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FCC Challenges Open-Access Ruling

Oct 13, 2003  •  Post A Comment

The FCC plans to appeal a federal appeals court decision last week that threw a wrench into the cable TV industry’s growing broadband business by raising the prospect that operators may have to open their networks to competing Internet service providers.
“I am disappointed that the court felt that it was bound by its prior decision and did not address the merits of the commission’s classification,” said Republican FCC Chairman Michael Powell, announcing the agency’s plan to appeal.
“We agree with one of the panel’s judges who aptly recognized this ruling as `positively bizarre,”’ added Dan Brenner, National Cable & Telecommunications Association senior VP, law and regulatory policy, pledging the cable association’s support for the FCC’s legal challenge.
Under the current rules, the FCC generally permits cable TV operators to control access to their broadband networks, letting them dictate the conditions that competing ISPs must meet to access the cable system’s customers.
The ruling last week by the U.S. Court of Appeals in San Francisco vacated a 2002 FCC ruling that cleared the way for the agency to exempt operators from requirements that force telephone companies to open their lines to competition. If the decision is ultimately upheld, the government-not the cable industry-could set the terms for access to cable’s broadband Internet service, threatening to undermine a business that generated $4.45 billion of the industry’s $47.8 billion in total revenues in 2002.
But industry sources said the court ruling was an early round in what is expected to be a long fight.
Cable TV industry officials said it’s important that they be allowed to control access to their networks, in part to ensure that competitors pay to defray the cost of building them.
But watchdog group representatives want the courts to open access to networks on the argument that competition among ISPs is good for consumers, and that open access would spur the development of such new services as streaming video, Internet television that could compete with cable’s own video offerings.
“Under the FCC’s [original] decision, citizens using the Internet over cable were not protected from content discrimination, and they do not benefit from competition among many ISPs,” said Cheryl Leanza, deputy director of the Media Access Project. “Now there is a chance that citizens will be protected.”
Added Chris Murray, legislative counsel for Consumers Union: “Congress has told the FCC to let consumers use their cable system just like their telephone. Just as you can pick up the phone and dial anybody you want, consumers ought to be able to do the same thing with high-speed Internet service. The courts are simply telling the FCC to go back and obey the law.”
Nonetheless, Blair Levin, a telecommunications analyst for Legg Mason, said he believes that even if the court decision is affirmed on appeal, the FCC will simply use its regulatory discretion to avoid regulating the cable TV industry under whatever new rules it sets. “At the end of the fight, I doubt that so-called open-access requirements are going to be placed on cable,” Mr. Levin said.
In a statement, the NCTA added, “Because a majority of commissioners have emphasized repeatedly that broadband services should develop free of regulatory restrictions, we believe it is likely that the commission would forbear from applying common carrier rules to cable modem service.”
But Democratic FCC Commissioner Michael Copps said the agency broadband plan vacated by the court has been “troubling.” 3
“We seem to be buying into a warped vision that open networks should be replaced by closed networks and that traditional user accessibility can be superseded by a new power to discriminate,” Mr. Copps said in a speech hosted by the New America Foundation.