Whether cable broadband companies must share lines with rivals, as they do in the telephone industry, will be the prime topic as broadband goes to the U.S. Supreme Court March 29.
The case involves Santa Monica Internet service provider Brand X, which hopes the Supremes force cable companies to lease their lines at discount rates, against the Federal Communications Commission, which hopes to convince the justices that telephone industry rules requiring such discount line-sharing have meant higher prices and slower broadband growth.
The FCC ruled in 2002 that cable broadband is an information service, which doesn't have to share lines with competing ISPs, while incumbent telephone companies are under prior FCC rule to make their networks available to dial-up ISPs. Brand X sued the FCC over that ruling, and the 9th U.S. Circuit Court of Appeals held in their favor in October 2003. The FCC and the Justice Department appealed the case to the Supreme Court.
"Next Tuesday," said Consumer Federation of America research director Mark Cooper, "the future of the Internet will be debated at the Supreme Court. [The FCC ruling] dynamically reduces the importance of the Internet."
Yankee Group market research firm analyst Patrick Mahoney sees it differently. "I don't think the FCC feels that high regulation in these industries is beneficial to broadband progress overall," he said.
The Supremes are not expected to rule in the case until summer, but the likely impact could reach beyond the Internet, since future plans for broadband also include cable and telephone providers using it to feed high-definition television stations, nationwide voice calling, and future digital home services.
Open-access line opponents say the Baby Bells showed the answer—under the 1996 Telecommunications Act, they were forced to lease their direct subscriber lines to competitive ISPs and, while cable spent big money to upgrade, the Baby Bells held back on improvements for fear that rivals would "cannibalize" any investments by leasing lines at government-set rates.
But open-space supporters accuse the Baby Bells of just stalling until the cable industry jumped to a huge lead and only then did the Baby Bells move to close the lead and market their DSL by dropping subscription rates aggressively.
"The Commission is not left powerless to protect the public interest by classifying cable modem service as an information service," said now-former FCC chairman Michael Powell, in an August 2004 FCC filing to the Supreme Court, adding that the FCC has "consistently" invoked its authority to "guard against public interest harms and anti-competitive results…"
"The Commission’s willingness to ask searching questions about competitive access, universal service and other important policy issues," he continued, "demonstrates its commitment to explore, evaluate and make responsible judgments about the regulatory framework."
In the same filing, FCC commissioner Kathleen Abernathy said she was concerned over some cable operators continuing to offer consumers single brands of ISP service, if not limit them to "two or three" alternatives.
"As the owners of the nation’s most extensive broadband architecture and as the leading providers of broadband service, cable operators have the potential to suppress competition," Abernathy said in the filing. "I believe that the Commission should not yet dismiss proposals to impose some kind of access requirement without better evidence that robust competition among broadband ISPs will develop on its own."
