FCC: No Forced ISP Access on Cable

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Cable operators are not required to carry unaffiliated Internet-service
providers, the Federal Communications Commission ruled Thursday in a decision
consistent with the agency's deregulatory bent.

After studying cable's Internet offerings for 18 months, the agency declared
that cable-modem service is an interstate information service not subject to
forced-access mandates that apply to phone companies' Internet-access
services.

The FCC also concluded that cable-modem service is neither a cable service
nor a telecommunications service.

The FCC made the information-service classification in a declaratory ruling
adopted in a 3-1 vote along partisan lines. The commission's three Republicans
voted for the ruling, while the agency's lone Democrat, Michael Copps, strongly
objected to it.

Concurrently, the agency adopted a notice of proposed rulemaking in which it
tentatively concluded that cities may not require cable operators to seek
additional franchises to provide information services and may not collect
franchise fees on cable-modem service revenue.

It's possible that cable operators might have to contribute a portion of
cable-modem revenue to the local phone-subsidy program called the
universal-service fund, but that issue it being debated in separate docket at
the FCC.

The commission did not totally extinguish the open-access debate. The NPRM
asked whether market conditions made it necessary or appropriate for the FCC to
impose ISP-access conditions on cable-modem-service providers and whether state
and local governments may do so on their own.

The agency also tentatively concluded that it would forbear from imposing
open-access requirements on cable operators within the jurisdiction of the U.S.
Court of Appeals for the Ninth Circuit. That court had held that cable-modem
service is partly a telecommunications service.

EarthLink Inc. and consumer groups pushed the FCC to classify cable-modem
service as a telecommunications service, which would have set the stage for ISP
access to cable facilities at regulated rates.

The decisions were not unexpected because FCC chairman Michael Powell has
often expressed his opposition to government rules that require network sharing
under terms set by regulators and his opposition to regulations that erect
barriers to broadband deployment and competition.

The forced-access issue gathered momentum at the FCC when America Online Inc.
chairman and CEO Steve Case urged regulators and Congress to require cable
operators to carry unaffiliated ISPs. Case's interest in the matter was sparked
by AT&T Corp.'s plan to buy cable operator Tele-Communications Inc.

Case quickly dropped the forced-access campaign in January 2000 when AOL
announced that it would merge with cable operator Time Warner Inc. However, the
Federal Trade Commission refused to approve the merger unless AOL Time Warner
Inc. agreed to carry unaffiliated ISPs.

'Today's FCC decision establishes a needed national policy framework for
cable high-speed Internet services,' National Cable & Telecommunications
Association president and CEO Robert Sachs said in a prepared statement.

'The classification of cable modem service as an 'information service,' and
not a telecommunications service, sends a strong signal that cable Internet
services will be able to continue to develop in a business environment that
favors competition over regulation and encourages new investment,' Sachs
added.

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