Brand X Reactions Split up The Middle


Reaction to this week’s Supreme Court Brand X ruling has fallen into two camps. Depending on the viewpoint, the
justices either added regulatory certainty to the broadband market or
muddled the situation even more.


The cable companies, of course, are delighted with the decision that they do
not have to share their high-speed broadband lines with independent service
providers (ISPs). The Baby Bells are almost as happy, as they anticipate the
same outcome for DSL services.


The Federal Communications Commission (FCC) is the happiest of all, finally
having one of their regulatory decisions upheld by the Supreme Court. The
Court ruled the FCC was correct in classifying broadband cable modem as a deregulated information service.


The Bells are currently classified as telecommunications services and
subject to extensive regulations, including line sharing. The FCC is
currently conducting a review of those regulations for Bells offering DSL.


“Now that the court has resolved lingering uncertainty regarding the
regulatory treatment of cable-based Internet access services, I am hopeful
that the commission will act quickly to establish a similarly
forward-looking approach for competitive wireline xDSL services,” FCC
Commissioner Kathleen Abernathy said in a statement Monday afternoon.


Consumer groups and local regulatory agencies, though, are predicting higher
prices, fewer choices and the potential prospect of private networks
deciding what parts and applications of the
Internet, such as Internet telephony, will be accessible to consumers.


“You can find gloom and doom or a ray of sunshine in the decision and now it
goes back to the FCC,” said Jason Talley, CEO of Voice over IP
wholesaler Nuvio. “It probably makes legal sense in the way it was
decided.”


The decision itself was a highly technical one based on the FCC authority
to fill in the blanks of the often vague laws passed by Congress. The end
result, for the time being, is the status quo holds.


“If the court is saying, ‘You own it [the network], you can do whatever you
want with it,’ then that’s bad,” Talley said. “But the big issue is Internet
neutrality.”


Talley noted the decision mostly focused on the physical layer of the
Internet and not on the application layer. For VoIP players, this is good
news. ”Right now, [VoIP companies] have access [to cable lines],” he said.


ISPs, however, do not.


“The decision to abandon nondiscrimination was a grave error, both harming
consumers and stifling entrepreneurial innovation,” the Consumers Union and
the Consumer Federation of America said in a joint statement. “Allowing
cable operators to act as gatekeepers on the flow of information has slowed
technological progress and adoption of high-speed Internet service.”


Five national organizations of state and local governments said late Monday
they were forming a new alliance to “use our ownership and management of
public rights-of-way, as well as our general police powers to protect our
constituents.”


The new Alliance of Local Organizations Against Preemption added in its
statement, “The court’s ruling has the effect of classifying the broadband
connection to most residences as an unregulated, closed proprietary network
with no obligation to interconnect or to carry unaffiliated VoIP and ISPs.”


That may be true, Nuvio’s Talley said, but Congress has yet to weigh in on
telecom reform legislation that, he says, is likely to focus on Internet
neutrality. “The issue is strongly recognized on Capitol Hill,” he said. “A
free market is what people want.”


Talley also dismissed the idea that Monday’s decision could lead to port
blocking, noting the FCC’s March decision to
fine a North Carolina telecom $15,000 for blocking VoIP traffic from certain
Internet telephone companies.


As for the Baby Bells receiving the same treatment as cable companies for its
DSL broadband service, Talley said it might not be as easy as they think.


“If your [broadband] requires that you have telephone service, buy a
telephone and get a number, there is certainly a telecommunications
component to that,” he said. “DSL is really a much tougher animal [for the
FCC].”

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