Powell: FCC To Appeal 9th Circuit


Washington -- Federal Communications Commission chairman Michael Powell plans to appeal a federal appeals court ruling Monday that struck down the agency's decision to shield cable modem service from a panoply of open access obligations.

The court decision threatens Powell's effort to craft a broadband regulatory regime for both cable and phone companies that entails minimal regulatory constraints.

"I will direct the FCC's general counsel to appeal," Powell said in a
statement late Monday afternoon.

Powell did not indicate whether the agency would seek reconsideration first
by the full U.S. Court of Appeals for the 9th Circuit in San Francisco or go
straight to the U.S. Supreme Court.

In a setback for cable companies as well as the FCC, a three-judge panel of
the 9th Circuit unanimously ruled that cable-modem service was both an
information service and a telecommunications service, not just an information service
as the FCC held in a March 2002.

The case, Brand X Internet Services vs. FCC, was decided by Circuit Judges
Richard D. Cudahy, Diarmuid F. O'Scannlain, and Sidney R. Thomas. The panel said
the FCC was bound by the court's June 2000 ruling that cable modem service
was a hybrid service as defined by the Telecommunications Act of 1996.

Information service providers are lightly regulated, if at all. However,
telecommunications service providers are required to act as common carriers,
meaning cable companies might need to provide access to competing Internet Service
Providers (ISPs) on nondiscriminatory terms.

"I am disappointed that the court felt that it was bound by its prior
decision and did not address the merits of the commission's classification. 
Unfortunately, as noted by Judge O'Scannlain, the ruling `effectively stops a vitally
important policy debate in its
tracks,' producing `a strange result' which will throw a monkey wrench
into the FCC's efforts to develop a vitally important national broadband
policy," Powell said.

ISP proponents of open access for cable hailed the ruling.

"Cable modem users deserve choice in high-speed Internet providers. Today's
ruling is a big step towards finally affording them that choice," said Dave
Baker, Earthlink Inc.'s vice president and law and public policy. Earthlink has 1
million broadband subscribers.

The 9th Circuit did affirm the FCC decision that cable-modem service was not
a "cable service." The ruling did not appear to disturb the FCC's holding that
cable companies need not pay franchise fees to local governments on
cable-modem revenue.

Cable operators have fought to avoid the telecommunications service
classification because of the scope of regulation involved. The FCC has already
indicated that it would shield cable operators from common-carrier regulation if a
court overturned the information-service classification.

The court's ruling also might impede the FCC's effort to strip away
regulations currently imposed on digital-subscriber-line (DSL) services provided by
Verizon Communications Inc., SBC and BellSouth Corp. Those companies, which must
provide access to competing ISPs offering DSL, have urged the FCC to create
deregulatory parity between them and cable companies.