December 3, 2004 3:52 PM PST

Supreme Court to hear broadband case

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The United States Supreme Court on Friday said it will review whether cable companies should be forced to open their high-speed Internet lines to outside providers.

The nation's highest court will determine whether the controversial "Brand X" ruling of a U.S. appeals court should stand. The case involves whether the government should regulate cable companies in the same way as phone companies. Phone companies are required to allow third-party providers to offer broadband service over their networks, but cable companies are not.

The difference arises from the Federal Communications Commission's classification of cable as an information service rather than a telecommunications service. The government can regulate telecommunications services, but cannot touch information services. In October 2003, the 9th U.S. Circuit Court of Appeals ruled that the FCC was incorrect in making that distinction.

The FCC has maintained that cable companies should remain information services, free from government requirements to open their networks to competitors. After the Ninth Circuit rejected the FCC's request for a re-hearing, the FCC headed to the Supreme Court.

FCC chairman Michael Powell applauded Friday's announcement, hoping the court would agree with his view that cable and telephone systems are similar but inherently different.

"High-speed Internet connections are not telephones, and I'm glad the Supreme Court has agreed to review the 9th Circuit's ruling that they are," Powell said in a statement.

Regardless of the Supreme Court's outcome, the decision will have profound effects on the Baby Bell phone giants and the cable industry. Both sides are in heated competition and heading down similar paths to provide digital phone, video and data.

The Bells plan to spend billions of dollars upgrading their copper wires with fiber optics, laying the groundwork for video delivery. Cable companies invested an estimated $75 billion in the 1990s, upgrading their networks with higher-bandwidth fiber lines.

The Bells and cable are becoming more similar than different. Both want to offer households a single, powerful data connection that can serve all communications and entertainment needs, such as Internet access, high-definition TV, Net phone calling and digital video recording.

However, Powell warns that changing the regulatory framework for cable companies would do more harm than good.

Powell has tried to balance encouraging broader adoption of broadband with pleasing the interests of the nation's top phone carriers. The Baby Bell phone giants have lobbied aggressively for the FCC to nullify their open-access regulations, or to impose similar regulations on cable companies to level the playing field.

Powell fears that cable companies will be slower to expand and improve their broadband services if they are forced to share their lines.

"The 9th Circuit's decision would have grave consequences for the future and availability of high-speed Internet connections in this country," Powell said.

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Cable companies shouldn't be able to hide behind the "cloth" that they are purely an information service. Once they started to sell broadband they ceased being purely "information" only. Broadband is not limited to just information as it encloses a multitude of other options like VoIP and video conferencing. Both of which are offered by the phone companies. If cable wants to compete they need to do so on a level playing field. Now the rest of their service being cable tv throws in a complication. What I think the FCC should do is make the cable company separate their broadband and cable tv services into 2 separate services, possibly into separate divisions; sort of like sister compaines or something along those lines. I realize that doing this is difficult as cable internet runs off the same lines as cable tv, but does it have to? And in short I would have to say no. They could run concurrent fiber lines, but that would cost them billions of dollars to change.
In the end we are left with price fixing so that the average consumer that only wants broadband from the cable company has to pay some outrageous amount because they prefer not to order cable tv. I currently have DSL from Sprint and enjoy the service. Even though the speed is to be wanted, the price is right for me. But once you get into the higher speeds the price ratio compaired to cable is ridiculous. Consumers are cheated out of decent rates when speaking in terms of connection/price ratio. Both cable and DSL should be comparable in price and they are not. The differences in them are minute nowadays as cable has so much bandwidth than it did before that having a steady connection is common. Whereas once before there were constant outages and so forth. Both DSL and Cable now have much fewer outages and problems as they once did. So why can't the consumer get a fair deal?...maybe the execs at the cable company are having too much fun stealing money from the consumer and building golf courses.
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