June 27, 2005 10:56 AM PDT

Cable wins Supreme Court battle

update The cable industry can breathe a sigh of relief, as the U.S. Supreme Court has ruled that cable companies will not have to share their infrastructure with competing Internet service providers.

In a 6-3 decision, the court overturned a federal court decision that would have forced cable companies to open up their networks to Internet service providers such as Brand X and EarthLink. The majority opinion was written by Justice Clarence Thomas. Dissenting justices were Ruth Bader Ginsberg, Antonin Scalia and David Souter.

The decision likely will not affect consumers immediately, since cable companies have long been exempt from having to share their networks. But Brand X and its supporters believe that over the long term, the decision will hamper competition and will ultimately lead to higher broadband prices.

Timeline

Here are highlights of the court battles and regulatory rulings that began in 2000 and led to Monday's U.S. Supreme Court decision in FCC v. Brand X.

June 22, 2000: In AT&T v. City of Portland, the 9th U.S. Circuit Court of Appeals rules that cable-modem offerings are telecom services. AT&T wins case to keep rivals off network.

March 14, 2002: FCC declares cable modems to be unregulated interstate information services. High-speed ISPs to see less regulation.

Oct. 6, 2003: In FCC v. Brand X, the Ninth Circuit rules that cable modems include a telecom component. Court rejects FCC cable ruling.

Nov. 19, 2003: The 9th U.S. Circuit Court of Appeals gives the FCC until Dec. 4, 2003, to file its appeal. Court grants FCC extension on cable ruling.

Dec. 4, 2003: FCC submits appeal to the 9th Circuit. FCC seeks to overturn cable broadband ruling.

March 31, 2004: 9th Circuit denies FCC petition for rehearing the Brand X case.

Dec. 3, 2004: Supreme Court agrees to hear appeal of Brand X case. Supreme Court to hear broadband case.

March 2005: Supreme Court scheduled to hear oral arguments in Brand X case. Broadband scuffle reaches Supreme Court.

June 27, 2005: In a 6-3 decision, Supreme Court declares that cable companies will not have to share their infrastructure with competing ISPs.

"Clearly, this sends a message from the Supreme Court that we get out of the Internet business," said Jim Tickrell, president of Brand X Internet, based in Santa Monica, Calif. "The Bush administration has made it clear that they are hostile toward small, independent service providers like us. And we think that is a big disaster for consumers, and a huge win for the monopolistic phone and cable companies, which spend millions of dollars on lobbying efforts."

The case, which was closely watched as it wound its way through the federal court system, pitted Santa Monica, Calif.-based ISP Brand X against the Federal Communications Commission. The case hinged on the definition of cable service.

The FCC has defined cable broadband as an "information service"--a definition that, under agency guidelines, frees cable companies of regulations that would require operators to share their networks with competitors, including ISPs such as Brand X.

But Brand X argued that cable networks should be regulated like phone lines, which, because they handle telecommunications service, fall under a different set of rules--rules that require carriers to allow competing services to ride over their networks. In December, the Supreme Court agreed to review the case.

In the opinion, the court upheld the FCC's interpretation of cable as an information service.

"We find nothing arbitrary about the Commission's providing a fresh analysis of the problem as applied to the cable industry," the majority wrote (click for PDF).

The Court also took a strong stance in reinforcing the FCC's ability to make critical decisions when it comes to interpreting the nuances of the Telecom Act. Because the case was so technically involved, the court said it was reasonable to defer to the expertise of the FCC.

"(The) question turns not on the language of the Act, but on factual particulars of how the Internet works," reads the opinion. "This leaves federal telecommunications policy in this technical and complex area to be set by the Commission, not warring analogies."

Justice Scalia, writing for the dissent, said that the FCC achieved its decision based on an "implausible reading of the statute" that as a result "exceeded the authority given it by Congress."

"This is a wonderful illustration of how an experienced agency can (with assistance from credulous courts) turn statutory constraints into bureaucratic discretions," Scalia wrote. "After all is said and done, after all the regulatory cant has been translated, and the smoke of agency expertise blown away, it remains perfectly clear that someone who sells cable-modem service is 'offering' telecommunications."

Mixed reaction
The National Cable and Telecommunications Association, the principal trade association of the cable television industry in the United States, heralded the opinion.

"Today's Supreme Court decision is a victory for consumers and maintains the momentum to advance broadband in the U.S.," Kyle McSlarrow, NCTA president and CEO, said in a statement. "Classifying cable modem service as an interstate information service, as the FCC did, keeps this innovative service on the right deregulatory path."

Cable companies view the ruling as a victory.

"We are very pleased," Cox, the nation's third largest cable operator, said in a statement. "Competition is ample and vigorous in the broadband marketplace."

But consumer advocates say that by upholding the FCC's classification of cable Internet as an unregulated "information service," the Supreme Court has paved the way

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10 comments

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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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