- The Washington Times - Monday, June 27, 2005

ASSOCIATED PRESS

The Supreme Court yesterday said cable companies don’t have to share their lines with rival providers of high-speed Internet service.

The justices, in a 6-3 decision reversing a lower court, said the Federal Communications Commission was justified in classifying cable-modem connections solely as an “information service,” a category that isn’t subject to access requirements. The FCC had said the cable companies were exempt from the regulations requiring phone companies to offer access to independent Internet-service providers (ISPs).

In an opinion written by Justice Clarence Thomas, the high court said judges should defer to the expertise of the FCC, which concluded in 2002 that limited access is best for the industry.

“The commission is in a far better position to address these questions than we are,” Justice Thomas wrote.

The FCC and cable companies cheered the ruling. The cable industry said it would further investment, growth and competition in the broadband market.

“It removes the regulatory uncertainty for all of us who want to offer high-speed Internet access. It gives us every incentive now to continue investing and continue innovating,” said Kyle McSlarrow, president of the National Cable & Telecommunications Association, the main industry lobbying group.

But consumer advocates said it would lead to higher prices for consumers.

The court’s ruling “threatens to cement the cozy duopoly of cable modem and DSL service that has made a mockery of competition in American broadband markets and prompted hundreds of communities across the country to build their own local networks,” said three consumer groups — the Consumer Federation of America, Consumers Union and the Free Press.

Joining Justice Thomas’ opinion were Chief Justice William H. Rehnquist and Justices John Paul Stevens, Sandra Day O’Connor, Anthony M. Kennedy and Stephen G. Breyer.

Justice Antonin Scalia wrote in dissent that the FCC enacted a rule stemming from an “implausible reading of the statute, and has thus exceeded the authority given it by Congress.” Also dissenting were Justices David H. Souter and Ruth Bader Ginsburg.

At the center of the case is a Santa Monica, Calif., company, Brand X Internet, with about 500 subscribers in the local area. Brand X challenged the FCC and sought access to cable’s fiber-optic lines to offer broadband service.

“This is just terrible, and the real losers in this decision are consumers, because consumers benefit from choice and competition,” said Brand X President Jim Pickrell. He said his company may be forced out of business.

Brand X runs its traffic over phone lines, but Mr. Pickrell may soon lose the discounted rates he gets to use those lines from the phone companies. The FCC is considering petitions to regulate broadband service offered by phone companies via digital subscriber lines, or DSL, as an information service instead of a telecommunications service. Regulation as a telecommunications service requires the phone companies to offer access to independent providers.

“We’re not going to close today, but it really doesn’t look good,” Mr. Pickrell said.

Analysts say the ruling will have little immediate impact, but could affect telecommunications policy in the long term. “This was a very far-reaching decision, taking the courts out of public-policy decisions relating to technology,” said Dana Frix, partner in the corporate telecommunications practice at Chadbourne & Parke, who has represented phone and cable companies.

Nationwide, 53 percent of home Internet users have a broadband connection, provided mostly by cable or DSL. About 44 percent of home users have a dial-up connection, according to the latest figures from the Pew Internet & American Life Project.

The FCC voted in March 2002 to exempt cable companies from the strict rules applied to telecommunications companies. The agency said high-speed Internet over cable was an “information service,” making it different from phone service.

But the 9th U.S. Circuit Court of Appeals overturned that decision in 2003, ruling that Internet providers should be allowed to sell their services over the cable companies’ lines.


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