News

Powell Balks at Modem Regulations

3/02/2003 7:00 PM Eastern

Washington— Cable-operator discrimination against Internet software and content providers appears to be a hypothetical concern at this point, Federal Communications Commission chairman Michael Powell said last Wednesday.

"I don't know that I have yet seen such a compelling record that we have a clear and demonstrable problem on this issue," Powell told members of the House Subcommittee on Telecommunications and the Internet.

At the hearing, Rep. Richard Boucher (D-Va.) said the FCC should ensure that cable modem providers do not use network control to "discriminate in favor of their own content or affiliated content," including slowing down access to competitors' Web sites.

In theory, Powell said, such conduct would violate antitrust laws.

Although the FCC is studying the issue, Powell said he was unsure "whether I can answer confidently" that the agency should adopt regulations soon.

Amazon.com Inc., Microsoft Corp., and the Walt Disney Co. agree with Boucher and want to see the FCC adopt rules.

Sachs's rebuttal

In a speech last week, National Cable & Telecommunications Association president Robert Sachs said cable-modem subscribers can go "anywhere, anytime" on the Internet, obviating the need for anti-discrimination regulations.

Sachs said the companies' call for "nondiscrimination" regulation against cable was a cure in search of a disease because MSOs do not use their networks to block consumers from reaching lawful Web sites.

"That is and has always been the case with cable-modem service. And given competition from DSL [digital subscriber line] and others, cable has no interest in even thinking about going in a different direction," Sachs said at the winter meeting of the National Association of Regulatory Utility Commissioners.

Further, Sachs noted, "discrimination" on the Internet is rife in the sense that a popular Web site might have banner ads and electronic-commerce links with Amazon.com but not necessarily with other book vendors, such as Barnes & Noble Inc.

Companies have yet to cite any examples of cable discrimination, as they define it, said Sachs, who suggested that at least Microsoft has developed an ad hoc sense of what it means by discrimination.

"Four cable companies have entered into promotional arrangements with Microsoft's Xbox Live," he added. "The same relationship doesn't exist today with Nintendo [of America Inc.], [Sony Computer Entertainment Inc.'s] PlayStation, or other online game businesses. You don't hear Microsoft complaining about this."

March