Supreme Court to Hear Brand X Cable Modem Case
The U.S. Supreme Court will hear the Brand X cable modem case, according to an order granting certiorari issued Dec. 3 that had been widely expected by the industry. The court will set a schedule for arguments and issue a ruling sometime in the next 6-8 months, said attorneys familiar with the proceedings. At issue is whether cable modem service is an information service or telecom service, which would subject it to common carrier regulations.
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“High-speed Internet connections are not telephones, and I'm glad the Supreme Court has agreed to review the 9th Circuit’s ruling that they are,” said FCC Chmn. Powell in a statement: “The 9th Circuit’s decision would have grave consequences for the future and availability of high-speed Internet connections in this country.”
Consumers would see a 10% increase in the cost of broadband if telephone regulations are applied to cable services, FCC officials estimated. The FCC has been eager to see the court take up the case because it hopes to get a clear ruling on the regulatory parameters so it can move forward with its plan to keep the cable modem industry largely deregulated. Although the FCC could employ its right of forbearance, which gives it the authority to exempt individual companies from telecom rules, officials said that isn’t desirable.
The court had been expected to take the case because there were unresolved jurisdictional issues, lawyers familiar with the case said. “A more clearly articulated decision would be to the industry’s benefit,” a telecom attorney said. In addition, the case got a higher profile when the U.S. Solicitor Gen. joined the FCC’s petition. Several critics of the 9th Circuit said it’s the most- overturned appeals court in the country. “The 9th circuit’s monkey wrench threatens to tie up the country’s broadband future in 19th-century rules,” said a statement by SBC.
NCTA applauded the high court’s decision to review the case, saying it was “optimistic” the court would decide cable modem service was an interstate information service. NCTA joined the FCC in seeking the court appeal. “This case presents a fundamental question of communications law, carefully decided by the FCC and then overturned by a circuit court that simply ignored what the agency had done,” said NCTA Pres. Robert Sachs. The Supreme Court decision puts cable modem service on the “right deregulatory path,” the statement said. His view was echoed by Progress & Freedom Foundation fellow Randolph May: “It’s a good thing they decided to take the case. FCC authority should be clarified.”
Some consumer groups were disappointed with the court’s decision to review the case because they wanted the 9th Circuit’s ruling to stand. “The outcome of this case will quite literally determine the future of the Internet as we know it,” the Media Access Project said in a statement. It had challenged the FCC in the 9th Circuit. The group fears that if the high court upholds the FCC’s ruling on cable modem regulation, cable companies will become monopoly providers and limit the public’s ability to choose among competing Internet providers.
BellSouth also welcomed the Court’s decision, saying in a statement that the “resolution of the cases in favor of the FCC’s previous determination will clear the way for the Commission to finish work on modernizing regulations to allow all Internet service providers -- phone companies, cable companies, satellite companies and independents -- to compete under the same rules as they bring high-speed internet services to their customers.”
Consumer groups said the Court’s decision offers a chance to address competition and consumer choice on the high-speed Internet. The FCC’s “back-door” policy “has allowed cable operators to gut any potential competition in the market by discrimination against Internet service providers who want to compete in the cable modem market,” Consumers Union and the Consumer Federation of America said in a statement. The groups claim that as a result of this policy, U.S. consumers pay 30 times as much as Japanese and 10 times as much as Koreans for high-speed Internet service.
Industry officials said less regulation is needed to address pricing and availability problems. Citing a report that the U.S. has slipped from 11th to 13th among nations globally in broadband penetration, Nortel Vp-Govt. Relations Raymond Strassburger said “a single regulatory framework will help remedy this situation.”