October 6, 2003 4:09 PM PDT
Court rejects FCC cable ruling
The 9th U.S. Circuit Court of Appeals said the FCC incorrectly ruled in March 2002 that cable broadband networks are an "information service" rather than a "telecommunications service." This is an important distinction because telecommunications services can be forced by governments to open their broadband lines to third parties. Information services, however, are not subject to regulations that force them to resell their lines to outsiders.
In a statement released late Monday, FCC Chairman Michael Powell said he plans to appeal the ruling, adding that he was "disappointed" that the court stuck to its original opinion. He then tried to turn the court's ruling on its head.
"Unfortunately, as noted by (9th Circuit) Judge O'Scannlain, the ruling 'effectively stops a vitally important policy debate in its tracks,' producing 'a strange result' which will throw a monkey wrench into the FCC's efforts to develop a vitally important national broadband policy," Powell said in his statement.
It is unclear whether the court's ruling would add judicial pressure for cable companies to open their lines to third parties. Cable companies such as Comcast and Time Warner Cable currently run broadband services without needing to offer part of their network to third-party services.
Phone companies, such as SBC Communications and Verizon Communications, are required by law to allow third-party Internet providers, such as EarthLink and America Online, to resell digital subscriber lines for their own subscribers.
Consumer groups and EarthLink heralded the decision as a win for competition in the rapidly growing broadband market. Earthlink added that the court's opinion would force cable companies to open access to other ISPs rather than strike private deals for carriage.
"Today?s decision by the United States Court of Appeals for the Ninth Circuit vindicates what EarthLink has been telling the FCC for five years now, that cable modem service contains a telecommunications service," Dave Baker, EarthLink's vice president of law and public policy, said in a statement.
The cable industry took the cautious route with the ruling and decided not to address the opinions until further review.
"Today's ruling is one step in a long process," the National Cable and Telecommunications Association, an industry lobbying group, said in a statement. "However, we have not had a chance to review the opinion and therefore have no comment at this time."