New York Times
December 4, 2004

Supreme Court to Hear Case on Cable as Internet Carrier

By LINDA GREENHOUSE
 

 

WASHINGTON, Dec. 3 - The Supreme Court on Friday stepped into one of the most heated debates over the future of the Internet: how to classify high-speed Internet cable service for purposes of federal regulation and, ultimately, for the question of whether competing Internet service providers are entitled to use the cable companies' networks to reach their subscribers.

The justices accepted appeals filed by the Bush administration and the cable industry from a federal appeals court decision that struck down large portions of a deregulatory order issued by the Federal Communications Commission in 2002. The order freed companies that provide cable modem service of the obligation that federal law places on providers of "telecommunications services" to open their networks to their competitors.

The F.C.C. had decided after two years of study that broadband cable service was an "information service" and not a "telecommunications service" - categories that in the commission's view are mutually exclusive under the 1996 Telecommunications Act. By placing cable on the "information" side, the commission freed it from the obligations the law places on carriers like traditional phone companies, which must permit interconnection with other carriers.

But the United States Court of Appeals for the Ninth Circuit disagreed, ruling last year that cable broadband service was a hybrid that could not be freed by administrative decree from its common-carrier obligations.

An initial question in the Supreme Court appeals is whether, regardless of the merits of the dispute, the appeals court should have given greater deference to the views of the F.C.C.

If the justices' answer is yes, the court might simply send the case back to the Ninth Circuit for reconsideration under a more deferential standard of review. That would postpone a judicial resolution.

The interest is intense among all segments of the telecommunications industry. Although the cable and phone companies are competitors for broadband services, with cable having about 60 percent of the residential broadband market, they are on the same side in this dispute because the phone companies expect that they will be the next to benefit from the deregulatory mood at the F.C.C.

The phone companies are still regulated as common carriers in their provision of digital subscriber line service and are required to offer their transmission capacity to unaffiliated Internet service providers. Verizon Communications, BellSouth and SBC Communications all told the justices in friend-of-the-court briefs that it was essential to resolve the regulatory framework so that phone companies could continue to invest in the next generation of broadband networks.

On the other side are independent Internet service providers like Earthlink and Brand X Internet Services, the small California Internet provider that was among the initial challengers to the F.C.C. order.