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from: Blogging Broadband

Comcast’s Response to Complaint on PEG Digitization Raises Broader Issues

Things have been moving quickly in Michigan over the course of the last couple of days – just as predicted in BloggingBROADBAND last week.

After months of discussion and a letter from House Energy & Commerce Committee Chairman John Dingell failed to dissuade Comcast from its plan to digitize and migrate public, education, and government (“PEG”) access channels, two Michigan communities and one Comcast customer filed a lawsuit in the US District Court for the Eastern District of Michigan to stop Comcast’s PEG channel migration plan. The lawsuit was filed last Friday afternoon – less than 100 hours before Comcast’s plan would be complete as the clock ticked to 12:01 a.m. tomorrow morning. The parties’ briefing occurred over the weekend, and an oral hearing on the communities’ motion for a temporary restraining order was scheduled for today at 9 a.m. The matter has been docketed as case number 08-10156, and pleadings are available electronically through PACER.

The strain of an accelerated briefing schedule is revealed in the briefs from both sides: Some typos are found, for example, and with respect to Comcast’s response, policy arguments are raised more often than legal arguments. These aren’t surprises, really, given the short period in which the parties had to gather their thoughts. What was a surprise, however, was how readily Comcast submitted the questionable-at-best argument that Michigan’s new state law somehow controls the issue of whether the company can migrate PEG channels from the low, analog end of the lineup into the digital land of the 900s.

Like many states, Michigan has adopted a “uniform franchise” statute. According to Michigan’s new law, if a community can’t find authority in state law to impose a particular obligation on a cable operator, a local government can’t impose the obligation at all. Consequently, the argument goes, even though federal law permits franchising authorities to regulate basic service rates (Cable Act Sec. 623), state law prohibits such regulation; therefore, according to Comcast, no rate regulation of the basic service tier is permitted. Likewise, even if federal law permits franchising authorities to impose PEG obligations as a matter of contract (as it does at Cable Act Sec. 611), Michigan’s new state law vests no such authority, so such regulation is prohibited. Comcast, therefore, argues that any such contract requirements are prohibited.

Perhaps the time pressure was once again revealing itself, but this appears to be a very risky argument for the company. Essentially, Comcast is arguing a reverse-Supremacy Clause concept, i.e., that somehow state law is enforceable and must be treated as superior to federal law unless a successful, preceding challenge proved otherwise. The large risk for Comcast is that the federal court will call it like it is – or, as the Cable Act itself puts it: “[A]ny provision of any law of any State . . . which is inconsistent with this Act shall be deemed preempted and superseded.” (Cable Act Sec. 636).

By invoking state law, Comcast runs a real risk that it will undermine the entire Michigan law. That’s something that’s both appropriate and welcomed by nearly every local government in the state – but a tactical blunder that would be expected from any cable operator.

Equally odd is Comcast’s reliance on the franchise modification provision in the Cable Act, which permits a cable operator to “rearrange a particular service [tier] to another . . .” Why is that a strange reference? Because Comcast’s entire argument is that it is NOT moving PEG from one tier (basic) to another (digital): Instead, the company asserts that PEG will remain on the basic service tier, but just be delivered digitally. Therefore, Comcast’s reference to Cable Act Sec. 625(d), a provision that purportedly allows a cable operator to engage in an activity that Comcast asserts does not exist, will leave a puzzled look on some faces.

Local governments have reason to remain hopeful that their requested temporary restraining order will be issued. As the motion brief points out, there is no harm that would result to Comcast if the plan were postponed for a short period – in fact, Michigan is the first place in the country that the company has even attempted to implement this strategy, so there’s no reason to believe that a little more time will hurt. Expect Comcast to develop more sophistication in its arguments, though, as this matter proceeds and a preliminary injunction is considered.