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Supreme Court Hands Cable Edge In Broadband Marketplace

June 27, 2005
The United States Supreme Court ruled that cable television operators do not have to open their systems to competitive Internet service providers. The ruling is a major setback for would-be competitors like America Online and Earthlink.

Broadband Access • Critics: FCC Inaction Slows Economic Development • Few Are Neutral in Net Neutrality Battles • Google Petitions FCC Over Verizon's Use of Wireless Spectrum • House Committee Grills FCC Over Wireless Auction • FCC's Martin: No Opening Of Wireless Networks • FCC Releases Broadband Report, Admits Data is Faulty • Verizon Wins Wireless Spectrum Auction • Bush Declares Broadband 'Connection Accomplished' • Google Will Bid In Wireless Spectrum Auction • Verizon Agrees to Stop 'Unlimited' Claims • Google Challenges Verizon Over Lobbying Of FCC • Sen. Kerry Wants New Broadband Policy • Verizon Wireless Challenges Spectrum Auction Rules • FCC Passes Compromise Rules For Wireless Spectrum Auction • Google, AT&T Square Off Over Wireless Broadband • Senate Wants Better Data On Broadband Deployment • FCC Takes a Closer Look at Broadband Deployment • Groups Urge FCC To Create Wireless Broadband Competition • FCC Chair Grilled By Congress Over Favorable Treatment of AT&T, Verizon • FCC Rolls Out New Rules On Video Franchising • FCC Approves AT&T-BellSouth Merger • AT&T Offers Net Neutrality Concessions To Win Merger Approval • FCC Plays Santa for AT&T, Verizon • Consumers Sidelined as Broadband Battles Rage • Wireless Broadband Still Expensive, Service Still Spotty • High-Speed Internet Overtakes Dial-Up in Market Share • U.S. Still Lags In Broadband Access • Municipal Wi-Fi: The Internet's Next Step? • Verizon Limits Its "Unlimited" Wireless Broadband Service • California Bill Seeks to Jumpstart Cable Competition • GAO: Broadband Access Difficult To Measure • Congress Wrestles with Net Neutrality --- More ...

The high court said the Federal Communications Commission acted within its authority when it classified cable Internet providers differently from ISPs using telephone lines. The distinction is significant; as an "information service," cable Internet is virtually unregulated while "telecommunications services" are heavily regulated.

Telephone companies are likely to try to play the same card. Tom Tauke, Verizon Communications' vice president for public affairs, said Verizon will lobby the federal government to "treat all competing broadband services alike."

The ruling is a setback for consumer groups who want cable operators to be required to lease space on their systems to competitors like America Online and Earthlink, which have claimed they are "shut out" out of offering broadband service.

On the other hand, many economists say the ruling, written by Justice Clarence Thomas, will create an additional incentive for cable operators to invest more in their infrastructure, potentially bringing broadband to more homes.

Three years ago the FCC determined that cable modems were more appropriately classified as an "information service" because Internet services were bundled together with the data transported over wires into the home. Traditional Internet service providers howled, complaining that both they and cable providers should be treated the same.

The 9th U.S. Circuit Court of Appeals struck down the FCC ruling, deciding that that cable modems should have been classified as both an information service and a telecommunications service. Today's Supreme Court’s 6-3 decision overturned that ruling.

Five national organizations today expressed disappointment with the court’s decision. The United States Conference of Mayors, the National League of Cities, the National Association of Counties, The National Association of Telecommunications Officers, and the International Municipal Lawyers Association formed the Alliance of Local Organizations Against Preemption (ALOAP) to pursue legal and regulatory actions as a result of the FCC's ruling that Internet connectivity provided by cable operators through a cable modem is not a "cable service."

The members of ALOAP represent local governments throughout the country who are responsible for ensuring that cable operators and others using public property to deliver private services do so in a manner that protects consumers, and that the public's property is well-managed.

While these protections had traditionally been accomplished through the cable franchise agreement, as a result of the Court's decision, the organizations say the Internet services provided by cable operators are not addressed within the scope of existing agreements.

The groups maintain the court's decision to uphold the FCC's view of 'information services' shifts the burden to the nation's local governments to ensure consumers are protected from unscrupulous and unsafe conduct by carriers.

"We are prepared to use our ownership and management of public rights-of-way, as well as our general police powers to protect our constituents. The court's decision jeopardizes the nation's public safety as information services are not subject to law enforcement and 911 requirements," the groups said in a statement.

"The decision also hurts consumers as it denies them the legally protected right to choose unaffiliated Internet service providers (ISP)," the coalition said.

"In making the finding of pure information services, 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. Worse yet, these proprietary networks have no legal obligation to be accessible to the disabled."

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