Appeals Court Reverses FCC Cable-Modem Decision - InformationWeek

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Appeals Court Reverses FCC Cable-Modem Decision

A three-judge panel of the 9th Circuit Court of Appeals said cable-based broadband is a "telecommunications service," which would make it subject to the same rules phone companies must adhere to.

SAN JOSE, Calif. (AP) -- Cable operators should not be the only companies to provide high-speed Internet access over the cable television system, a federal appeals court said, reversing a Federal Communications Commission regulation.

In an opinion issued Monday, a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco said the FCC erred when it classified high-speed Internet over cable as just an "information service"--a move that effectively locked out competitors.

The judges, basing their ruling on a decision in an earlier case, said cable-based broadband also is a "telecommunications service," which would make it subject to the same rules that the phone companies must adhere to--such as allowing access to competitive providers.

"Giving consumers a choice of Internet service providers would open the door to more competition, and let people choose services with better privacy and less spam," said Chris Murray, Consumers Union's legislative counsel.

The FCC voted in March 2002 to exempt cable companies from laws that force phone companies to open their lines to competition. At the time, officials said the move was necessary to spur more investment in high-speed Internet services. Cable companies have invested billions of dollars in upgrading their networks.

The FCC ruling left phone companies, which offer rival digital subscriber lines, at a disadvantage. Though they must pay for upgrades, they're subject to more regulation, including a much-debated rule requiring them to lease their infrastructure to rivals.

"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," FCC chairman Michael Powell said in a statement. He also said he will direct the FCC's lawyers to appeal.

Cable's control over its wires also hurt independent Internet providers, which saw their subscribers abandon dial-up services for much faster broadband. EarthLink Inc., which was among the petitioners to the court, praised the decision.

"Cable modem users deserve choice in high-speed Internet providers," said Dave Baker, EarthLink's vice president of law and public policy. "Today's ruling is a big step toward finally affording them that choice."

Consumer groups applauded the decision, saying the court ruling would help protect users.

"Under the FCC's 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, spokeswoman for the Media Access Project. "Now there is a chance that citizens will be protected."

Though there are alternatives for high-speed access such as telephone line-based DSL, fixed wireless, and satellite, an estimated 60 percent of high-speed Internet users subscribe to their cable company's service, according to recent studies.

That has been harmful to independent Internet providers who lost customers to cable and large telephone companies. Consumers Union, the publisher of Consumer Reports magazine, said three-fourths of all independent ISPs have gone out of business in the past five years.

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