Supreme Court Could Weigh In on Mandated Cable Rebates

Supreme Court of the United States
(Image credit: Mike Kline (notkalvin) via Getty Images)

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 (opens in new tab), 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 (opens in new tab), 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. ■

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.