March 29, 2005 12:34 PM PST

Top court examines broadband competition

WASHINGTON--In a case that could help determine the viability of the independent ISP business, the Supreme Court on Tuesday took a close look at whether cable companies could keep other service providers off their networks.

The case, which pits the Federal Communications Commission and the cable industry against a small Internet service provider called Brand X, revolves around a highly technical legal definition of cable Internet. The FCC has said that cable companies can be the only ones to offer high-speed Net services over their broadband lines, while Brand X and other ISPs say that cable networks should be like telephone lines, on which any ISP can offer services.

Several of the justices appeared to scratch their head over why the two industries should be regulated differently.

"I think you can just as intelligently say it for (telephone) wire as you can for cable," said Justice David Souter, addressing an explanation by the cable industry's lawyer of why the industry was not obligated to share its networks.

The Brand X case is likely to set the ground rules for an Internet business that is increasingly moving away from the business pattern of its early days, in which a multitude of Internet service providers offered consumers a way to get online in virtually all markets.

As the market has moved toward high-speed Internet service, cable providers have had a monopoly over their high-speed lines, while telephone companies have provided the lion's share of services over their fast DSL, or digital subscriber line, networks. That pattern has smaller ISPs worried that they will completely lose their role in offering service as consumers continue to move to broadband networks.

Consumer and free-speech groups are also concerned that allowing cable companies to keep a complete monopoly over Internet access on their wires could enable them to selectively block some content, for business or political reasons.

Attorneys for the FCC and the cable industry said the government agency was under no obligation to treat the telephone and cable industries identically. The telephone industry has a distinct history and was treated by Congress differently in the passage of telecommunications laws, they said.

Brand X attorney Thomas Goldstein said that had been a misreading of congressional intentions, however. He said that cable companies were effectively "deregulating themselves" by bundling Internet transmission, e-mail and other services, and then saying they were therefore exempt from laws regulating the underlying data transmission services.

"If someone offered you a train bridge, and then the train and the grain in it, they couldn't avoid (regulation) by forcing you to take the whole bundle," Goldstein said.

Much of the case's outcome will depend on how far the court will defer to the FCC to make rulings in its own subject area.

Progress and Freedom Foundation Senior Fellow Randolph May, a former FCC counsel, said he had expected more discussion about this issue of deference to the regulatory body, and that its relative scarcity could be a bad sign for the government.

"I think that the cable industry and the FCC have to be a bit concerned that there wasn't more discussion about deference," May said.

A decision in the case is expected by early summer.

 

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