The California-based Internet service provider filed the petition with the FCC in June. IVI asked that the FCC invoke the "must carry" clause of the 1996 Federal Communications Act.

The FCC determined that it need address only the most basic threshold issue to resolve IVI's petition. The only question the FCC asnwered, was whether Internet access services constitute video programming as contemplated by Section 612 of the Communications Act.

In a statement released by the FCC, the commissioners concluded that ISP services are not video programming.

"The FCC concluded that Section 612 does not require cable operators to make available channel capacity on their systems for the range of services that IVI seeks to offer," the statement read.

Had the FCC ruled in favor of the petition, cable operators would have been ordered to carry independent Internet services over their networks.

Don Janke, IVI president, said the FCC's action would result in higher prices and fewer choices for consumers connecting to the Internet through cable modems.

Janke said it's disheartening to realize that both the open and leased access arguments fell on deaf ears at the commission.

"There's open access, there's leased access and now there will be no access," Janke said. "The FCC's regulation today will deprive thousands of ISPs and their subscribers of the benefits of the broadband revolution."

Janke added that fighting for leased access meant the firm had to take a stand against companies like AT&T Corp. (T)., but that the telecom and cable industry leader was nothing compared to arguing before the FCC.

"From the start, our campaign has been a true David versus Goliath story," Janke said. "Lucky for David that he only had to deal with giant, not the FCC."

IVI's defeat is the second blow to independent service providers' efforts to gain access to proprietary cable systems this week. America Online, Inc. (AOL) backed away from its commitment to open cable network access earlier this week, since it intends to merge with cable monolith Time Warner, Inc. (TWX).

By denying the IVI petition, the commission stands firmly behind its "hands off" policy against regulating cable access to the Internet.

Hands Off The Internet is a consumer coalition that supports the FCC's approach toward Internet non-regulation.

Peter Arnold, Hands Off The Internet executive director, said the IVI petition was an absurd interpretation of the law.

"It was flat out wrong," Arnold said. "It was wrong as a matter of the law and it would have been bad public policy for the FCC."

Although IVI has not been successful at overcoming federal regulatory roadblocks to shared cable access; the firm has been successful in several parts of the country.

Internet Ventures began installing residential broadband Internet access to the Ashland Fiber Network municipal overbuild in Oregon last week. The municipality is one of the first in the nation to provide residents broadband cable access choice among five independent ISPs.

IVI currently provides Internet access for about 30,000 subscribers over conventional phone lines and 1,700 subscribers over cable modems.