FCC Cable-Modem Ruling Challenged

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The Federal Communications Commission is under court attack on two fronts in
connection with its decision in March to classify cable-modem service as an
interstate information service.

Early next year, in a case that could go a long way toward settling
regulatory disputes over cable-modem service, the U.S. Court of Appeals for the
Ninth Circuit is expected to hear oral arguments on whether the FCC acted
legally in declining to label cable-modem service either a cable or
telecommunications service.

Local governments urged the FCC to classify cable-modem service as a 'cable
service' within the meaning of federal communications law, thus allowing them to
collect 5 percent on cable-modem revenue just as they do on video-programming
revenue.

In a court brief filed Oct. 10, a coalition that includes the National League
of Cities said the FCC's decision is resulting in about $72 million in lost
cable-modem franchise-fee revenue in 2002. By the end of the decade, the
per-year loss is expected to reach $334 million, the NLC claimed.

In the same case, the Consumer Federation of America is challenging the FCC's
decision not to classify cable-modem service as a telecommunications service as
defined by federal law.

The CFA -- joined by the Consumers Union and the Center for Digital Democracy
-- said telecommunications-service providers (unlike cable and
information-service providers) typically are required to provide
nondiscriminatory network access to unaffiliated Internet-service providers.

By allowing cable operators to exclude Internet competitors, the FCC has
failed to protect the First Amendment interests of Internet providers and
consumers, the public-interest groups said.

'The [FCC] has selected a mode of regulation that is the least friendly to
First Amendment principles. Common carriage is the most compatible with the
First Amendment because it removes both the government and private parties from
content decisions,' the public-interest groups said in their court
brief.

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