June 27, 2005 10:56 AM PDT

Cable wins Supreme Court battle

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for a privatized, tightly controlled broadband market. Groups such as the Center for Digital Democracy or CDD, which was one of the petitioners in this case, say that the decision leaves the vast majority of broadband households in the United States at the mercy of just two companies--the local cable monopoly or one of four remaining "Baby Bells."

"Today, the Court struck a blow against freedom online," Jeff Chester, CDD's executive director, said in a statement. "The Internet they have bestowed promotes the interest of a few big media companies against the best interests of the public--in the U.S. and globally."

The Consumers Union, a major consumer advocacy group, said by giving cable operators "gatekeeper" status, the percentage of the U.S. population with a broadband connection will continue to lag the rest of the world.

The group noted that the United States has slipped from third in the world to 16th in recent years. And Americans pay 10 to 20 times more on a megabit basis for broadband than the Koreans or Japanese, it said.

"In its action, the agency abandoned a fundamental principle that has applied to all means of communications throughout U.S. history," a Consumers Union representative said.

"It is our view that the FCC clearly abused its discretion in ruling that cable operators should not be constrained in their treatment of independent (Internet service providers)."

Just the beginning?
While this particular court case may have come to a conclusion, experts say the battle over broadband regulation is only just beginning. The Supreme Court's decision has likely paved the way for the FCC to deregulate DSL service as well. The FCC had already opened proceedings on this question a couple of years ago. But not much has been done as the FCC awaited the Supreme Court's decision on cable's classification.

"This decision puts the phone companies in a very strong position to argue for equal treatment," said John Rigovin, former general counsel of the FCC who argued this case before the Ninth Circuit Court and now is a partner at Wilmer Cutler Pickering Hale & Dorr. "I expect they'll argue for a level playing field, which makes a lot of sense. It seems unfair that cable modem service is unregulated and DSL service is highly regulated."

The Supreme Court declined to directly address how DSL should be classified, but in the majority opinion alluded to potential changes to DSL classification.

"The Commission's decision appears to be a first step in an effort to reshape the way the Commission regulates information service providers," said the opinion. "We express no view on how the commission should, or lawfully, may classify DSL."

The phone companies wasted little time in pushing this issue forward for their own benefit.

"This decision confirms the FCC's authority to classify broadband services in a manner that reflects the highly competitive nature of those services," Tom Tauke, executive vice president of public affairs, policy and communications for Verizon said in a statement. "Now, to provide consumers the full benefits of new technology and competition, the FCC and Congress should act promptly to finish the job."

Competitive local exchange carriers, which rely on laws that require phone companies to share their networks, are already gearing up for battle.

"If the FCC tries to do the same thing for DSL, we believe it would be a mistake and something that is not allowed by the statute," said Jason Oxman, general counsel for ALTS/Comptel, an industry group that represents more than 300 competitive phone and Internet providers. "Today's decision only speaks to the cable network. Cable service has a very different regulatory history than phone service, and we hope the FCC will recognize that."

An entirely deregulated broadband market would be bad news for ISPs and other competitive providers, say experts.

"I think it's safe to say that it will continue to be harder and harder to have viable business plan if you don't own the infrastructure," Rigovin said. "The conventional wisdom is that there is already so much competition from different technologies."

Paul Gallant, an analyst with the Stanford Washington Research Group and former legal advisor to former FCC Chairman Michael Powell, said that competitive providers can still survive. He said that even if broadband was entirely deregulated, ISPs could still negotiate deals with cable providers and phone companies.

"Independent ISPs aren't out of the game yet," he said. "But they are going to have to find ways to create more value in their service. Connectivity is not enough."

Comcast, another of the nation's largest cable operators, had no immediate comment and instead deferred to the NCTA's statement on the ruling.

CNET News.com's Ben Charny and Declan McCullagh contributed to this report.

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Cable Companies Should Be Pleased
That's kinda a funny heading considering it isn't true. Cable
companies like Cox Communications and Mediacom have been
gouging the general public for some time now.

Buy not letting the little guys in you are essentially allowing the
cable companies owner to become little Microsofts. Little
companies that pillage the average human being for a cable
service that is essentially a great big commecial wrapped with
very little content.

It used to be back in the day that we got cable service because
they claimed to have less commerials, yada, yada, yada. Today
it's a commecail every 3 minutes and then the content in
between. Some place are even forced to do this because
broadcast reception is so crappy where they reside.

This move has just given the cable companies the go ahead to
charge more for what is already a waste of bandwidth and
money. It makes you wonder if the courts have there own
vested interest or if they are really here for the people.

This decision was not based on the people. The internet is like a
highway with no Cops or State Troopers to pull you over and
reprimand you for going too fast, or too slow, or for showing
your bussoms out the window. Right now you can do anything
on the web without reprocussion.

Maybe that is where the focus should lay, on the people, what is
best for us, not the cable service provider', let alone the
competition that want's the bandwidth. This issue is trivial
compared the one's that need to be addressed on the net.

Justin
Posted by OneWithTech (196 comments )
Reply Link Flag
Real competition will only come with Bells running IPTV
If the courts allow this to happen, we hopefully will see comparable offerings gouging each other. This should be further enhanced by WiMax rollout. Hopefully there will be a third operator for this and not a second option by either a cable or bell player in each region. This is where congress needs to make their decision. If they allow either player to develop WiMax service in addition to cable or phonelines then that should be considered an act of anti-trust.
Posted by jamie.p.walsh (288 comments )
Reply Link Flag
Oh good.
Now telcos will fight to "unshare" their lines, since they are essentially the same things. It's good to see the courts getting this wrong in a big way, since it should serve as a wakeup call to pro-consumer representation: educate your judges. The only diff between cable and telco is cable pumps something down by default, otherwise it's just data dialtone.

-Remo
Posted by Remo_Williams (488 comments )
Reply Link Flag
oh well...
i hope my free cable connection and my free internet access don't go up in price. i refuse to pay an incompetent company like comcast a premium price for crappy service and dolts for techs.
Posted by (34 comments )
Reply Link Flag
we will now be forced to buy one of two monopolies
Broadband for the people bleh, its either the DSL or Cable
monopoly.

I currently subscribe to Cable broadband with Earthlink as my
ISP going over Time Warner Cable. I pay $44.95/mo. If this
rulling will have an immediate effect, TWC will likely disallow
both Earthlink and AOL as ISPs that provide alternative Cable
broadband running over their same coax at a lower price point.
I will be forced to subscribe to Time Warner Cable's Road Runner
service at $59.95, yes thats an extra $15 a month or $180 a
year on the same service I have now. Just great and all we have
to do is thank the MAN.
Posted by mpitogo (270 comments )
Reply Link Flag
It's time for a sea change.
Almost all of the derisiveness connected to the Internet has been due to its being inappropriately viewed as a communications or entertainment medium. The pro-cable-profit decision clearly illustrates the need for a change in how the govt and the FCC defines and controls internet services. The Internet should NOT be considered the same as phone telecommunication, or cable-based entertainment.

Phone service and cable TV are as similar and different as cats and dogs. The Internet is as a bird would be to cats and dogs, still sharing some similarities, but needing to be classified as a new animal altogether, and needing to be defined and treated as such.

Access to public information via the Internet should be universal, and network infrastructure should be accessible by everyone, including multiple providers (the only thing the infrastructure owners will lose is a percentage of their already-significant profits).
Posted by Steve Jordan (126 comments )
Reply Link Flag
Who put the cable in the ground?
I honestly don't know, but the way things usually works out the taxpayer pays the bulk of the cost and the private company ends up with ownership.
Posted by Darryl Snortberry (96 comments )
Reply Link Flag
Like it matters...
I subscribe to the only cable provider in my area. The phone company (Alltel) doesn't even offer their DSL in my neighborhood. I only pay $55.00 a month for my cable ($40.00), modem rental ($5.00), and an MSN Premium subscription ($10.00). I couldnt even get basic Alltel DSL for that price.
Posted by PCCRomeo (432 comments )
Reply Link Flag
You could save an0ther $10...
if you dumped MSN. I doubt that you need to duplicate the basic
Internet services already provided by the Cable company.
Posted by Earl Benser (4310 comments )
Link Flag
You obviously have no clue
For those that are crying foul about this decision, I suggest you educate yourselfs on the huge differences between phone and cable before you make yourself look like an idiot again. Phone shoots its signal down the line only when needed, say when you make a phone call. Cable however, has a constant signal going to ALL the lines at once, with only data and phone service being burst signals (as needed). The video portion though is the same very every line, every subscriber, with only filters of some sort (rf filters and addressable converter boxes) to block out what the customer does not subscribe to.

Now to force cable companies to share their lines, it would be a headache because they would have to balance frequencies that they are not using vs what the other companies can use. Its not as simple as using a switch on a telco line to allow competition to use the same line. THis ruling just saved cable subscribers a ton of money.
Posted by tanis143 (122 comments )
Reply Link Flag
 

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