Transforming Network Infrastructure Industry News

[June 27, 2005]

High court rules cable companies need not share lines with rival Internet providers

By HOPE YEN
Associated Press Writer

(AP) -- The Supreme Court ruled on Monday that cable companies may keep rival Internet providers from using their lines, a decision that will limit competition and consumers' choices.

The 6-3 decision is a victory for the Bush administration, which sought exclusive control to promote broadband investment from deep-pocketed cable companies.

Judges should defer to the expertise of the Federal Communications Commission, which concluded that limited access is best for the industry, the high court said in an opinion by Justice Clarence Thomas.

More than 19 million homes have cable broadband service. At issue is whether cable Internet access is a "telecommunications service" under federal law that makes it subject to strict FCC rules requiring companies to provide access to independent providers.

The FCC said no, voting in March 2002 to exempt cable companies from the strict rules to stir more investment. The agency reasoned that high-speed Internet over cable was just an "information service," making it different from phone companies.

The stakes were high. Cable companies have invested billions to set up broadband networks and are now reaping the benefits. Last year, the industry earned about $10 billion in revenue from cable-modem subscriptions, which now represent its fastest growing segment.

The cable industry also had the backing of phone companies, which will now push the FCC to deregulate their rival Internet services on digital subscriber lines. Currently, DSL is regulated as a "telecommunications" service that requires companies to share their lines with independent providers such as Brand X and Earthlink.

Consumer groups, however, argued that subscribers should be able to choose their own Internet service provider rather than be forced to use the cable company. Left unregulated, cable companies will monopolize the market, with unfettered ability to raise prices and restrict content for their business advantage, they said.

Most computer users access the Internet through dial-up services, but broadband connections, through phone and cable lines and satellites, are faster. Broadband, which costs about $40 to $50 a month, depending on location, also features video conferencing.

Though there are alternatives for high-speed access such as telephone line-based DSL, fixed wireless and satellite, an estimated 60 percent of high-speed Internet users subscribe to their cable company's service, according to recent studies.

The cases are National Cable & Telecommunications Association v. Brand X Internet Services, 04-277; FCC v. Brand X Internet Services, 04-281.

___

On the Net:

Supreme Court: http://www.supremecourtus.gov/

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