several [S]tates, 
and with the Indian Tribes."  Art. I, § 8, cl. 3 of the United 
States Constitution.  The United States Supreme Court has "long 
interpreted the commerce clause as an implicit restraint on 
[S]tate authority, even in the absence of a conflicting 
[F]ederal statute."  United Haulers Ass'n v. Oneida-Herkimer 
Solid Waste Mgmt. Auth., 550 U.S. 330, 338 (2007) (collecting 
cases).  This implicit restraint is known as the "dormant" 
commerce clause.  See id. 
 
A State tax is permissible under the dormant commerce 
clause if it "[1] is applied to an activity with a substantial 
nexus with the taxing State, [2] is fairly apportioned, [3] does 
11 
 
not discriminate against interstate commerce, and [4] is fairly 
related to the services provided by the State."  Complete Auto 
Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977).  See American 
Trucking Ass'ns v. Michigan Pub. Serv. Comm'n, 545 U.S. 429, 438 
(2005).  The satellite companies' challenge to the excise tax is 
limited to the third of these requirements, namely the 
prohibition on discrimination against interstate commerce. 
 
c.  Discrimination against interstate commerce.  The ban on 
discrimination against interstate commerce is rooted in the 
"principle that our economic unit is the Nation, which alone has 
the gamut of powers necessary to control of the economy."  
Oregon Waste Sys., Inc. v. Department of Envtl. Quality of Or., 
511 U.S. 93, 98 (1994) (Oregon Waste), quoting H.P. Hood & Sons 
v. Du Mond, 336 U.S. 525, 537–538 (1949).  The dormant commerce 
clause seeks to prevent economic "Balkanization," Bacchus 
Imports, Ltd. v. Dias, 468 U.S. 263, 276 (1984), and to protect 
"an area of free trade among the several States."  Boston Stock 
Exch. v. State Tax Comm'n, 429 U.S. 318, 328 (1977), quoting 
McLeod v. J.E. Dilworth Co., 322 U.S. 327, 330 (1944). 
 
In the context of the dormant commerce clause, 
"'discrimination' simply means differential treatment of in-
[S]tate and out-of-[S]tate economic interests that benefits the 
12 
 
former and burdens the latter."  Oregon Waste, 511 U.S. at 99.9  
The concept of "discrimination" also implicitly assumes "a 
comparison of substantially similar entities."  General Motors 
Corp. v. Tracy, 519 U.S. 278, 298 (1997).10 
 
A statute may be discriminatory on its face, in its effect, 
or in its underlying purpose.  See Amerada Hess Corp. v. 
Director, Div. of Taxation, 490 U.S. 66, 75 (1989) (Amerada 
                     
 
9 Notwithstanding the stated simplicity of this test, the 
United States Supreme Court has recognized that its "case-by-
case" approach to the dormant commerce clause "has left 'much 
room for controversy and confusion and little in the way of 
precise guides to the States.'"  Westinghouse Elec. Corp. v. 
Tully, 466 U.S. 388, 403 (1984), quoting Boston Stock Exch. v. 
State Tax Comm'n, 429 U.S. 318, 329 (1977).  See also E. 
Chemerinsky, Constitutional Law, Principles and Policies, § 5.3 
at 444-445 (4th ed. 2011). 
 
10 In General Motors Corp. v. Tracy, 519 U.S. 278, 299 
(1997), the United States Supreme Court determined that the 
entities involved were dissimilarly situated because they 
"serve[d] different markets."  Relying on the analysis of Tracy, 
the satellite companies argue that any entities that serve the 
same market are necessarily similarly situated.  But the 
conceptual prerequisite that entities must be "substantially 
similar" in order for discrimination to occur also may be 
undermined by other types of differences.  Thus, "competing in 
the same market is not sufficient to conclude that entities are 
similarly situated."  National Ass'n of Optometrists & Opticians 
LensCrafters, Inc. v. Brown, 567 F.3d 521, 527 (9th Cir. 2009).  
See Amerada Hess Corp. v. Director, Div. of Taxation, 490 U.S. 
66, 78 (1989) (Amerada Hess) (differential treatment permissible 
when it "results solely from differences between the nature of 
[entities'] businesses, not from the location of their 
activities"); Philadelphia v. New Jersey, 437 U.S. 617, 626-627 
(1978) (differential treatment permissible if "there is some 
reason, apart from . . . origin, to treat [entities] 
differently" [emphasis supplied]). 
13 
 
Hess); Chemical Waste Mgmt., Inc. v. Hunt, 504 U.S. 334, 344 n.6 
(1992).  The burden to show discrimination against interstate 
commerce rests on the party challenging the validity of a 
statute.  See Hughes v. Oklahoma, 441 U.S. 322, 336 (1979); 
Family Winemakers of Cal. v. Jenkins, 592 F.3d 1, 9 (1st Cir. 
2010).  If this burden is carried, the discriminatory law is 
"virtually per se invalid."  Department of Revenue of Ky. v. 
Davis, 553 U.S. 328, 338 (2008), citing Oregon Waste, 511 U.S. 
at 99.11 
 
3.  Analysis.  a.  Discriminatory effect.  The satellite 
companies argue that the excise tax discriminates against 
interstate commerce in its effect by disadvantaging the 
satellite companies and benefiting the cable companies.  The 
department responds, first, that the cable companies and the 
satellite companies do not represent in-State and out-of-State 
interests, respectively.  The department argues also that the 
                     
 
11 "[N]ondiscriminatory regulations that have only 
incidental effects on interstate commerce are valid unless 'the 
burden imposed on such commerce is clearly excessive in relation 
to the putative local benefits.'"  Oregon Waste Sys., Inc. v. 
Department of Envtl. Quality of Or., 511 U.S. 93, 99 (1994), 
quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970).  
The satellite companies do not contend that the excise tax fails 
this test.  Conversely, a discriminatory statute may be upheld 
if "the State has no other means to advance a legitimate local 
purpose."  United Haulers Ass'n v. Oneida-Herkimer Solid Waste 
Mgmt. Auth., 550 U.S. 330, 338-339 (2007), citing Maine v. 
Taylor, 477 U.S. 131, 138 (1986).  The Department of Revenue has 
not argued that the excise tax satisfies this requirement. 
14 
 
excise tax is not discriminatory because the cable and satellite 
companies are not similarly situated. 
 
For the reasons we describe, we adopt the latter argument.  
In so doing, we follow the other courts that have considered and 
rejected the satellite companies' challenges to the laws of 
other States.  See Directv, Inc. v. Treesh, 487 F.3d 471 (6th 
Cir. 2007) (Treesh I), cert. denied, 552 U.S. 1311 (2008); 
DIRECTV, Inc. v. State, 178 N.C. App. 659 (2006); DIRECTV, Inc. 
v. Levin, 128 Ohio St. 3d 68 (2010), cert. denied, 133 S. Ct. 51 
(2012).  We assume for purposes of our analysis, while 
appreciating the weighty arguments to the contrary, that the 
cable companies and the satellite companies represent in-State 
and out-of-State interests, respectively.12 
                     
 
12 As to this issue, compare Freedom Holdings, Inc. v. 
Spitzer, 357 F.3d 205, 218 (2d Cir. 2004) ("For dormant 
[c]ommerce [c]lause purposes, the relevant 'economic 
interests' . . . are parties using the stream of commerce, not 
those of the state itself"), with Westinghouse Elec. Corp. v. 
Tully, 466 U.S. at 403-404 (discussing cases in which "the Court 
struck down state tax statutes that encouraged the development 
of local industry by means of taxing measures that imposed 
greater burdens on economic activities taking place outside the 
State than were placed on similar activities within the State"); 
Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 42 n.9 (1980) 
("discrimination based on the extent of local operations is 
itself enough to establish the kind of local protectionism we 
have identified"); and Philadelphia v. New Jersey, 437 U.S. at 
627 ("The Court has consistently found parochial 
legislation . . . to be constitutionally invalid, whether the 
ultimate aim of the legislation was to assure a steady supply of 
milk . . . , or to create jobs by keeping industry within the 
State . . . , or to preserve the State's financial resources 
 
15 
 
 
i.  The broader context.  The excise tax applies to 
satellite companies only.  Our analysis must not be "divorced," 
however, from the broader context of the act; we are required to 
consider the regulatory scheme "as a whole."  See West Lynn 
Creamery, Inc. v. Healy, 512 U.S. 186, 201 (1994) (West Lynn 
Creamery).  Accord DIRECTV, Inc. v. Tolson, 513 F.3d 119, 122 
(4th Cir. 2008) (Tolson); Zenith/Kremer Waste Sys., Inc. v. West 
Lake Superior Sanitary Dist., 572 N.W.2d 300, 304 (Minn. 1997), 
cert. denied, 523 U.S. 1145 (1998).  See also Minneapolis Star & 
Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575, 589 
n.12 (1983) (United States Supreme Court "evaluat[es] the 
relative burdens of different methods of taxation" in commerce 
clause cases).  As described supra, both the cable companies and 
the satellite companies are subject to corporate income taxes, 
sales taxes, real property taxes, and personal property taxes.  
The cable companies are, in addition, subject to obligations in 
money and in services to local governments. 
 
The satellite companies suggest that the cable companies' 
obligations toward local governments should play no part in our 
analysis of the ways in which the two types of company are 
treated.  In the satellite companies' view, these obligations 
                                                                  
from depletion by fencing out indigent immigrants" [citations 
omitted]). 
16 
 
are merely "rent" payments imposed on cable companies on the 
basis of the use that they, but not the satellite companies, 
make of public spaces.  We do not agree. 
 
The localities' power to charge franchise fees as to cable 
companies but not satellite companies flows, not from the 
localities' ownership of public property, but from statutory 
provisions.  A Federal statute provides that, subject to certain 
limitations, "any cable operator may be required . . . to pay a 
franchise fee."  47 U.S.C. § 542(a) (2012).  The imposition of 
such fees is facilitated by a Massachusetts statute that 
prohibits the construction or operation of any cable system "in 
any city or town . . . without first obtaining . . . a written 
license from each city or town."  G. L. c. 166A, § 3.  Franchise 
fees and related obligations are, in this sense, not rent 
payments, but rather statutorily authorized tax payments.  See 
Tolson, 513 F.3d at 123, 125-126 & n.3 (holding that cable 
franchise fees are "taxes" for purposes of Tax Injunction Act, 
28 U.S.C. § 1341 (2012), and explaining that "a sum fixed for 
the privilege of doing business" is unlike "[a] per-pole charge 
levied . . . for the use of [a] city's telegraph poles"). 
 
Correspondingly, cable companies do not obtain leases or 
other property rights in return for their franchise fees.  What 
they do receive in return are special privileges.  See Tolson, 
513 F.3d at 126 n.3 ("Taxpayers . . . often receive something of 
17 
 
value in exchange for their taxes").  In the Superior Court 
proceedings, the satellite companies recognized that the 
privileges granted in exchange for franchise fees are "the 
privilege of doing business in a locality and . . . the rights 
to access public-rights-of-way in a locality."  See 47 U.S.C. 
§ 522(9) (2012) (franchise permits "construction" or "operation" 
of cable system); Treesh I, 487 F.3d at 480 (Kentucky cable 
franchises provided "the right to conduct business and use local 
rights-of-way").13 
 
Because of the method by which they deliver their 
programming, the satellite companies do not need to access 
public rights-of-way.  The privilege of doing business with 
local consumers, on the other hand, is one that benefits the 
satellite companies no less than the cable companies.  
Consequently, if not for the Telecommunications Act's 
prohibition on the imposition of local taxes on satellite 
services, the satellite companies "certainly could have been" 
                     
 
13 At his deposition, a representative of Charter 
Communications Inc. defined a franchise fee as "a fee to 
authorize [the company] to do business in [a] community," paid 
as compensation both for "using the public right-of-way" and for 
"being authorized to provide the service to customers."  A 
representative of Comcast Corporation (Comcast) testified that a 
franchise agreement "allow[s] [Comcast] to operate within [an] 
area by selling its products and services."  The representative 
agreed that the right to use public rights-of-way is "one 
component of a franchise." 
18 
 
subjected "to the tangled regime of local taxation and franchise 
fees" that applies to cable companies.  See Treesh I, 487 F.3d 
at 481.  Namely, by way of a statute akin to G. L. c. 166A, § 3, 
the Legislature could have forbidden the provision of video 
services by satellite without a license from a local authority.  
Cf. Commissioner of Corps. & Taxation v. Metropolitan Life Ins. 
Co., 327 Mass. 582, 584 (1951) (excise tax on insurance imposed 
"for the privilege of doing business in this Commonwealth"). 
 
In our analysis of whether the cable and satellite 
companies are subjected to "differential treatment . . . that 
benefits the former and burdens the latter,"  Oregon Waste, 511 
U.S. at 99, we therefore consider the fact that each of these 
types of company is subject to unique obligations in connection 
with the privilege of selling video programming services to 
Massachusetts consumers. 
 
ii.  Differences between the obligations of the cable and 
satellite companies.  The cable companies' local obligations and 
the excise tax imposed on the satellite companies are different 
in two ways.  First, the cable companies' obligations are 
collected piecemeal by an assortment of local authorities, 
whereas the satellite companies pay the entirety of the excise 
tax to the department.  Second, the cable companies' local 
obligations are made up of several components determined via 
negotiations with each locality, including franchise fees, 
19 
 
additional payments to support public-oriented programming, and 
services in kind.  The excise tax, on the other hand, is set at 
a uniform, flat rate. 
 
These differences in the manners in which the cable and 
satellite companies are treated do not amount to actionable 
discrimination if they do not impose a greater burden on the 
satellite companies.  See Oregon Waste, 511 U.S. at 99.  These 
differences also are not discriminatory if they are rooted in 
meaningful differences between the two types of company.  See 
Tracy, 519 U.S. at 298.14  We conclude that, on the summary 
judgment record, the satellite companies have "no reasonable 
expectation" of proving a discriminatory effect; there is thus 
no genuine issue of material fact, see HipSaver, Inc. v. Kiel, 
464 Mass. 517, 522 (2013) (HipSaver), quoting Kourouvacilis v. 
                     
 
14 The bare existence of differences between the satellite 
and cable companies would not alone defeat allegations of 
discrimination, because a statute does not "need to be drafted 
explicitly along [S]tate lines in order to demonstrate its 
discriminatory design."  Amerada Hess, 490 U.S. at 76.  
Differences between entities render regulation nondiscriminatory 
only if they represent substantive reasons to treat the entities 
differently, rather than proxies for geographical distinctions.  
See West Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 201 (1994) 
(West Lynn Creamery), quoting Best & Co. v. Maxwell, 311 U.S. 
454, 455-456 (1940) ("The commerce clause forbids 
discrimination, whether forthright or ingenious.  In each case 
it is our duty to determine whether the statute under attack, 
whatever its name may be, will in its practical operation work 
discrimination against interstate commerce"). 
20 
 
General Motors Corp., 410 Mass. 706, 716 (1991), and the 
department is entitled to judgment as a matter of law. 
 
A.  Method of collection.  We examine first the divergent 
manners by which payments for the privilege of doing business in 
Massachusetts are collected from cable and satellite companies, 
respectively.  As previously described, the excise tax is 
collected in its entirety by the department, whereas the cable 
companies owe varying obligations to each of the localities in 
which they operate.  This instance of differential treatment, 
rather than burdening the satellite companies, is advantageous 
to them.  The excise tax provides a streamlined method of 
collection, far less cumbersome than the cable companies' 
assortment of local obligations. 
 
Congress conferred this benefit on the satellite companies 
by design in the Telecommunications Act.  Section 602(a) of that 
statute states that "[a] provider of . . . satellite service 
shall be exempt from . . . any tax or fee imposed by any local 
taxing jurisdiction on direct-to-home satellite service."  110 
Stat. at 144.  The phrase "tax or fee" is defined to include a 
number of different types of taxes, including any "privilege 
tax" and any "fee that is imposed for the privilege of doing 
business."  Telecommunications Act § 602(b)(5), 110 Stat. at 
145.  On the other hand, the same section states that it "shall 
not be construed to prevent taxation of a provider of . . . 
21 
 
satellite service by a State."  Telecommunications Act § 602(c), 
110 Stat. at 145. 
 
The decision to excuse the satellite companies from 
burdensome dealings with local authorities was rooted in the 
characteristics of their operations.  "Congress's intent . . . 
was not to spare the [satellite] providers from taxation as 
such, but to spare national businesses with little impact on 
local resources from the administrative costs and burdens of 
local taxation."  DirecTV, Inc. v. Treesh, 290 S.W.3d 638, 643 
(Ky. 2009), cert. denied, 558 U.S. 1111 (2010) (Treesh II).  
This objective was explained on the floor of the House of 
Representatives by Congressman Henry Hyde: 
 
"[Satellite companies] utilize satellites to provide 
programming to their subscribers in every jurisdiction.  To 
permit thousands of local taxing jurisdictions to tax such 
a national service would create an unnecessary and undue 
burden on the providers of such services. . . .  The power 
of the States to tax this service is not affected by 
[Telecommunications Act §] 602." 
 
142 Cong. Rec. H1145, H1158 (Feb. 1, 1996).  See W. Hellerstein, 
State Taxation ¶ 4.25[1][l] (3d ed. 2014) ("Congress was 
concerned with burdening [satellite] providers with the 
requirement of complying with taxes in thousands of local taxing 
jurisdictions.  This was the rationale for preempting local, but 
not [S]tate, taxing authority" [emphasis in original]).  In sum, 
the divergent methods by which payment for the privilege of 
doing local business is collected from the cable and satellite 
22 
 
companies are both advantageous to the satellite companies and 
rooted in the different operational methods employed by the two 
types of company. 
 
B.  Method of calculation.  We turn to the different 
methods by which the obligations of the cable and satellite 
companies are calculated.  Whereas the satellite companies' 
services are subject to a flat tax rate of five percent of gross 
revenues, the cable companies' obligations are composed of 
(a) franchise fees, running to approximately three to five per 
cent of gross revenues; (b) additional fees, used to support 
public-oriented programming, averaging 1.09% of gross revenues; 
(c) services, facilities, and equipment for the use of public, 
educational, and governmental channels; (d) free video 
programming services delivered to municipal buildings, schools, 
and libraries; and (e) requirements imposed by local governments 
concerning service quality and customer service.  On the basis 
of these facts, the satellite companies do not have a 
"reasonable expectation" of proving that their obligations are 
more burdensome than those of the cable companies.15  See 
                     
 
15 Implicit in the satellite companies' argument is the 
assumption that because they, unlike the cable companies, do not 
use local rights-of-way, the Legislature is required to impose a 
heavier tax burden on the cable companies.  As explained by the 
United States Court of Appeals for the Sixth Circuit, however, 
"States and local government are under no mandate to charge for 
the use of local rights-of-way; this is readily apparent from 
 
23 
 
HipSaver, 464 Mass. at 522.  This is particularly so given that 
no affidavits or other evidence has been submitted that might 
shed light on the value of the in-kind services that cable 
companies provide to local governments. 
 
Moreover, even if the satellite companies were able to show 
some discrepancy between the amounts charged to them and to the 
cable companies, respectively, this discrepancy would be 
permissibly attributable to important differences between the 
cable and satellite industries, some of which we have already 
discussed. 
 
For one, franchise fees are, as noted, capped by Federal 
law at five per cent of gross revenue.  See 47 U.S.C. § 542(b) 
(2012).  Massachusetts law does not require that cable's 
franchise fees be any lower.  It follows that if the cable 
companies' obligations to local governments amount to a lighter 
burden than the satellite companies' excise tax, this 
discrepancy results from certain localities' consent to reduce 
franchise fees from the statutory maximum.  In this sense, any 
benefit to the cable companies results from the fact that they 
are required, unlike the satellite companies, to negotiate 
                                                                  
the fact that not every road is a toll road. . . .  The 
provision of access to the [S]tate infrastructure free of charge 
is an acceptable option that the [S]tate may exercise."  
Directv, Inc. v. Treesh, 487 F.3d 471, 479 (6th Cir. 2007), 
citing West Lynn Creamery, 512 U.S. at 199 n.15. 
24 
 
separate arrangements with an array of local governments.  In 
turn, this difference between the treatment of the cable and 
satellite companies is rooted, as we have explained, in the 
different nature of these businesses, namely in the fact that 
the cable companies, unlike the satellite companies, cannot 
avoid interface with local governments.  See Treesh II, 290 
S.W.3d at 643. 
 
As the department argues, another difference between the 
cable and satellite companies' respective operations would 
support the imposition of a somewhat lower tax rate on cable.  
This difference lies in the respective regulatory regimes to 
which the two types of company are subject. 
 
When the technology for satellite provision of video 
programming became available in the 1980s, the Federal 
government "concluded that the public interest is best served by 
a flexible regulatory approach."  2 D.L. Brenner, M.E. Price, & 
M.I. Meyerson, Cable Television and Other Nonbroadcast Video, 
Law and Policy, § 15:5 (2014).  Accordingly, the satellite 
industry was subjected to "regulatory requirements [that are] 
minimal . . . .  This approach allows [satellite] operations to 
experiment with service offerings and methods of financing.  Few 
rules exist."  Id.  See 2 C.D. Ferris & F.W. Lloyd, 
Telecommunications Regulation:  Cable, Broadcasting, Satellite, 
and the Internet ¶ 20.04[5][b], at 20-9 (rev. ed. 2014). 
25 
 
 
Cable, on the other hand, a veteran industry with well-
established methods of operation, has long been subject to an 
extensive scheme of Federal regulation.  See 1 C.D. Ferris & 
F.W. Lloyd, Telecommunications Regulation:  Cable, Broadcasting, 
Satellite, and the Internet ¶ 5.04[1], at 5-5 (rev. ed. 2014) 
(discussing development of cable in 1940s and 1950s); id. at 
¶ 5.04[3][b], at 5-7 (rev. ed. 2014) (discussing origins of 
cable regulation in 1960s).  Among other things, cable companies 
must comply with standards concerning the technical operation 
and signal quality of their programming.  See 47 U.S.C. § 544(e) 
(2012); 47 C.F.R. §§ 76.601-76.640 (2013).  They are subject to 
minimum standards for office hours, telephone availability, 
installations, outages, service calls, and billing.  See 47 
U.S.C. § 552(b) (2012); 47 C.F.R. § 76.309 (2013).  They are 
required to enable their customers to receive emergency 
information.  See 47 U.S.C. § 544(g) (2012).  They must provide 
subscribers with a device that permits the subscribers to limit 
access to certain channels, see 47 U.S.C. § 544(d)(2) (2012), 
and they may be forbidden by localities to provide access to 
channels that carry obscene content.  See 47 U.S.C. § 544(d)(1) 
(2012). 
 
In addition, the rates for the provision of basic cable 
services are determined by Federal regulations, unless the 
Federal Communications Commission finds that these services are 
26 
 
subject to "effective competition."  See 47 U.S.C. § 543(a)(2) 
(2012); 47 C.F.R. §§ 76.901-76.990 (2013).  Cable companies may 
not discriminate between different "tiers" of subscribers in the 
provision of programming offered on a per-channel or per-program 
basis.  See 47 U.S.C. § 543(b)(8)(A) (2012).  With some 
exceptions, cable companies are required to operate a 
geographically uniform rate structure.  See 47 U.S.C. § 543(d) 
(2012).16 
 
The divergent regulatory regimes that govern the cable and 
satellite companies' respective operations are relevant to the 
selection of the tax obligations to which these companies are 
subjected.  Cf. Tracy, 519 U.S. at 295-297, 300-301 (considering 
regulatory obligations of local utility companies); National 
Ass'n of Optometrists & Opticians LensCrafters, Inc. v. Brown, 
567 F.3d 521, 526-527 (9th Cir. 2009) (considering regulatory 
obligations of optometrists and ophthalmologists).  The rate of 
the excise tax permissibly may allow for the fact that satellite 
companies do not bear the additional regulatory burdens imposed 
                     
 
16 In addition, cable companies are required to devote a 
greater percentage of their channel capacity to public, 
educational, and government programming than satellite companies 
are.  See 47 U.S.C. §§ 335, 531, 534, 535 (2012).  Compare 1 
C.D. Ferris & F.W. Lloyd, Telecommunications Regulation:  Cable, 
Broadcasting, Satellite, and the Internet ¶ 7.15[2], at 7-40 
(rev. ed. 2014), with 2 C.D. Ferris & F.W. Lloyd, 
Telecommunications Regulation ¶ 20.4[6][c], at 20-11 (rev. ed. 
2014). 
27 
 
on cable companies.  The Legislature also permissibly may wish 
to support the provision of cable services, in order to ensure 
that this regulated product remains available to Massachusetts 
consumers.  See Treesh I, 487 F.3d at 481 (Kentucky may have 
sought to support viability of cable "for reasons entirely 
unrelated to geography -- for example, that cable providers 
often provide [I]nternet access as well, that cable providers 
are more likely to provide public access channels, etc."). 
 
In summary, given the nuances of the divergence between the 
ways in which the cable and satellite companies are treated, 
examined in light of the differences between the ways in which 
these two types of company do business, the satellite companies 
have no reasonable expectation of proving that the excise tax 
discriminates against interstate commerce in its effect.  See 
HipSaver, 464 Mass. at 522.  No genuine issue of material fact 
was presented, therefore, and the department was entitled to 
judgment as a matter of law. 
 
b.  Discriminatory purpose.  The satellite companies 
contend also that the excise tax is unconstitutional because it 
is discriminatory in its purpose.  This argument relies almost 
entirely on lobbying materials prepared on behalf of the cable 
28 
 
industry.17  For instance, a letter sent by cable lobbyists to 
members of the Legislature read, in part: 
 
"Satellite TV companies have long enjoyed a one-way 
relationship with Massachusetts, selling their service here 
but giving almost nothing back.  Unlike cable companies, 
satellite providers pay no personal property or real estate 
taxes . . . . Nor do satellite companies make investments 
in the economy or community, as cable providers do.  
Comcast alone, for example, employs more than 5,000 people 
in Massachusetts who collect more than $336 million in 
salary and benefits." 
 
The satellite companies assert that lobbying efforts of this 
nature indicate that the excise tax was intended to reward the 
cable companies for their contributions to the Commonwealth's 
economy.  We conclude that the summary judgment record does not 
support a reasonable expectation that a discriminatory purpose 
could be proved.  See HipSaver, 464 Mass. at 522. 
 
"It is well settled that a statute is presumed to be 
constitutional, and every rational presumption in favor of its 
validity is to be made."  Cote-Whitacre v. Department of Pub. 
Health, 446 Mass. 350, 367 (2006).  See Commonwealth v. King, 
374 Mass. 5, 16 (1977).  For the reasons previously explained, 
the excise tax is understood most naturally as an element of a 
                     
 
17 The satellite companies point also to the testimony of a 
high-ranking satellite company executive who asserted at 
deposition that he had been told by members of the Legislature 
that they would vote for the excise tax, at least in part, 
because of the cable industry's "significant local presence."  
Like the Superior Court judge, we ascribe little significance to 
this vague testimony. 
29 
 
balanced scheme of taxation that imposes corresponding burdens, 
different in nuanced and rational ways, on the cable and 
satellite companies.  The burden of establishing that the 
statute was motivated not by this legitimate goal, but rather by 
a discriminatory purpose, is necessarily difficult to carry.  
See Treesh I, 487 F.3d at 480 (affirming dismissal of 
discrimination claim where, "[w]hile a purpose of the [statute] 
might have been to aid the cable industry rather than the 
satellite industry . . . there were clearly many other 
purposes," including "collecting taxes from the previously 
untaxed, burgeoning satellite industry"). 
 
The evidence offered by the satellite companies does not 
suffice to carry this burden.  In the context of statutory 
interpretation, we have cautioned against "confus[ing] the 
intention of the private proponents of legislation with the 
intentions of the legislative body that enacted the statutory 
change, to the extent we may ascertain them.  They are not 
necessarily the same."  Commonwealth v. Ray, 435 Mass. 249, 257 
n.15 (2001).  The United States Supreme Court similarly has 
explained that: 
 
"Legislative history is problematic even when the 
attempt is to draw inferences from the intent of duly 
appointed committees of the [Legislature].  It becomes far 
more so when we consult sources still more steps 
removed . . . and speculate upon the significance of the 
fact that a certain interest group sponsored or opposed 
particular legislation." 
30 
 
 
Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 120 (2001), 
citing Kelly v. Robinson, 479 U.S. 36, 51 n.13 (1986).  We 
cannot assume, in other words, that the Legislature embraced the 
reasons expressed by private interests, such as lobbyists for 
the cable companies, merely because those interests advocated 
vocally for a statute.18 
 
Moreover, the lobbying materials identified by the 
satellite companies also make repeated reference to the goal of 
"tax parity."  Written testimony by a cable industry executive 
before a committee of the Legislature stated, for instance, that 
the excise tax would "ensure[] that the overall level of 
taxation is equal among video providers, so that all 
multichannel video providers operate on a level playing 
field . . . . Tax parity ensures fair competition and true 
consumer choice."  Other communications stressed that, before 
the 2010 appropriations act was passed, the satellite companies 
paid no tax corresponding to the franchise fees paid by cable 
companies.  A letter to legislators from the New England Cable 
and Telecommunications Association stated that the excise tax 
would create a "competitively neutral tax policy for the 
                     
 
18 A representative of DIRECTV, LLC acknowledged at his 
deposition that his company does not know whether the cable 
companies' lobbying materials had an impact "on any individual 
legislator" or "on the Legislature as a whole." 
31 
 
delivery of video signals," and described the tax as "expanding 
the [five per cent] franchise fee to include satellite 
companies."  These facts further weaken the suggestion that the 
Legislature was motivated by sympathy for in-State interests as 
such. 
 
The conclusion that the excise tax was not intended to 
confer a special disadvantage on the satellite companies is 
reinforced by the context in which the tax was enacted.  As 
mentioned, in addition to creating the excise tax, the 2010 
appropriations act also imposed a personal property tax on 
"[p]oles, underground conduits, wires and pipes of 
telecommunications companies."  St. 2009, c. 27, § 25, amending 
G. L. c. 59, § 18.  This provision increased Comcast's annual 
tax obligations by approximately $5.1 million.  It also 
resulted, in 2010, in a tax assessment of approximately $29.8 
million against Verizon.  Verizon employs approximately 9,500 
people in Massachusetts, 4,000 more than the cable companies.  
These facts support the conclusion that the excise tax was not 
intended to discriminate against interstate commerce, but rather 
was part of an effort to increase, across the board, the amount 
of tax revenue collected from the video programming industry. 
 
 
 
 
 
 
Judgment affirmed.