Powell: FCC to Appeal Ninth Circuit Decision


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 Ninth Circuit in San Francisco or go straight to the U.S. Supreme Court.

In a setback for cable companies, the Ninth Circuit Monday overturned the FCC's decision that cable-modem service is exclusively an unregulated interstate information service under federal law.

In March 2002, the FCC attempted to shield cable companies from intrusive Internet regulation at the federal, state and local levels, but Monday's court decision in Brand X Internet Services vs. FCC
appeared to expose cable to new mandates for the carriage of Internet-access competitors such as EarthLink Inc.

In a long-awaited decision, a panel of the U.S. Court of Appeals for the Ninth Circuit said an earlier decision by the court that cable-modem service was both an information service and a telecommunications service under federal law was binding on the agency.

While information services are unregulated, telecommunications services offered by Verizon Communications and SBC Communications Inc. are heavily regulated, both for voice and high-speed-data services.

The court affirmed the FCC decision that cable-modem service was not a "cable service," but it vacated the FCC's ruling on cable-modem service being solely an information service and remanded the case to the agency for further proceedings.

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.

The decision could bolster the claims of cable "open-access" proponents. Cable-modem service classified as a "telecommunications service" could mean that it will be subject to FCC rules requiring carriage of unaffiliated Internet-service providers on a nondiscriminatory basis. Cable companies have vigorously fought such a legal classification.

But the FCC has already indicated that it would shield cable companies from common-carrier telecommunications-service regulation if a court overturned the information-service classification.

The decision might also impede the FCC's effort to strip away regulation of digital-subscriber-line service provided by Verizon, SBC and BellSouth Corp.