A major cable TV operator filed a federal lawsuit against Maine on Monday, asking that the state be prevented from unlawfully regulating rates that it charges its subscribers.
Spectrum Northeast and its parent, Charter Communications, filed the lawsuit in U.S. District Court against Maine Attorney General Aaron Frey. They are asking the court to rule that a new state law mandating rebates should be preempted and that the state not be able to hold cable companies liable for not following it.
That law, which requires cable companies to refund a prorated amount to customers who cancel cable service during a billing cycle, takes effect on June 16. It was sponsored by Rep. Seth Berry, D-Bowdoinham, who said hundreds of Spectrum cable customers complained of a change in billing practices that left them on the hook for charges. Gov. Janet Mills signed the change into law in March.
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Charter’s billing systems and customer service centers are organized regionally rather than within individual states, and Charter will suffer irreparable harm, the two cable companies said in the lawsuit. Charter said it can either incur large costs to comply with the new law or face financial liabilities and a loss of customer goodwill.
The Maine law is preempted by the federal Communications Act of 1934, which bars states and localities from regulating the rates of a cable operator if the Federal Communications Commission has found there is effective competition in the area, Spectrum and Charter claim. The two companies said that is the case in Maine, where competitors include DIRECTV and Dish Network.
“Federal law does not allow individual states to force providers to sell TV services by the day. This legislation also blatantly discriminates against select TV providers, distorting the competitive marketplace by allowing companies like Netflix and DirecTV to offer monthly subscription services, while requiring cable operators to sell by the day,” Charter spokesperson Lara Pritchard said.
The lawsuit said Charter’s decision to not provide a partial-month rebate for canceling subscribers stems from its service being sold on a monthly basis. It also claims that the monthly rate reduces administrative costs and in return reduces the pressure to raise rates for continuing subscribers.
The lawsuit is the third in the past year against the state over new cable regulations. Telecommunications giant Comcast and cable operators including Fox, CBS and Disney sued the state and 17 municipalities last September, claiming a new state law aimed at allowing customers to buy cable channels individually is preempted by federal law.
Also last September, Maine was sued for a 2019 cable law overhaul by NCTA, a trade group representing broadband and cable providers, which argued that federal law preempts changes aimed at expanding cable access and making public-access networks easier to find in channel lineups. A federal judge in March ruled in favor of Maine.