Cable Wins in Florida On Local-Access Law

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WASHINGTON -For the third time in six months, a federal court has decided that local governments are powerless to force cable operators to open their facilities to competing Internet-service providers.

The latest ruling came Nov. 8, when U.S. District Judge Donald M. Middlebrooks held that Florida's Broward Country violated the First Amendment by forcing ISP access upon AT&T Broadband and Comcast Corp.

The cable industry was aglow with the victory. But the ruling is unlikely to stop the Federal Trade Commission from attempting to impose open access on the merger between America Online Inc. and Time Warner Inc.

Nor is it likely to deter the current Federal Communications Commission from moving ahead with proposals to craft regulatory classifications for the provision of Internet access over cable networks.

"I think the FCC is going to keep chugging along. This decision will have no weight in the policy process that is going to unfold," said Mark Cooper, research director for the Consumer Federation of America, an open-access proponent.

Barbara Esbin, a Washington cable lawyer and a former Internet-over-cable expert at the FCC, disagreed. The Broward decision could provide the cable industry with powerful legal ammunition to combat federal-level open-access efforts, she said.

"The First Amendment applies to FCC mandates, as it does to actions taken by the Federal Trade Commission," she said. "I think the court has raised serious constitutional impediments to the mandated opening of the cable platform to competing ISPs."

GTE Corp., now part of Verizon Communications, drafted the Broward law adopted in July 1999 and agreed to cover the county's legal costs if cable operators sued.

John Raposa, Verizon vice president and associate general counsel, said the company is talking with Broward officials about appealing the ruling to the U.S. Court of Appeals for the 11th Circuit.

In his 27-page opinion, Middlebrooks said Broward's law intruded on cable operators' editorial discretion and harmed their ability to market and finance their own high-speed Internet-access services.

To the extent the open- access law rested on the assumption of a cable monopoly, Middlebrooks said, that assumption was false. "Most consumers reach the Internet by telephone," he noted.

Middlebrooks' opinion was replete with language that the Broward law was overly broad and designed to injure cable operators-but not to harm other Internet-access providers-apparently for the sole benefit of GTE.

"The Broward County ordinance invidiously impacts a cable operator's ability to participate in the information market," Middlebrooks said. "The ordinance was adopted at the behest of a telephone company seeking to eliminate or hamper a competitor."

Raposa called the decision "fatally flawed" because Middlebrooks didn't account for the fact that cable operators provide both content and transmission. He also failed to realize that the Broward ordinance addressed only access to transmission facilities, Raposa added.

He also faulted the decision to the extent that it relied on the notion that government is barred from regulating cable if the industry is not a monopoly.

"If the First Amendment bars economic regulation unless there is a bottleneck monopoly, then you throw out 99 percent of antitrust regulation on constitutional grounds," Raposa said.

Dan Brenner, senior vice president of law and regulatory policy at the National Cable Television association, called the ruling "a very strong, forceful articulation of the First Amendment rights of cable operators over speech on their networks."

The Broward decision was yet another victory over local governments, some of whom decided to confront the issue after the FCC clearly indicated that it preferred to let the marketplace resolve commercial-access disputes.

In May, a federal judge ruled that Virginia's Henrico County could not impose open access under communications law. U.S. Judge Richard Williams held that cable Internet access is a cable service and that cable operators were not subject to common-carrier regulation by reason of providing a cable service. The case is on appeal before the U.S. Court of Appeals for the 4th Circuit.

In June, the U.S. Court of Appeals for the 9th Circuit ruled that Portland, Ore., could not require open access because federal law prevented cities from forcing cable operators to provide telecommunications services.

The three-judge panel concluded that Internet service via cable was a telecommunications service, not a cable service, but deferred open-access related questions to the FCC.

Consumer groups and other cable-access proponents seized on the 9th Circuit decision as a victory that left the FCC no choice but to treat cable operators just like phone companies, which are required to provide non-discriminatory access.

"We won in the 9th Circuit," CFA's Cooper said. "The 9th Circuit's reasoning is perfect, from our point of view."

Middlebrooks' decision had instant impact. AT&T Broadband last week said it would begin offering Excite@Home high-speed data service in the South Florida county. Prior to the decision, AT&T held back, fearing it would violate Broward's law by not offering other ISPs access.

One local-franchising official called Middlebrooks' decision "an aberration," resulting from a misguided attempt by access proponents to argue the case on First Amendment grounds.

Even so, Portland franchising director David Olson said that despite the appearance of a huge win for cable, the district court ruling does not place a headstone on open access.

"With all the memorandums of understanding going around, and AT&T conducting a trial in Boulder, and AOL-Time Warner negotiating with the FTC, we've gone beyond whether to implement open access, way beyond," said Olson, whose jurisdiction was the site of the first open-access battle. "It's now when, not whether."

St. Louis cable administrator Susan Littlefield said she was glad the FCC has opened a docket on open access, since the courts have come up with at least three different reasons for siding with cable.

"I'm glad the FCC is looking at this, because we're not going to get a definition out of the courts," she said.

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