RealTime IT News

Supreme Court Questions FCC Cable Modem Regs

WASHINGTON -- The Federal Communications Commission (FCC) and the cable industry told the U.S. Supreme Court today that the law permits denying Internet service providers (ISPs) access to broadband cable lines.

At issue is a complex 2002 ruling by the FCC that cable broadband modems are information services, which are essentially unregulated by the FCC. The FCC, on the other hand, classifies the regional Bell operating companies as telecommunications services and subject to extensive regulations, including line sharing with competing ISPs.

The ruling prompted a Santa Monica, Calif.-based ISP named Brand X to sue the FCC for open access to cable lines. In October 2003, the 9th Circuit Court of Appeals overturned the FCC decision and ruled in favor of Brand X. The FCC, supported by the Department of Justice, appealed the decision.

Further complicating the issue is a Washington state district court decision that predates the FCC ruling. In that decision, the court said cable modem service does involve a telecommunications element. The FCC claims its decision is the controlling ruling. The 9th Circuit said law trumps regulation, and the court got there first.

"Cable companies have not traditionally been regulated as a telecommunications service," U.S. Deputy Solicitor General Thomas Hungar told the court on Tuesday.

Paul Cappuccio, general counsel at Time Warner, the nation's number two cable company, told the justices, "We are offering two products [broadband service and the underlying transmission service] that come together for one product."

"And those things are not telecommunication services?" asked a skeptical Justice Stephen Breyer.

Justice Antonin Scalia was equally pressing in his questions.

"How do you get that out of the [FCC] definitions? Some bundled offers are [telecommunications services] and others are not?" he asked.

Much of the FCC's reasoning in its decision is based on the theory that cable companies built their own systems while the regional Bells have a system that has been supported by taxpayers and telephone users dating back to AT&T's monopoly days.

"Cable companies built their networks using government-granted monopoly franchises, access to public rights of way and discounted rates for pole attachments," Dave Baker, vice president for law and public policy at EarthLink, said in a statement issued after the hearings. "Nonetheless, they now dictate what services, devices and applications companies can offer and consumers can use on those networks."

Baker added, "We expect that the Supreme Court will affirm that consumers, and not cable companies, should make those choices."

Blair Levin, a former chief of staff for FCC Chairman Reed Hundt in the 1990s and now a senior analyst at Legg Mason, said in a statement, "The justices appeared willing to grapple with the substantive issue themselves rather than sending the case back to the lower court."

Levin predicted the justices would ultimately side with "cable and Bell companies seeking a 'bottom up' approach to regulating (putting the burden on proponents of regulation)."

The justices are expected to issue a decision in June.