FCC Sued Over Cable-Modem Ruling

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Sparking another cycle of open-access related litigation, Verizon Communications and EarthLink Inc. last week took the Federal Communications Commission to court over the agency's decision to keep high-speed cable service unregulated for now.

Consumer advocacy organizations also filed an appeal. Several municipal groups are also expected to soon enter the fray, keeping alive an issue that first surfaced before the FCC in 1998 and was initially aired in federal court a year later.

On March 15, the FCC ruled that cable-modem service is an information service and that cable operators have no obligation to carry competing Internet-service providers. The agency has yet to make a final decision on the access issue.

Verizon, EarthLink and the three consumer groups filed separate appeals in the U.S. Court of Appeals for the D.C. Circuit. Brand X Internet, a Santa Monica, Calif.-based ISP, filed its appeal in the 9th Circuit.

Verizon, the nation's largest local phone company and a provider of digital subscriber line (DSL) service, didn't appeal because it opposes keeping cable-modem service unregulated. Rather, it opposes subjecting DSL service to open-access rules that do not apply to cable operators.

The FCC classified "cable-modem service in a radically different manner from functionally equivalent high-speed Internet access services offered by telephone companies and their affiliated ISPs," Verizon said in a three-page court brief.

MARTIN: HARD TO JUSTIFY

The maintenance of different regulatory regimes for cable-modem service and DSL violates the First and Fifth Amendments, and is arbitrary and capricious rulemaking on the FCC's part, Verizon said.

Republican FCC member Kevin Martin told reporters last week that the agency would have to meet a high burden of proof to impose access rules on phone companies, but not on cable, because the latter controls 70 percent of the high-speed-data subscriber base.

"I think it would be difficult to justify. I don't know whether or not the commission could meet that burden and whether the facts will bear out the necessity of it," Martin said.

Martin said the FCC would find it easier to apply access rules to both industries or to neither.

"Clearly, that's the easiest, but that doesn't mean that's the only option," he said. "There are gradations in between as well."

EarthLink, an Atlanta-based ISP with 4.8 million subscribers, was upset that the FCC declined to classify cable-modem service a telecommunications service and use that status to impose open-access requirements.

The three consumer groups — the Media Access Project, the Consumer Federation of America and the Center for Digital Democracy — also favor the telecommunications classification and open-access requirements.

"Without nondiscriminatory open access, cable operators retain the legal right to censor messages, to limit the size and nature of files which can be uploaded and downloaded and to favor content provided by their commercial 'partners' and 'preferred vendors,' " MAP president Andrew Jay Schwartzman said in a statement.

Brand X president Jim Pickrell, who also heads the California ISP Association, said he wants access to cable customers regardless of the classification.

"We'd like to see open-access requirements, which are the objective," Pickrell said.

CITIES WEIGH ACTION

Cities urged the FCC to classify cable-modem service as a cable service and thus preserve their authority to collect franchise fees on that revenue. Some operators have already refused to collect data fees as a result of the FCC's action.

Cities "are very, very disturbed by the decision and the real question is, do they file as a group or do they file independently? I think that's what the discussion is about at this point," said Washington attorney Nick Miller of Miller & Van Eaton, which represents the National Association of Telecommunications Officers and Advisors.

Legal action could take years and ultimately wind up in the Supreme Court.

It's not clear at this point whether the D.C. Circuit or the 9th Circuit will gain control of the case.

The venue could be important. In a different context, a 9th Circuit panel has held that cable-modem service was not a cable service but a hybrid telecommunications and information service.

The court case could be delayed if a party asks the FCC to reconsider its cable-modem classification, or if the court refuses to move the appeals along as the agency debates whether to apply access rules to cable-modem service.

FCC officials hope to wrap up the access issue by the end of the year.

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