Modem Ruling Heading to Court

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The Federal Communications Commission is under court attack on two fronts in connection with its March decision 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, 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 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 will cost about $72 million in lost cable-modem franchise-fee revenue in 2002.

By the end of the decade, the per-year loss is expect to reach $334 million a year, the NLC claimed.

Access hinge

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

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

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

"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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