Letters have been sent to cable operators by the Commission, and responses are due back by the middle of this month.  Click here to read the AP story.

Cable operators often wait until after the holiday season to increase rates — that way, current customers are less likely to put a dish under the tree. That’s what happened last year when Comcast increased rates. But it seems that the nation’s biggest cable operator is getting started a little early this year, and hoping that the latest round of price hikes wears off before the holiday season really gets under way.

In many places throughout the country, price increases around 3% are being reported. That doesn’t seem too bad until one considers the fact that this appears to be the second increase in less than a year for many customers. As has now become anticipated, the operator blamed an increase in operating costs for the need to raise prices — absent from the explanation, though, is the most likely culprit: A languishing stock price that was bogged down long before recent, broader declines in the market.

In Michigan, U-Verse is now available in parts of 30 communities around the Saginaw, Flint and Midland areas. No mention was made by AT&T as to the parts of the communities where service is actually offered, or even whether service is available in the majority of each of the mentioned communities. If history serves as any guide, though, U-Verse is probably available in just a small portion of each community — probably something around 20% or less of the homes. Finally, there is no mention in the company’s recent announcement of the total number of communities served or homes passed in the State of Michigan. The last such update seems to have occurred early this past summer, when the company asserted that it offered U-Verse in portions of 160 Michigan communities and to about 625,000 “living units” in the state.

A little more detail about the company’s presence in Ohio was offered in AT&T’s announcement about its Toledo rollout. In a story appearing in the Toledo Free Press, AT&T claimed U-Verse was available to 600,000 residences in parts of Ohio communities in and around Akron, Canton, Cleveland, Columbus and Dayton.

Also newly announced by AT&T are two services that cable can’t yet match. The first is a full-house DVR product the company calls Total Home DVR. With the service, any of seven connected TVs in a house can play back standard definition or high definition programming that has been been recorded on the DVR. The service reportedly permits four different programs to be streamed off the DVR to different TVs at once — and three of those streams can be HD feeds. This service seems capable of softening U-Verse’s current competitive disadvantage against cable when it comes to the number of HD channels a home can view off the video system — with cable, a household can view several HD channels at once on different TVs, but with U-Verse, only one HD channel can be viewed in real time (the company has plans to rollout the capability of simultaneously viewing 2 HD channels throughout the forth quarter of this year). For more information about AT&T’s Total Home DVR product, click the story about the San Antonio rollout of the product.

Also new to U-Verse’s product list: Interactive weather. The service is offered in partnership with AccurWeather.com, and allows a customer to enter a zip code for a customized forecast. According to Telecommunications Industry News, the service is available in Atlanta, Austin, Dallas-Fort Worth, Indy, and San Diego, and will be available to other markets in coming months.

AT&T has previously announced an anticipated slowdown in capital spending for the fourth quarter of this year, and a year-end homes passed target of eighteen million for U-Verse.

Saline’s Complaint against Comcast alleged that the City had established the 2% PEG fee under Michigan’s new law, but that Comcast had refused to pay the fee. Following seven weeks of intense litigation and negotiation, the matter has now settled: A uniform franchise has been issued to Comcast under Michigan’s new law, and Comcast has agreed to pay the 2% PEG Fee to the City as a term of that franchise. Under the terms of the now-publicly-available settlement agreement, Comcast will also retroactively pay the City one year’s worth of PEG Fees.

Thanks, Saline, for having the courage to pursue this action — it was my pleasure to represent you!

BloggingBROADBAND previously predicted a fault in Comcast’s argument at the preliminary injunction stage of this proceeding, and that the greatest potential victory in this lawsuit may come in an area where relief hadn’t even been sought. That prediction has now come to pass, as Judge Roberts has unequivocally rejected Comcast’s argument that Michigan’s new video franchising law supersedes franchising authority rights vested by federal law in the area of PEG channel placement obligations, as contained in franchise agreements.

For those just joining, here’s the background: Late last year, Comcast announced a plan in Michigan to migrate PEG channels from their low-channel-position, basic service location to the 900-range of the company’s lineup. In the process, the PEG channels would be delivered digitally, rather than through the analog portion of the company’s bandwidth. Franchising authorities became concerned that the PEG channel migration would require customers to lease digital converters, and that viewership would fall dramatically. Local governments raised those concerns with Comcast, but the company responded by saying that it would press on with its plan.

As a consequence, Meridian Township, the City of Dearborn, the City of Warren and Bloomfield Township filed complaints and sought a preliminary injunction to prevent Comcast’s PEG channel migration. That injunction was issued on January 14, 2008. After efforts to negotiate a settlement failed, Comcast filed a Motion to Dismiss the franchising authorities’ action.

Throughout these arguments, Comcast forwarded an awkward argument: The company claimed that Michigan’s new state video franchising law, which contains no provisions related to PEG channel placement, somehow supersedes federal law, which permits franchising authorities to enforce franchise agreement provisions related to PEG channel placement. As previously noted in BloggingBROADBAND, Comcast’s argument turns the Supremacy Clause on its head — and in the US District Court’s most recent Order, there is no question left as to how the Judge felt about the company’s state-law-trumps-federal-law claim:

Section 531 [of the United States Code] expressly permits ‘a franchising authority’ to enforce PEG channel requirements in franchise agreements . . . On the other hand, the Local Franchising Act [Michigan’s new law] purports to restrict a franchising authority’s ability to enforce PEG channel requirements in existing franchise agreements that are beyond the scope of the Local Franchising Act. Because the Local Franchise Act makes unenforceable what federal law explicitly makes enfoceable, the Local Franchise Act is preempted by 47 USC 531.

While Judge Roberts was careful to limit the preemption to the PEG channel matter at hand, the implications of the ruling could have much broader reach. Federal law vests franchising authorities with a variety of rights that many state laws purport to limit. Also raised by the Order is the question of whether a uniform franchise, like those developed in Michigan, can be imposed by state law where a state-mandated franchise would essentially strip rights otherwise vested under federal law, such as the right to “enforce any requirement in any franchise [agreement] regarding the providing or use of [PEG] channel capacity.”

While these broader questions may play out on another day, many issues related to the specific question of PEG channel placement were resolved. As a result, several of the franchising entities’ original claims against Comcast were dismissed — but two important assertions nevertheless survived Comcast’s attack. The first is the one already noted: That a franchising authority is permitted to enforce a franchise agreement term related to PEG channel placement, regardless of whether state law purports to render such a term unenforceable. The second relates to the fact that some customers would have to pay extra to receive PEG channels once digitized (i.e., those customers who currently receive only the basic, analog tier where no additional decoding equipment is required) and others would not (i.e., those that already receive digital service, and who, therefore, already lease a digital converter). Because those two claims survived, so, too, did the preliminary injunction. As a consequence, Comcast is still prevented from migrating the PEG channels.

Finally, while the federal Court has done a fine job deciphering these complex and often technology-specific questions, the Court nevertheless felt that the FCC would be a better forum for resolving the remaining questions. The Court, therefore, will be transferring the matter to the Commission under the “primary jurisdiction” doctrine, and will ask the Commission to examine six specific questions, among them, whether cable operators are precluded from charging for equipment used in connection with the reception of PEG channels on the basic service tier, and whether the digitization of PEG channels is discriminatory because some customers may be required to obtain additional equipment to view those channels.

A complete copy of the October 3, 2008 Order can be found here: meridian-october-3-2008-order133. Mike Watza from the Kitch firm and Joe Van Eaton from Miller & Van Eaton have led the legal charge on behalf of the franchising authorities. Congratulations to both and to the other counsel who have been involved in this effort.