Policy

Cable-Modem Appeal Denied by Ninth Circuit

4/01/2004 2:00 AM Eastern

The U.S. Court of Appeals for the Ninth Circuit Wednesday refused to review a decision by one of its three-judge panels that potentially exposed cable operators to mandatory sharing of high-speed Internet-access facilities with Internet-access rivals.

The Federal Communications Commission -- which had asked the full Ninth Circuit in San Francisco for rehearing -- now has to decide whether to take the case to the U.S. Supreme Court.

At issue is the regulatory treatment of cable's high-speed-data service. In March 2002, the FCC labeled the service an interstate information service that was not subject to open-access requirements that apply to phone companies that offer high-speed data to consumers.

Internet-service providers and consumer groups disagreed with the FCC's ruling and took the agency to court in an appeal that landed in the Ninth Circuit, the jurisdiction of which includes California and several other Pacific states.

On appeal, a three-judge panel of the Ninth Circuit tossed out the FCC's order, saying that it conflicted with a Ninth Circuit precedent from June 2000 that cable-modem service was both an information service and a telecommunications service.

The panel also held that cable-modem service was not a cable service, which allowed some cable operators to stop paying local taxes on cable-modem revenue.

Because telecommunications services are subject to open-access requirements, the cable industry has been fighting in the regulatory arena for years to avoid that legal designation.

However, EarthLink Inc. and other ISPs support calling cable-modem service a telecommunications service because that might require operators to lease them wholesale access to their broadband facilities.

The Ninth Circuit rejected the FCC appeal apparently after no active judge voted to stage a rehearing.

"The full court has been advised of the petitions for rehearing en banc and no active judge requested a vote on whether to hear the matters en banc. The petitions for rehearing and suggestions for rehearing en banc are therefore denied," the court ruled.

If the case were to reach the Supreme Court, the high court would not likely confront a constitutional issue, such as whether cable has a First Amendment right to offer high-speed data unfettered by open-access requirements.

Instead, the court will asked to support the proposition that the FCC acted reasonably within its regulatory authority to classify cable-modem service as an information service.

The National Cable & Telecommunications Association released a statement attributed to Dan Brenner, senior vice president of law and regulatory policy: "While we are disappointed with the Ninth Circuit ruling, we will urge the FCC to seek U.S. Supreme Court review. We believe that if and when the Ninth Circuit's decision is given a full substantive review by the Supreme Court, it will be reversed."

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