The Supreme Court is being encouraged to weigh in on whether a state law mandating prorated cable bill refunds constitutes impermissible state rate regulation, which is prohibited by the Cable Act, or is instead a consumer protection law not “specifically preempted” by the act.

The larger question cable operators want answered is the extent to which the Cable Act preempts rate regulation given that they say state and federal courts are split over how to apply preemption to state rebate laws, which are increasingly popular.

Maine passed a law requiring that cable operators provide a rebate of a portion of its monthly charge for cable service if the customer cancels that service. For example, a $50 rebate if the customer pays $100 per month but cancels service mid-month.

Cable operator Spectrum Northeast (Charter Communications) challenged the rebate as constituting rate-setting by the state in contravention of the Cable Act.

The 1st U.S. Circuit Court of Appeals rejected that appeal, saying the rebate requirement was not rate regulation. Charter appealed the decision to the Supreme Court, which has not yet weighed in on whether it will hear that appeal.

Charter argues that requiring the refund means Maine has effectively “forbidden” cable operators to charge a fixed rate for a final month of service and that the Cable Act “preempts state and local laws that prevent cable companies from selling their services at their chosen rate for the final month of service.”

It told the Supreme Court that such rebate laws constitute rate regulation in two ways. First, it “prohibits cable companies from selling cable service only in full-month increments (i.e., without proration).” Second, it “prohibits cable companies from freely choosing the prices they wish to charge subscribers for partial service in the final month.”

In an amicus brief to the Supreme Court, Maine Attorney General Aaron Frey said the 1st Circuit got it right and the Supremes should pass on the review.

Frey told the court that the regulatory and legislative history of the Cable Act “includes no suggestion that post-termination rebates are barred.”

“Maine’s Pro-Rata Law does not govern what cable companies may charge at all. By operation of the law, if and only if a customer cancels, then at that time a partial refund is required. And even for that month, the cable companies will have already charged the rate they saw fit,” he told the court. ■

Walter E. Dellinger III, who as assistant solicitor general in 1996 successfully argued that the cable must-carry rules were constitutional, has died in Chapel Hill, N.C. Dellinger was the Douglas B. Maggs Professor Emeritus of Law at Duke University.

Dellinger was acting solicitor general in 1996-97 when he argued successfully in Turner Broadcasting System, Inc. v. FCC before the Supreme Court that the 1992 Cable Act's requirement that cable operators reserve channels for local broadcast TV (must-carry) was a content-neutral regulation of speech that served three important government interests: preserving free over-the-air TV, promoting a diversity of information sources, and promoting TV competition.

The Supreme Court, in a 5-4 decision, concluded that there was "substantial evidence to support Congress' conclusion that enactment of must-carry was justified by a real threat to local broadcasting's economic health. The harm Congress feared was that broadcast stations dropped or denied cable carriage would be at a serious risk of financial difficulty."

Dellinger served in the Clinton White House as a presidential advisor on constitutional issues. He was named assistant attorney general in 1993 and was a resident faculty member at Duke from 1969 until 1993.

He was born in Charlotte, N.C. May 15, 1941, and graduated with honors from the University of North Carolina. He graduated from Yale Law and clerked for Supreme Court Justice Hugo Black. ■

New York -- Michael Willner, president and CEO, Penthera and GreatLand Connections Inc., opened up NewBay Media’s NYC Television Week here Wednesday morning by firing away at President Obama’s push toward stricter regulation of the Internet.

Willner, in a conversation with Multichannel News senior finance editor  Mike Farrell, said any movement toward Title II reclassification would be “one of the worst policy decisions” not only for the cable and wireless industries, but for consumers.

He envisions a repeat of what happened 20-plus years ago after the Cable Act was enacted in 1992. At that time, the cable industry was rebuilding its plant, putting in fiber optics to lay the groundwork for the Internet, which no one at that time could fully imagine would become such an integral part of daily existence.

With the Cable Act, Willner said, the investment community “turned off the tap.” In turn, capacity slowed as did the formation of programming networks. “Everything came to a screeching halt,” he said. During this slowdown, Western Europe pushed ahead in fortifying its infrastructure and “we fell behind as a country.”

Willner said that with the “heavy hand of Title II, we’re asking for the same kind of result. The definition of insanity is to do the same thing and expect a different result…We’re teetering toward a 21st Century repeat of 1992 in an even more competitive world.”

During the fireside chat, Willner also weighed in on a couple of other subjects du jour:

*On OTT:  Noting that he blogging during his days heading Insight Communications, Willner said that four years ago he wrote that over-the-top services would become a reality. “If consumers want to view beyond [the bundled] package of services, they’re going to do it legally or illegally. I embrace over-the-top. It makes people appreciate the connectivity to our networks.”

*A la carte: He said a pure a la carte regime would result in higher prices and less programming, “ a lot of content aggregators would cease to exist.”  Saying this is the “golden age of television,” Willner noted a lot of "TV viewing still takes place incidentally, with people thumbing through the channels. Without some form of packaging that model unravels.”

*Technological evolution: Willner said the best businesses understand consumer behavior and most importantly they change their products and services as those behaviors evolve.  “To be successful, we can’t focus on the status quo, but have to evolve toward the next best thing.  When someone invents a new widget and it becomes a serious player, that’s fine. We either leap to the challenge and keep up with the times, or we get ready to perish. “