FCCs Portland Brief Gives Locals Some Ammo

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Washington -- For once, the Federal Communications
Commission gave local governments some ammunition in the battle with cable operators over
providing access to competing Internet-service providers.

In a 31-page court brief filed last week, the FCC refused
to say that Portland, Ore., violated the law by requiring AT&T Broadband &
Internet Services to open its Internet facilities.

The commission also refused to endorse the view that cable
provision of Internet access is a "cable service" that is immune from
common-carrier access mandates.

The FCC made the filing with the U.S. Circuit Court of
Appeals for the Ninth Circuit, which is reviewing a lower-court ruling in June that said
it was permissible for the city of Portland to force AT&T Broadband to make room for
competing ISPs on its cable-modem platform.

In an interview, Portland franchising director David Olson
called the FCC brief "surprisingly toothless" and said it broke no new legal
ground.

"It's not a lot of sound, not a lot of fury, not
a lot of anything," Olson said. "It's a study in the FCC's own
inability to come to grips with these issues."

On the whole, the commission agreed with the cable industry
that local governments were poorly positioned to deal with Internet-access issues.
AT&T Broadband applauded that declaration to the court, which FCC chairman William
Kennard has been saying publicly for many weeks.

"We're pleased that the FCC, in its filing [Aug.
18], has shown why these requirements are not in the public interest because they would
slow the delivery of new, innovative services to consumers and harm competition,"
AT&T Broadband said in a prepared statement.

"I thought it was a very helpful brief," National
Cable Television Association senior vice president for law and regulatory policy Daniel
Brenner said. "The same points that we have been emphasizing get emphasized in this
one."

But the FCC said nothing to the court to bolster AT&T
Broadband's claim that Portland's open-access law violated established cable law
in four ways and the U.S. Constitution in two ways.

As Olson noted, the brief didn't ask the appeals court
to reverse the lower court.

But the brief wasn't an unqualified success for the
cities. The FCC's unwillingness to declare that cable provision of Internet access is
a "cable service" as defined in law was a setback for cities because
classification of Internet access as a "cable service" is their hook to require
open access.

"Strong arguments have been advanced in support of the
argument that Internet access via cable is not a cable service," the agency's
brief said.

Cable wants to rely on the cable-service classification
because that prevents any government body from imposing common-carrier regulation on cable
operators.

"Forced access is common-carrier regulation as its
purest," the NCTA told the court in its own 48-page brief, which was filed on the
same day as the FCC's.

Yet an FCC source said it was not clear whether requiring a
cable operator to open up to ISPs equaled common-carrier regulation even if cable Internet
access were classified as a cable service.

The ambiguity could allow the commission, if it were so
inclined, to require open access on cable systems.

"The commission did want to preserve its authority to
come back if it turned out that there is a problem," an FCC source said.

Some analysts wondered last week why the FCC even bothered
to file the brief if it was not going to provide a legal foundation for Kennard's
widely quoted comment that 30,000 local governments deciding Internet-access issues would
lead to regulatory "chaos."

"I wouldn't say the word 'shocking' --
I would say 'puzzling,'" one Washington-based cable lawyer said. "[The
brief] certainly is not as strong as [Kennard's] own personal statements."

Tom Power, a senior cable and telephone adviser to Kennard,
said the brief's goal was to inform the court of the FCC's policies in this
area. He added that the commission was in no position to opine on whether Portland was
within its legal rights because the agency had not put the issue under a legal microscope.

Nor, Power said, had the FCC ruled on whether cable
provision of Internet access is a "cable service" under the law.

Had the FCC wanted to take a stand on these legal questions
in the brief, it could have. But that would require the support of a majority of FCC
commissioners. "Procedurally, you could have done that, but it's rare,"
Power said.

In the brief, the commission did say that it was the only
government body with jurisdiction over all Internet-access providers -- cable, wireless,
wireline phone and satellite operators.

"Local franchising authorities, in contrast, are in no
position to implement technologically neutral policies with respect to all of these
competitors. Those considerations support a narrow judicial resolution of the dispute
before this court," the FCC said.

The agency also said it has used its authority over those
competitors to impose a policy of nonregulation of cable operators and others building
broadband facilities.

Paul Glenchur, a cable analyst for Schwab Washington
Research Group, said that although the FCC brief was short on legal arguments, it made the
point that federal policy should prevail.

"It probably didn't go as far as [AT&T] would
have liked it to go in terms of laying out a legal rationale for rejecting the Portland
ordinance," Glenchur said. "It clearly conveyed the tone that the Portland
action is inappropriate and not something that federal regulators would support."

Portland councilman Erik Sten, who has criticized the FCC
for not acting until after the city won in court, wondered why the agency filed a brief if
it wasn't going to claim that "Portland can't decide this issue."

"They're saying, 'We would prefer that you
stay out of this,'" Sten said. "But that's a lot different from,
'It's illegal for you to get into this.'"

A Washington cable lawyer said the FCC's brief was
timid on key legal questions because the agency has a legacy of treading lightly on local
governments' prerogatives. "It explains why they didn't go for the
jugular," the lawyer added.

Legal experts said Kennard was aware that court rulings
barring local governments from regulating the Internet today might hamper FCC efforts to
regulate the Internet tomorrow.

Kennard's view that shaping Internet policy resides
with the federal government won endorsements from various electronic-commerce, software
and Internet players, including Charles Schwab & Co., General Instrument Corp. and
BancBoston Robertson Stevens.

In an Aug. 16 letter to Kennard, they said that although
they were not united on the access fight, they were united in believing that the FCC had
to step forward and control the debate.

"Our intention is not to criticize the role of state
and local governments. But for the sake of the Internet's future and what it can
offer businesses and consumers, the jurisdictional policy questions raised by the Portland
case must be resolved at the federal level," the letter said.

Meanwhile, the access war continued to rage at the local
level last week.

In Denver, city officials authorized a new 10-year
franchise for AT&T Broadband, minus any unbundling requirements. Voters must approve
the deal Nov. 2.

The council's approval was seemingly a defeat for a
coalition of local ISPs seeking a ballot initiative that would ask voters to amend the
franchise to require open access.

"We believe that the endorsement of this franchise
means that the council recognizes that what Denver needs is better service and more
consumer choice for Internet services," AT&T Broadband spokesman Matt Fleury
said.

The ISP coalition had already suffered a setback when the
city attorney's office said its request to the Denver Election Commission had not
been filed in time to place the initiative on the November ballot.

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