Judge Keeps Verizon ISP Off Cox System

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A California federal judge refused to order cable operator Cox Communications Inc. to carry a phone company-affiliated Internet-service provider on its high-speed Internet-access platform.

In a Jan. 29 decision, U.S. Judge Napoleon A. Jones Jr. said ISP Verizon Internet Solutions was not entitled to cable carriage while the Federal Communications Commission was determining the regulatory classification of cable-modem service.

"The regulation of cable Internet involves complex issues with far-reaching consequences. The issue is clearly not being taken lightly by the experts at the FCC, and this court defers to that concern and pending investigation," Jones wrote in a nine-page opinion.

Jones, who serves in the southern district of California, did not dismiss the case. He stayed the proceedings, allowing Verizon Communications to refile the compliant after the FCC has addressed the regulatory classification of cable Internet access. He said the FCC has primary jurisdiction to settle the classification dispute.

Since September 2000, the agency has been trying to decide whether cable Internet access is a cable service, an information service or a telecommunications service.

The commission in March is expected to classify cable Internet access an information service — a move that, based on precedent, would not require cable carriage of unaffiliated ISPs.

In November 2000, Verizon sued Cox asserting that, under a decision by the U.S. Court of Appeals for the Ninth Circuit, the MSO was required to carry unaffiliated ISPs as a telecommunications-service provider subject to common-carrier obligations in federal law.

Verizon went to court after Cox refused to negotiate a carriage deal.

The Ninth Circuit's decision involved AT&T Corp.'s challenge to an ordinance adopted by Portland, Ore., which barred Tele-Communications Inc. from transferring its cable franchise to AT&T unless AT&T agreed to provide access to unaffiliated ISPs. The city maintained that it had the right to require open Internet access due to its authority over cable services during a franchise transfer.

In its decision, the Ninth Circuit said it could not decide the case without determining whether cable Internet was a cable service.

The court defined cable Internet as a hybrid of information service and telecommunications service, and held that Portland could not enforce its ordinance to the extent that it pertained to telecommunications services offered by Cox.

In filings with the FCC, Cox has insisted that the controlling holding in the court's decision was the finding that cable Internet is "not a cable service."

Cox argued that the court's hybrid definition was nonessential to the disposition of the case and amounted to judicial dicta.

In his opinion, Jones said he declined to embrace Cox's reading of the Ninth Circuit's decision, insisting that the hybrid classification was a "necessary" ingredient to the Portland case.

"At best," Jones said, "the Ninth Circuit's discussion can be considered an alternative holding, but clearly not dicta."

Jones noted that his decision to stay the case pending FCC's resolution of the classification issue was consistent with the Ninth Circuit's decision not to "impinge" on the agency's "authority over these matters."

Despite its move to classify cable Internet as partly a telecommunications service, the Ninth Circuit noted that the FCC could also classify cable Internet as purely a telecommunications service, but then forbear from applying common-carrier obligations to cable-modem service.

Cox has been relying on the Ninth Circuit's holding that cable Internet is not a cable service to refuse to collect and remit the 5 percent franchise fee on cable-modem-service revenue.

Although Cox said such a step was necessary to avoid potential litigation, some California local governments are planning to sue Cox in order to collect the franchise-fee revenue.

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