OVS Case Could Aid Cities Defending Portland

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Washington -- A federal court ruling earlier this year that
included at least one legal victory for the cable industry has taken on greater meaning
now that local governments may be able to order cable operators to open their networks to
unaffiliated Internet-service providers.

In January, the U.S. Court of Appeals for the Fifth Circuit
in New Orleans held that local governments had the authority to require open-video-system
operators to obtain franchises, even though Congress intended to lift that burden with the
Telecommunications Act of 1996.

Although cities raised the franchise issue in court, the
cable industry was pleased with the outcome because OVS operators would have to shoulder
cablelike franchise obligations.

In the January opinion, the three-judge panel held that
removing the OVS-franchise requirement from federal law was not the same thing as telling
cities they had been pre-empted from imposing franchises on OVS operators.

But now, it appears, according to Federal Communications
Commission general counsel Christopher Wright, that the OVS decision could help cities
that -- like Portland, Ore. -- want to be able to require cable to unbundle high-speed
access as part of franchise approvals.

That's because the OVS decision suggested that cities have
substantial latitude to regulate cable and telecommunications companies in ways that
Congress did not intend.

"We argued in the OVS case that under Title VI of the
Cable Act, the local franchising authority can do what it is authorized to do under the
act -- but not other things, like impose a franchise requirement, which Congress has
lifted," Wright said in Chicago two weeks ago.

He added that the Fifth Circuit refused to rehear the case
on the OVS-franchise issue.

"The case isn't necessarily over. We're studying
whether to take it to the Supreme Court," Wright said.

Before U.S. District Court Judge Owen Panner ruled on the
Internet-access issue in Portland, the OVS case was largely insignificant. But in the wake
of Panner's ruling, cable's incentives have changed, in Wright's view.

"Wouldn't [cable] be a winner if the Supreme Court
said, 'You're right, FCC: Local franchising authorities can do what they are authorized to
do by the act.' That would make [cable] a winner in the cable-modem case," he said.

Mark Rosenblum, AT&T Corp.'s vice president of law,
said he agreed with Wright that the Fifth Circuit ruled incorrectly in the OVS case, but
he did not agree that the case would help the cities to defeat AT&T's appeal of
Panner's Portland rulings.

Rosenblum said the OVS case might have had an ambiguity or
two. In the Portland decision, he added, Panner clearly failed to recognize that Congress
barred cities from requiring cable operators to install telecommunications facilities and
to comply with common-carrier regulations.

"I know that [Wright] feels very strongly that the
Fifth Circuit decided this case wrongly, but I do not think that case is an impediment to
our prevailing in the Portland case," Rosenblum said.

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